Report: Global ad market prospects further downgraded
June 12, 2025
A study from WARC, the experts in marketing effectiveness, has found that global advertising spend is now on course to grow 6.2 per cent this year to $1.16 trillion, a downgrade of half a percentage point (pp) from WARC’s March forecast due to growing market volatility. Key sectors such as retail (-6.1 per cent) and automotive (-4 per cent) are set to cut ad spend this year, while ad spend growth across technology and CPG brands is muted compared to previous rates.
James McDonald, Director of Data, Intelligence & Forecasting, WARC, and author of the research, said: “The latest downgrade is attributable to a reticence to commit ad budgets across key markets in the second quarter. This cooling is underpinned by tariff trepidations and ebbing business and consumer confidence, prompting advertisers to front-load budgets and reallocate spend geographically, particularly towards Canada, Australia, and Europe. Trade tensions are forcing major sectors to rethink their ad strategies. Automakers are cutting back amid rising costs and a pivot to performance media, while retailers tighten budgets as tariffs squeeze margins. Tech firms face growing uncertainty despite continued investment, and CPG brands are leaning into retail media as supply chains come under pressure. Across the board, agility is the new imperative.”
WARC’s latest global projections are based on data aggregated from 100 markets worldwide, and leverage a proprietary neural network which projects advertising investment patterns based on over two million data points.
- Search to account for more than a fifth (21.5 per cent) of the ad market this year, with spend rising 7.4 per cent to $248.6 billion despite regulatory threats
- Social media – the largest single advertising medium globally – is poised to account for a quarter (25.8 per cent) of all ad spend this year, at a total of $298.3 billion
- Retail media set to be fastest growing advertising medium this year (+14.4 per cent), though trade disruption threatens ad receipts from consumer packaged goods (CPG) brands
Pure play internet – encompassing social media, retail media, online display, online classified and paid search – grew 11.5 per cent in the first quarter of 2025 to $195.2 billion, equivalent to 70.8 per cent of all global ad spend. The growth rate is expected to ease to 9.9 per cent during the second quarter and 8.9 per cent over the second half of the year – to an annual total of $829.2 billion (+9.8 per cent vs. 2024).
The pure play internet sector is on course to top $1trn in ad revenue in 2028, by when it would account for almost 80 per cent of all advertising spend. Alphabet, Meta and Amazon’s combined share of advertising spend outside of China is expected to reach 54.7 per cent this year (+1.8pp vs. 2024) with an aggregated total of $524.4 billion. This share is set to rise further – to 56.2 per cent – next year.
Within the pure play internet total, search advertising spend is forecast to rise 7.4 per cent this year and 6.8 per cent next, by when the market would be worth $265.5 billion – equivalent to 21.5 per cent of all spend, up from 21.2 per cent in 2024.
Within the paid search total, Google’s expected $213.3 billion take would account for 85.8 per cent of the market this year. The embedding of artificial intelligence into the search journey stands to disrupt ad revenue models, but Google’s dominance in search advertising will likely persist in the near term, aided by SMEs.
Social media is now set to account for over a quarter of all ad spend this year. A strong first quarter rise of 14.9 per cent precedes an expected slowdown, with growth averaging 11.2 per cent over the coming three quarters as tariffs begin to impact Asian brands disproportionally. The social market is still on track to grow 12 per cent to $298.3 billion this year.
Meta last month outlined plans for an end-to-end AI solution covering the generation of creative, ad placement and performance optimisation – primarily for its long tail of small advertisers rather than large brands. Meta’s ad business is forecast to grow 12.6 per cent to $142.1 billion this year, a cooling from the 18.4 per cent rise recorded in 2024.
Retail media is expected to be the fastest-growing medium tracked by WARC this year, with an anticipated rise of 14.4 per cent to a total value of $176.2 billion. This represents a 15.2 per cent share of global ad spend this year.
Amazon’s retail media ad business grew 21 per cent to $13.3 billion during the first quarter, accounting for a third (33.4 per cent) of the global retail media market. WARC projects Amazon’s ad income will grow by 16.1 per cent to $60.6 billion this year. A further rise, of 14.9 per cent, is forecast next year, giving Amazon a 35.4 per cent of global retail media spend and 5.7 per cent of all advertising spend worldwide. Like other online retailers, Amazon is exposed to tariffs imposed on its Chinese sellers, thought to be well over half of all vendors on the platform.
Global video advertising spend is forecast to decline by 2.6 per cent in 2025 to $183.9 billion, equating to 15.9 per cent of all spend this year. The contraction is driven by a continued decline in linear TV, which still represents over three-quarters of the total video market.
Linear TV spend is expected to fall by 6.3 per cent this year – a drop exacerbated by 2024 major sporting and political events. Notably, 2025 marks the first year that retail media will command a greater share of global ad spend than linear TV.
VoD advertising is forecast to rise by 13.2 per cent to $39.9 billion, a downgrade from the 15.4 per cent projected in March. Within this, Netflix is due to see ad billings double this year (from a small base) due to the relative resilience of its ad tier during economic downturns.
Key product sector trends: Tariff trepidations hit retailers and automakers
- Automotive ad spend down 4 per cent this year as manufacturing stalls and key players pare back on brand building
- Retailers set to reduce ad spend by 6.1 per cent as margins tighten; US retailers are vulnerable to disruption among Chinese suppliers
- Ad growth set to slow markedly among tech & electronic and consumer packaged goods (CPG) brands as barriers to trade impair access to components
The automotive industry invested $56.8 billion in advertising last year with almost a quarter (22.9 per cent) going to premium video formats. However, budgets are shifting from video towards digital platforms, with automotive spend on social ads surpassing linear TV for the first time in 2025.
Despite WARC’s projected 4 per cent cut in automotive advertising spend this year (an improvement on the 7.3 per cent originally projected in March), the sector should rebound next year with a 7.5 per cent rise pushing spend to a total of $58.6 billion.
Retail, with projected ad spend of $166.1 billion this year (14.3 per cent of the global ad market), faces a fall of 6.1 per cent from 2024 levels. This largely reflects impending US trade tariffs on key goods and raw materials, which are poised to increase costs for global retailers, particularly those heavily reliant on Chinese imports such as Amazon and Walmart.
Retailers are set to accelerate shifts in marketing strategies in response to changing cost structures and consumer behaviour. As predicted in March, large Chinese retailers targeting US consumers – including Temu and Shein – have reallocated advertising spend to other markets such as Canada, Australia and Europe.
The tech and electronics sector is expected to spend $90.3 billion on advertising this year. This year-on-year rise of 5.5 per cent represents a cut from our +6.2 per cent forecast in March, and is a sharp slowdown from the 24.3 per cent rise recorded last year. Tariffs are driving the sector to adjust go-to-market strategies, shifting investments toward less-affected regions or different product lines to buffer against hardware margin erosion.
Consumer Packaged Goods (CPG) companies experienced their weakest first quarter sales revenues since the pandemic. Further, with tariffs reaching as high as 145 per cent for Chinese imports and additional tariffs on goods from Canada and Mexico, CPG companies are facing major disruption to their established supply chains.
WARC expects core CPG sectors, such as soft drinks (+7.1 per cent), toiletries & cosmetics (+7.2 per cent) and household & domestic (+4.2 per cent) to record growth in advertising spend at a global level this year, though all see a significant slowdown from 2024. Taken together, the CPG sector is expected to increase advertising spend by 6.7 per cent this year to a total of $200.5bn.
Key market outlook: US growth prospects cut as Chinese brands look elsewhere
- US ad market expected to post a +5.2 per cent rise this year, less than half that recorded in 2024 (+13.5 per cent) and has been cut by half a point since March
- Canadian ad spend growth set to ease to 3.5 per cent this year despite some Chinese advertisers redirecting spend from the US
- The Chinese ad market continues to struggle with weak domestic demand; growth is set to slow to 7.2 per cent this year
- The UK, German, French and Japanese economies are all stalling and present a severe risk of stagflation over the forecast period
WARC’s latest forecast suggests the US ad market will grow 5.2 per cent this year to $451.6 billion, half the growth rate recorded in 2024 (+13.5 per cent) and representing a 0.5 point downgrade from our March forecast. The US ad market – the largest worldwide with a 39 per cent share – faces major headwinds including tariff uncertainty, disrupted supply chains, lower consumer demand and stagflation.
Despite a strong first quarter performance – +7.6 per cent to $105.7 billion, boosted by Chinese brands accelerating spend ahead of the anticipated tariff changes – US ad market growth is expected to slow significantly through to year-end.
Chinese brands appear to be redirecting ad spend to Canada to negate US market barriers, yet Canadian ad growth is expected to slow to 3.2 per cent this year amid deteriorating economic conditions. The IMF had downgraded Canada’s GDP growth forecast by 0.6pp to 1.4 per cent, with the Bank of Canada projecting growth rate to approximately +0.5 per cent in 2025.
Digital platforms dominate Canada’s media landscape, projected to capture 77.6 per cent of the total market this year. This digital transformation stems from granular targeting capabilities drawing advertisers away from traditional media, with retail media now fuelling additional growth.
China is experiencing significant structural shifts, characterised by increasingly price-conscious consumers and a digital ecosystem dominated by major players including ByteDance (Douyin), Alibaba, and Tencent, creating challenges for smaller platforms. Short-form video has become instrumental in brand promotion in China, while marketers are prioritising performance marketing over brand building initiatives.
Projected US tariffs are expected to dull China’s economic growth by 0.2 points in 2025, creating economic uncertainty and prompting a downward revision of our 2025 advertising growth expectations to 7.2 per cent (from 8.3 per cent in March). The outlook for 2026 has been upgraded to 7.9 per cent growth (from 6.9 per cent), reflecting the online sector’s resilience.
The AA/WARC Expenditure Report forecast for the UK ad market stands at +6.5 per cent in 2025, to a total of £44.3 billion ($54.7 billion). The highly digitalised UK market sees online ads accounting for over four in five (84.6 per cent) dollars this year, with social (+13.1 per cent this year) and search (+8.2 per cent) fuelling growth despite weak economic prospects.
Germany’s economy is also struggling, at just +0.4 per cent expected growth by the OECD this year following a cut of 0.3pp from its last outlook. WARC forecasts a modest 2.9 per cent rise in German advertising spend to €26.4 billion ($29.5 billion). Growth in France’s ad market is also set to be muted this year, at +2.7 per cent to €18.8 billion ($20.3 billion). Japan faces a challenging outlook, too, with advertising spend expected to rise by 3.3 per cent to ¥5.8 trillion ($39 billion) this year.