The global advertising market is facing growing headwinds, as a confluence of sector-specific cutbacks and escalating trade tensions prompt a further downgrade in 2025 growth projections. According to the Q2 2025 update from WARC, global advertising spend is now expected to grow 6.2% to $1.16 trillion this year – a reduction of 0.5 percentage points from the research firm’s March forecast.
The revision follows a $20 billion forecast cut earlier this year and reflects weakened ad demand from major sectors such as retail (projected -6.1%) and automotive (-4.0%). The slowdown comes amid mounting US trade tariffs that are squeezing supply chains, pressuring margins and forcing brands to recalibrate ad budgets and geographic allocations.
“The latest downgrade is attributable to a reticence to commit ad budgets across key markets in the second quarter,” said James McDonald, Director of Data, Intelligence & Forecasting at WARC. “This cooling is underpinned by tariff trepidations and ebbing business and consumer confidence.”
Retailers and Automakers Lead Budget Pullbacks
Retailers are expected to spend $166.1 billion on advertising this year, down 6.1% from 2024, as tariffs on goods and raw materials – particularly from China – bite into margins. Automotive ad spend is forecast to fall to $54.5 billion, a smaller drop than previously feared, with a rebound of 7.5% expected in 2026.
Chinese e-commerce giants such as Temu and Shein have reportedly shifted their ad budgets away from the US and toward Canada, Australia, and Europe, responding to rising trade barriers in their largest overseas market.
Platforms Gain as Traditional Channels Falter
The pure play internet category – which includes search, social, retail media, display and classifieds – is on track to reach $829.2 billion in ad revenue in 2025, representing 70.8% of global spend. Growth is expected to moderate to 9.8% this year, after an 11.5% surge in Q1.
Alphabet, Meta and Amazon are forecast to collectively command 54.7% of all ad spend outside China this year, equal to $524.4 billion – a share that could rise to 56.2% in 2026. Google alone is expected to net $213.3 billion from search advertising, controlling 85.8% of the market.
Retail media is projected to be the fastest-growing channel in 2025, up 14.4% year-on-year to $176.2 billion. Amazon, which generated $13.3 billion in Q1 ad revenue, is forecast to grow its ad income 16.1% to $60.6 billion this year.
In contrast, global video ad spend is expected to shrink by 2.6% to $183.9 billion, driven by a 6.3% drop in linear TV. 2025 will mark the first year retail media overtakes linear TV in global ad share.
Sector Snapshots: Tech, CPG Feel Pressure
- Technology & Electronics: Ad spend is forecast to rise 5.5% to $90.3 billion – a slowdown from last year’s 24.3% surge – as brands shift focus to less tariff-exposed markets and products.
- Consumer Packaged Goods (CPG): Facing weak Q1 revenues and supply chain disruptions, CPG brands are projected to raise ad spend by 6.7% to $200.5 billion. Core subcategories like soft drinks (+7.1%), toiletries (+7.2%) and household goods (+4.2%) all see growth, but at slower rates than 2024.
Regional Outlook: US Downgrade, Canada and China Realign
The US ad market – the world’s largest – is expected to grow by 5.2% this year to $451.6 billion, down from 13.5% in 2024 and revised downward by half a percentage point since March. A strong Q1 (+7.6%) driven by early Chinese spend is unlikely to hold, with growth set to taper as the full impact of trade policies sets in.
Canada, a key alternative market for Chinese advertisers, is forecast to see 3.2% ad growth in 2025. However, weak economic projections from the IMF and Bank of Canada cast a shadow over prospects.
In China, advertising growth is now pegged at 7.2% – down from 8.3% projected in March – as consumer spending tightens and smaller platforms struggle to compete with ByteDance, Tencent and Alibaba.
The UK is projected to post 6.5% growth to £44.3 billion ($54.7 billion), with digital dominating (84.6% of total spend). Germany and France are expected to see slower growth at 2.9% and 2.7%, respectively, while Japan is forecast at 3.3%.
Looking Ahead
Despite current volatility, WARC expects global ad spend growth to rebound to 6.5% in 2026, reaching $1.23 trillion – or nearly $150 per capita. However, with trade policy, supply chain fragility, and macroeconomic headwinds at play, the road ahead will require marketers to remain agile, regionally attuned, and performance-driven.
