As the US and China emerge from their latest round of trade talks, the impact of Donald Trump’s tariff policies continue to bite for the global advertising industry. This morning, marketing data business WARC cut its full-year ad forecast to 6.2 percent, with global ad spend now projected to reach $1.16 trillion in 2025. The update follows WARC’s previous downgrade back in March, when the firm slashed $20 billion from the full-year forecast.
“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, prompting advertisers to front-load budgets and reallocate spend geographically.”
Automotive advertisers put the brakes on brand spending
In terms of where the policies will hit advertising, the automotive sector is predicted to be most prone to pullbacks amid disruption to manufacturing. As a result, automotive ad spend is set to fall by 4 percent this year, as car brands pull back on brand-building activity, rerouting their spend to less intensive performance advertising. The shift is significant as 22.9 percent of the sector’s ad investment went to premium video in 2024, but this year automotive spend on social is set to surpass linear TV for the first time.
Spending from the retail sector is also set to fall by 6.1 percent due to mounting pressures on global supply chains – particularly among US retailers that are heavily reliant on Chinese imports, such as Amazon and Walmart. Chinese retailers on the other hand, such as Temu and Shein, have already reallocated ad spend to other markets (mainly Canada, Australia and Europe) in response to US tariffs.
Meanwhile technology and CPG brands are slowing their spending, after CPG companies experienced “their weakest first quarter sales revenues since the pandemic,” according to WARC. Tech spending is expected to grow 5.5 percent this year, down from the 6.2 percent forecast issued in March, while CPG spend is lowered to 6.7 percent growth.
“Trade tensions are forcing major sectors to rethink their ad strategies,” added McDonald. “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.”
Retail media takes greater share than linear TV
As brands rethink their spending in the wake of tariff pressures, there is significant impact on marketing channels, with the trend towards performance channels accelerating the flow of ad spend into the hands of the tech giants. WARC found that “pure play internet” channels (social media, retail media, online display, online classified and paid search) took 70.8 percent of all global ad spend in Q1, projected to near 80 percent ($1 trillion) in 2028. This means that Alphabet, Meta and Amazon will take 54.7 percent of all ad spend (outside of China) this year, reaching 56.2 percent in 2026.
Looking at individual channels, search will account for 21.5 percent of all ad spend in 2026, according to WARC, with Google taking an 85.8 percent market share this year. And while AI stands to disrupt the search market, the report suggests that “Google’s dominance in search advertising will likely persist in the near term, aided by SMEs.” Similarly Meta’s embracing of AI for advertising means the tech giant will continue to dominate the social media market, which will account for more than one-quarter of all ad spend this year.
For retail media, ad spend is expected to rise by 14.4 percent this year, taking 15.2 percent share of global ad spend. Amazon currently holds a 33.4 percent market share, forecast to reach 35.4 percent next year, when Amazon will take 5.7 percent of all global ad spend. However, the report notes that Amazon is exposed to tariffs imposed on its Chinese sellers, which are thought to make up “well over half of all vendors on the platform.”
With those digital channels benefiting from marketers shifting budgets to where they see greater agility, premium video formats are set to decline. Global video spending is forecast to fall by 2.6 percent this year, making up 15.9 percent of global ad spend. The contraction is driven by a 6.3 percent drop for linear TV, and WARC highlights that 2025 marks the first year that retail media will command a greater share of global ad spend than linear TV.
At the same time, the growth of VOD advertising is also showing signs of slowing, with WARC revising its growth forecast from 15.4 percent to 13.2 percent in 2025. But the report notes that Netflix is due to see ad billings double this year, “due to the relative resilience of its ad tier during economic downturns.”
US market grows at half last year’s rate
Assessing ad markets by geography, the US is set to be hit particularly hard by the trading conditions. The market is predicted to grow at half the rate recorded last year, increasing 5.2 percent in 2025. “The US ad market – the largest worldwide with a 39.0 percent share – faces major headwinds including tariff uncertainty, disrupted supply chains, lower consumer demand and stagflation,” said the report.
Meanwhile Canada’s ad growth is expected to slow to 3.2 percent this year, despite being the beneficiary of redirected Chinese ad spend. WARC suggests this will also accelerate the dominance of digital platforms on Canada’s media landscape, capturing 77.6 percent of the total market this year.
China itself is projected to be dampened by US tariffs, with WARC lowering its growth forecast from 8.3 percent to 7.2 percent for 2025, but rising to 7.9 percent for 2026, due to the resilience of China’s online ad market. “Short-form video has become instrumental in brand promotion in China, while marketers are prioritising performance marketing over brand-building initiatives,” said the report.
WARC also forecast “muted” growth this year for Germany (2.9 percent), France (2.7 percent) and Japan (3.3 percent), but better prospects for the UK (6.5 percent) given its “highly digitalised” ad market. Online ads will account for 84.6 percent of UK ad spend this year, according to the report, with growth expected in social (13.1 percent) and search (8.2 percent) advertising.
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