Global Ad Spend Forecast Cut Amid Budget Pullbacks by Retailers, Automakers

...Chinese brands shift focus as US trade tensions escalate

A new study from WARC, the experts in marketing effectiveness, has revealed that global advertising spend is now projected to grow by 6.2% this year to $1.16 trillion. This marks a downgrade of half a percentage point from WARC’s March forecast, as economic volatility and trade tensions intensify. Key sectors including retail (down 6.1%) and automotive (down 4.0%) are pulling back on ad budgets, while growth among technology and consumer packaged goods (CPG) brands has slowed.

James McDonald, Director of Data, Intelligence & Forecasting at WARC and author of the research, says: “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 revised global outlook draws on data from 100 markets worldwide and uses a proprietary neural network, analyzing over two million data points to project advertising trends.

Media Trends: Search and Social Dominate as AI Drives Growth

Alphabet, Amazon, and Meta are expected to claim 54.7% of global ad spend (excluding China) this year, driven by AI integration and digital dominance. Search advertising will account for 21.5% of total spend, growing 7.4% to reach $248.6 billion, while social media is poised to take the largest share at 25.8% with projected spend of $298.3 billion.

Retail media is forecast to be the fastest-growing channel, expanding 14.4% to $176.2 billion, although ongoing trade disruption may dampen growth in CPG advertising.

Pure play internet advertising – including social, search, display, classifieds, and retail media – rose 11.5% in Q1 to $195.2 billion, comprising 70.8% of global ad spend. Growth is expected to moderate over the year, leading to a total of $829.2 billion in 2025 (+9.8% YoY), with the sector set to surpass $1 trillion in 2028.

Search advertising within this category is projected to rise to $265.5 billion by 2026, with Google accounting for 85.8% of that spend in 2025. Despite the evolving ad landscape, Google's dominance remains intact, bolstered by strong adoption among small and medium-sized enterprises.

Social and Retail Media Outperform as Linear TV Declines

Social media spending surged 14.9% in Q1, but growth is expected to average 11.2% for the remainder of the year, slowing due to the impact of tariffs on Asian brands. Meta’s ad revenue is projected to grow 12.6% to $142.1 billion in 2025, down from 18.4% in 2024. The company recently announced a full-stack AI solution for ad creative, placement, and optimization.

Retail media continues to surge, with Amazon’s ad business rising 21.0% to $13.3 billion in Q1. The platform is forecast to grow its ad revenue to $60.6 billion this year, accounting for 33.4% of global retail media spend and 5.7% of all ad spend. However, the company’s heavy reliance on Chinese sellers exposes it to tariff-related risk.

Video advertising spend is expected to shrink by 2.6% to $183.9 billion in 2025, primarily due to a 6.3% decline in linear TV. Video-on-demand (VOD) advertising will grow 13.2% to $39.9 billion, though this represents a slight downgrade from previous forecasts. Netflix is expected to double ad revenues this year, driven by the stability of its ad-supported tier during economic downturns.

Sector Highlights: Trade Barriers Weigh on Retail, Auto, and Tech Ad Spend

The automotive industry will reduce ad spend by 4.0% this year, bringing the total to $56.8 billion, with a shift away from premium video formats toward digital. The sector is forecast to rebound in 2026 with a 7.5% increase in spend.

Retail ad budgets are expected to fall 6.1% to $166.1 billion, representing 14.3% of the global ad market. This decline is largely due to US tariffs on goods and raw materials, which are raising costs for major retailers like Amazon and Walmart. Chinese e-commerce firms such as Temu and Shein have already redirected ad spend to alternative markets.

The tech and electronics category is expected to spend $90.3 billion on advertising in 2025, a 5.5% increase year-on-year, though this is below earlier projections. Trade restrictions are forcing companies to shift marketing and product strategies to mitigate risks and protect margins.

CPG brands are also facing challenges, with tariffs as high as 145% affecting imports from China, Canada, and Mexico. The sector is still forecast to grow ad spend by 6.7% to $200.5 billion, though this is a significant deceleration from previous years. Sub-sectors such as soft drinks, toiletries, and household goods will all experience slower growth.