WARC Downgrades Ad Revenue Forecasts Amid U.S. Tariffs

WARC has lowered its 2025 advertising forecast, projecting a 6.2 percent increase to $1.16 trillion amid market volatility around trade tariffs.

James McDonald, director of data, intelligence and forecasting at WARC, and author of the research, noted: “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.”

Social media is projected to account for 25.8 percent of all adspend this year, reaching $298.3 billion, while retail media will be the fastest-growing medium, rising by 14.4 percent. Pure play internet—encompassing social media, retail media, online display, online classified and paid search—is expected to reach a total of $829.2 billion, an increase of almost 10 percent. This sector will top $1 trillion in 2028, accounting for almost 80 percent of media spend. Alphabet, Meta and Amazon will dominate outside of China, with a share of 54.7 percent expected for this year.

Global video advertising, meanwhile, will drop by 2.6 percent this year to $183.9 billion, a 15.9 percent share of the ad pie, amid continued losses in linear, which will fall by 6.3 percent. “Notably, 2025 marks the first year that retail media will command a greater share of global ad spend than linear TV,” WARC said. However, VOD advertising is expected to rise, increasing by 13.2 percent to almost $40 billion. “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,” WARC said.