WARC has released its Q1 forecast update for the global advertising spend outlook for 2025 and 2026, revealing global advertising spend growth forecasts have been reduced by US$19.8 billion (A$32bn), with growth now expected to reach 6.7% in 2025 and 6.3% in 2026.

The global ad market is projected to be valued at US$1.15 trillion in 2025, marking an increase of U$72.9 billion from 2024. However, key risks threaten this outlook, including prolonged stagflation, potential recession, and new trade tariffs. These factors are particularly concerning for automakers, retailers, and tech brands.

Regulatory challenges also pose a threat, with the European Union’s stance on Google and Apple, alongside US antitrust rulings against Google and TikTok, adding to the uncertainty. WARC’s projections are derived from data spanning 100 markets and over two million data points.

Director of Data, Intelligence & Forecasting at WARC, James McDonald, said: “The global ad market faces mounting uncertainty as trade tariffs, economic stagnation, and tightening regulation disrupt key sectors – leading us to cut growth prospects by $20bn over the next two years.

“Despite the growing volatility, digital advertising remains strong, led by three companies – Alphabet, Amazon and Meta – on course to control over half of the market in 2029.”

“Automakers, retailers, and tech brands in particular are now reigning in ad spend amid rising manufacturing costs and mounting supply chain pressures,” he said.

The automotive sector is expected to experience a 7.4% decline in advertising spend, attributed to manufacturing stalls and a reduction in brand-building efforts. Retail advertising spend is projected to decrease by 5.3% as margins tighten, with US retailers particularly vulnerable to disruptions in the Chinese supply chain.

Advertising growth in the tech and electronics sector is anticipated to slow to 6.2%, a significant drop from the previous forecast of 13.9%. This deceleration is linked to new tariffs on semiconductors. Despite the challenges, digital advertising remains robust, with Alphabet, Amazon, and Meta expected to control over half of the market by 2029.

Search advertising is projected to account for 21.7% of the ad market, with an 8.0% increase in spend, reaching US$250 billion. Social media is expected to represent a quarter of all ad spend, with platforms like TikTok, Instagram, and Facebook experiencing notable gains. Retail media is projected to be the joint-fastest growing advertising medium, with a growth rate of 15.4%.

Regionally, the US ad market is expected to grow by 5.7% in 2025, a rate less than half of the growth seen in 2024. China’s ad market growth is projected to slow to 5.3% in 2025, with a further deceleration to 3.5% in 2026. The UK ad market is anticipated to grow by 7.1% in 2025, with digital ads comprising 82.6% of the market.

In contrast, Japan’s ad market is expected to decline by 2.0% in 2025, with economic stagnation likely extending into 2026. Germany’s ad market is projected to fall by 2.1% in 2025, with real growth of just 0.4% expected.