WARC lowers 2025 global ad spend forecast amid economic uncertainty
By Felicia Nwosu
Following a recent report from the World Advertising Research Center (WARC),the advertising market is undergoing a downgrade with global adspend growth forecasts cut by $19.8 billion due to market volatility. According to the report, the global ad market is now expected to grow 6.7% this year – a 0.9 percentage point lower than the previous forecast. The World Advertising Research Center (WARC) has therefore, revised its 2025 global advertising spend forecast downward, reducing growth expectations by nearly one percentage point and cutting $20 billion from earlier projections.
The revised growth rate now stands at 6.7%, while 2026 estimates have been lowered by 0.7 percentage points to 6.3%. The adjustment reflects economic instability, including risks of stagflation, potential recessions in major economies, new US trade tariffs, tighter European regulations, declining profit margins, and weakening business and consumer confidence.
WARC’s Director of Data, Intelligence, and Forecasting, James McDonald, noted that trade tariffs, economic stagnation, and regulatory hurdles are affecting key sectors, leading companies in the automotive, retail, and technology industries to scale back ad budgets. He mentioned that rising production costs and supply chain constraints have added pressure on advertising expenditures.
Despite these challenges, he said digital advertising remains strong, with Alphabet, Amazon, and Meta expected to control more than half the global ad market by 2029, though regulatory scrutiny and uncertainties surrounding TikTok’s future in the US pose potential risks. WARC’s analysis, using the Organization for Economic Cooperation and Development (OECD) model, indicates that a 10% universal trade tariff would reduce GDP growth in major economies by 0.5 percentage points over three years, while inflation could rise by 0.4 points.
This scenario could lower global ad market growth by 0.3 percentage points, cutting $4 billion from projected spending. More severe trade measures, including the US administration’s proposed reciprocal tariffs and additional levies on Chinese imports, could reduce ad spend growth by 0.8 percentage points, equating to a $9.5 billion loss, with the impact increasing by late 2025 and early 2026.
The automotive industry, which spent $54.8 billion on advertising in 2024, is shifting more ad dollars to digital platforms, with over half now allocated to search and social media.
Major US automakers like General Motors and Ford have scaled back marketing budgets despite revenue gains. GM’s marketing spend has dropped to 1.8% of revenue from 3.5% in 2013, while Ford allocates just 1.2%. The European Automobile Manufacturers Association (EAMA) warns that pending tariffs on production from Mexico, Canada, and China could impact over 40% of the industry. WARC projects a 7.4% decline in auto ad spending this year, with video formats taking the biggest cuts.
Retail, the largest ad spending sector tracked by WARC, is forecast to allocate $162.7 billion to advertising in 2025, accounting for 14.1% of the global ad market. This marks a 5.3% drop from 2024, primarily driven by supply chain disruptions linked to trade tariffs.The report showed that in more adverse scenarios, ad spend reductions could reach 5.7% under the OECD model and 6.1% in severe trade conditions.
According to Adnews, last year, the sector expanded by 13.6%, fueled by aggressive marketing campaigns from Chinese e-commerce giants like Temu and Shein, but these companies are now expected to scale back spending as trade barriers tighten. Technology and electronics advertising, which rebounded 25% to $84.3 billion in 2024 after a two-year slump, is expected to grow 6.2% in 2025 to reach $89.5 billion, significantly lower than the previous 13.9% forecast.
It added that tariffs on semiconductors have led to further downward revisions, with growth projections slipping to 5.8% under the OECD scenario and 4.9% under a severe trade scenario, while regulatory scrutiny of digital platforms is mounting.
The European Union recently found Apple and Google in violation of the Digital Markets Act (DMA), exposing them to potential fines. In the UK, a legal ruling allowing consumers to opt out of personalized advertising adds another challenge for marketers. Despite this, digital ad spending remains strong, with paid search advertising projected to grow 8.0% in 2025.
Meanwhile, It attested that Google’s paid search revenue is expected to increase by 8.5%, while Apple’s search business, valued at $5.1 billion last year, is set to expand at a similar pace. Social media platforms are expected to generate $286.2 billion in ad revenue in 2025, marking a 12.1% rise, with TikTok, Instagram, and Facebook driving growth through AI-powered targeting tools. Retail media continues to be one of the fastest-growing advertising channels, expected to expand by 15.4%, outpacing the broader digital ad market’s 10.1% growth rate. WARC affirmed that this will push retail media’s share of global ad spend to 15.5% ($178.7 billion), though trade disruptions could affect consumer packaged goods (CPG) advertising within the sector.
In the US, ad spending is forecast to increase by 5.7% in 2025, reaching $451.9 billion, marking a sharp slowdown from the 13.1% growth seen in 2024. However, spending is expected to accelerate in 2026 due to the FIFA World Cup in North America and the US midterm elections, driving a 6.5% increase. China’s advertising market is also slowing, with ad spend projected to rise by 5.3% to $205.5 billion in 2025, down from 7.1% growth in 2024, reflecting weak domestic demand.
Real ad spend growth of 3.5% lags behind the OECD’s revised real GDP forecast of 4.8% for China. In the UK, ad spending grew by an estimated 10.2% in 2024, with WARC projecting a 7.1% increase in 2025, bringing total spend to $52.6 billion.
Adjusted for inflation, real growth stands at 5.0%. Japan faces an advertising downturn, with spend expected to decline by 2.0% to $40.0 billion, a 3.9% real-term contraction, exacerbated by the yen’s depreciation against the dollar and a weaker economic outlook. Germany’s economic struggles continue, with GDP projected to grow by just 0.4% in 2025.
WARC forecasts a 2.1% decline in German ad spending to $27.1 billion, translating to a 4.1% contraction in real terms. This latest revisions highlight the increasing volatility in the global advertising market as shifting trade policies, economic uncertainty, and tightening regulations continue to shape industry trends
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