Despite persistent economic volatility and rising geopolitical tensions, global advertising spend is projected to grow by a robust 6.2% this year, reaching an impressive $1.16 trillion. This forecast, from Warc, a leading specialist in marketing effectiveness, reflects a resilient industry adapting to challenging market conditions. However, the projection marks a slight downward revision of 0.5 percentage points from Warc’s earlier March outlook, signaling increased caution among advertisers.
The revised forecast underscores a complex global economic landscape, where factors like trade tariffs, fluctuating consumer confidence, and inflationary pressures are compelling brands to rethink their marketing strategies. While the overall outlook remains positive, driven largely by the relentless expansion of digital platforms, key sectors are experiencing notable shifts in their advertising budgets.
James McDonald, Director of Data, Intelligence & Forecasting at Warc, and author of the comprehensive research, notes the industry’s response: “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.”
McDonald further elaborated on the strategic imperative for brands in this environment: “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.” This emphasis on “agility” highlights a fundamental shift, where rapid adaptation, data-driven decision-making, and dynamic budget allocation are no longer optional but essential for market survival and growth.
Warc’s projections are meticulously crafted, drawing on aggregated data from 100 markets worldwide. The firm leverages a proprietary neural network, a sophisticated artificial intelligence model, which analyzes over two million data points to project advertising investment patterns. This advanced methodology allows for a nuanced understanding of market dynamics, offering valuable insights into the intricate relationship between global economics and advertising spend.
The Digital Dominion: AI Propels Tech Giants to Unprecedented Market Share
The most striking trend within the global advertising landscape is the continued, relentless ascent of “pure play internet” channels. This expansive category encompasses social media, retail media, online display, online classifieds, and paid search. In the first quarter of 2025, this segment demonstrated impressive growth of 11.5%, reaching $195.2 billion and accounting for a dominant 70.8% of all global ad spend. While this growth rate is expected to moderate slightly through the year—easing to 9.9% in Q2 and 8.9% in the latter half—the annual total is still projected to hit $829.2 billion, representing a robust 9.8% increase over 2024.
The trajectory of pure play internet advertising is truly transformative, with forecasts suggesting it will surpass $1 trillion in ad revenue by 2028, by which point it could command nearly 80% of all advertising expenditure worldwide. This digital dominance is largely driven by three tech behemoths: Alphabet (Google), Meta (Facebook, Instagram), and Amazon. Their combined share of advertising spend outside of China is expected to reach an astounding 54.7% this year, an increase of 1.8 percentage points from 2024, with an aggregated total of $524.4 billion. This concentrated power is projected to grow further, reaching 56.2% next year, solidifying their positions as the indispensable pillars of the modern advertising ecosystem.
Search Advertising: Google’s Enduring Reign, Powered by AI
Within the pure play internet total, search advertising continues to be a powerhouse. Spend in this category is forecast to rise by 7.4% this year and another 6.8% next year, by when the market would be valued at $265.5 billion. This equates to 21.5% of all global ad spend, up marginally from 21.2% in 2024.
Google’s dominance in search advertising remains virtually unchallenged. The tech giant is expected to capture a staggering 85.8% of the market this year, with an estimated take of $213.3 billion. The embedding of artificial intelligence (AI) into the search journey is poised to fundamentally disrupt traditional ad revenue models. As users increasingly engage with AI-powered overviews and conversational search, advertising must adapt to new discovery patterns. However, Google’s proactive integration of generative AI into its ad products—such as AI Max for Search campaigns and new creative tools powered by models like Veo and Imagen—aims to maintain its lead. These AI-driven solutions are designed to help advertisers, particularly small and medium-sized enterprises (SMEs), connect with users more effectively by optimizing ad placement, expanding query matching, and dynamically generating relevant creative content. This ensures Google’s dominance in search advertising will likely persist in the near term, bolstered by continuous innovation and strong support for its vast network of advertisers.
Social Media: Meta’s AI-Driven Evolution
Social media platforms are set to account for over a quarter of all ad spend this year. Following a robust 14.9% rise in the first quarter, growth is expected to slow, averaging 11.2% over the subsequent three quarters. This moderation is partly attributed to the disproportionate impact of tariffs on Asian brands, which often rely heavily on social media for direct-to-consumer reach. Despite this, the global social media ad market is still on track to grow by a healthy 12.0% to $298.3 billion this year.
Meta, the parent company of Facebook and Instagram, is at the forefront of this segment. Its ad business is forecast to grow by 12.6% to $142.1 billion this year, a cooling from the impressive 18.4% rise recorded in 2024. Last month, Meta unveiled ambitious plans for an end-to-end AI solution designed to revolutionize the advertising process. This comprehensive offering covers the generation of creative content, intelligent ad placement across its platforms, and performance optimization. While these tools aim to benefit large brands, they are primarily geared towards empowering Meta’s vast “long tail” of small advertisers, providing them with sophisticated capabilities previously reserved for larger budgets. Meta’s Advantage+ suite of AI tools, for instance, automates audience selection, budget allocation, and real-time ad optimization, making it easier for businesses of all sizes to maximize their return on investment.
Retail Media: Amazon Leads the Charge in the Fastest-Growing Segment
Retail media is emerging as the undisputed growth champion in the advertising world, projected to be the fastest-growing medium tracked by Warc this year. It is anticipated to surge by 14.4%, reaching a total value of $176.2 billion, and commanding a significant 15.2% share of global ad spend. This explosive growth is fueled by the immense first-party data that retailers possess, allowing for highly targeted and effective advertising directly at the point of purchase.
Amazon, the e-commerce titan, dominates this burgeoning market. Its retail media ad business recorded a remarkable 21.0% growth to $13.3 billion during the first quarter, capturing a third (33.4%) of the global retail media market. Warc projects Amazon’s ad income to grow by a substantial 16.1% to $60.6 billion this year, with a further 14.9% rise forecast for next year. By then, Amazon is expected to hold a 35.4% share of global retail media spend and a notable 5.7% of all advertising spend worldwide.
However, even giants like Amazon are not immune to global economic forces. Similar to other online retailers, Amazon faces exposure to the new tariffs imposed on its Chinese sellers, who are estimated to constitute well over half of all vendors on the platform. This reliance on a global supply chain means that tariff impacts can ripple through their business, potentially affecting seller profitability and, consequently, ad spend dynamics on the platform. Despite this, Amazon’s continued investment in AI-powered tools and its expansion into full-funnel activation (including streaming TV and its demand-side platform) are expected to sustain its strong growth trajectory.
Video Advertising: The Shifting Sands from Linear to On-Demand
The landscape of video advertising is undergoing a profound transformation. Global video advertising spend is forecast to decline by 2.6% in 2025 to $183.9 billion, equating to 15.9% of all ad spend this year. This contraction is primarily driven by the continued, structural decline of linear TV, which still accounts for over three-quarters of the total video market. Linear TV spend is expected to fall by 6.3% this year, a drop exacerbated by the significant major sporting and political events of 2024, which temporarily boosted ad spend.
A symbolic shift is also occurring: 2025 marks the first year that retail media is projected to command a greater share of global ad spend than linear TV, underscoring the irreversible migration of advertising budgets towards digital, performance-driven channels.
Conversely, video-on-demand (VOD) advertising is a bright spot within the video segment, forecast to rise by 13.2% to $39.9 billion. While this represents a slight downgrade from the 15.4% projected in March, it signifies robust growth. Platforms like Netflix, despite starting from a smaller base, are expected to see their ad billings double this year due to the relative resilience of their ad-supported tiers, even during periods of economic downturn. This highlights the increasing willingness of consumers to engage with ad-supported streaming content and the growing appeal of these platforms for advertisers seeking engaged, targeted audiences.
Product Sector Trends: Tariffs and Cost Pressures Drive Strategic Shifts
The impact of economic volatility and trade tensions is particularly evident across major product sectors, forcing companies to implement significant strategic adjustments in their advertising expenditure.
Automotive Industry: A Drive Towards Digital Performance
The automotive industry invested $56.8 billion in advertising last year, with nearly a quarter (22.9%) allocated to premium video formats. However, the sector is experiencing a rapid shift in budget allocation: from traditional video towards more agile, performance-driven digital platforms. For the first time in 2025, automotive spend on social media ads is set to surpass linear TV. This pivot reflects a recognition that consumers are increasingly researching and making purchase decisions online, particularly with the rise of electric vehicles and evolving mobility solutions.
Despite Warc’s projected 4.0% cut in automotive advertising spend this year (an improvement on the 7.3% originally projected in March), the sector is anticipated to rebound with a healthy 7.5% rise next year, pushing total spend to $58.6 billion. This rebound is expected as automakers adapt to rising input costs, supply chain disruptions, and the strategic imperative to promote new electric vehicle models and digital sales channels. Advertising strategies are becoming more focused on lead generation, customer relationship management, and leveraging data analytics to optimize campaign performance.
Retail Sector: Navigating Tariff-Induced Margin Squeeze
The retail sector, with a projected ad spend of $166.1 billion this year (14.3% of the global ad market), faces a notable 6.1% fall from 2024 levels. This contraction is largely a direct consequence of impending US trade tariffs on key goods and raw materials. These tariffs are poised to significantly increase costs for global retailers, especially those heavily reliant on Chinese imports, such as e-commerce giants Amazon and Walmart, as well as fast-fashion sensation Shein and online marketplace Temu.
The tariff surge in 2025 includes steep increases, with some key Chinese goods, including electronics, raw materials, and auto components, facing tariffs as high as 145%. Additionally, imports from Canada and Mexico, particularly aluminum, steel, and auto parts, are subject to 25% tariffs. These moves have triggered retaliatory actions and significant strain on global supply chain networks. Retailers are accelerating shifts in marketing strategies in response to these changing cost structures and evolving consumer behavior. Large Chinese retailers targeting US consumers, for example, have strategically reallocated advertising spend to other less-affected markets such as Canada, Australia, and Europe to mitigate the impact of market barriers. This geographical reallocation of budgets underscores the agility and responsiveness demanded by the current global trade environment.
Tech and Electronics: Slowdown Amidst Tariff Uncertainty
The tech and electronics sector is expected to spend $90.3 billion on advertising this year. While still a year-on-year rise, the 5.5% growth represents a cut from Warc’s earlier 6.2% forecast in March and marks a sharp slowdown from the impressive 24.3% rise recorded last year. Tariffs are a significant factor, driving the sector to adjust its go-to-market strategies. Companies are shifting investments toward less-affected regions or different product lines to buffer against hardware margin erosion, which is a direct consequence of increased import costs. The semiconductor industry, heavily reliant on a globally distributed supply chain, has been particularly disrupted by US tariffs on machinery and raw materials, leading to warnings of potential shortages and increased consumer prices.
Consumer Packaged Goods (CPG): Battling Supply Chain Disruption
Consumer Packaged Goods (CPG) companies have experienced their weakest first-quarter sales revenues since the pandemic, indicating a broad-based slowdown in consumer spending. Furthermore, the CPG sector is facing major disruption to its established supply chains due to tariffs, with duties reaching as high as 145% for Chinese imports and additional tariffs impacting goods from Canada and Mexico. These elevated costs on imported ingredients and materials force CPG brands to rethink product formulations, packaging, and pricing strategies to maintain competitiveness without fully absorbing the tariff burden.
Despite these headwinds, Warc expects core CPG sub-sectors, such as soft drinks (+7.1%), toiletries & cosmetics (+7.2%), and household & domestic (+4.2%), to record growth in advertising spend globally this year. However, all these categories are experiencing a significant slowdown compared to their 2024 growth rates. Taken together, the CPG sector is projected to increase advertising spend by 6.7% this year to a total of $200.5 billion. Many CPG companies are increasingly “leaning into retail media” as a strategic response, leveraging the rich consumer data and point-of-sale influence offered by retailers to drive sales in a price-sensitive market.
Key Market Outlook: Economic Headwinds and Regional Nuances
The global ad spend forecast also highlights significant regional variations, influenced by differing economic conditions, trade policies, and market maturity.
The United States: Navigating Stagflationary Pressures
The US ad market, the largest worldwide with a 39.0% share, is expected to grow by 5.2% this year to $451.6 billion. This is less than half the growth rate recorded in 2024 (+13.5%) and represents a 0.5 percentage point downgrade from Warc’s March forecast. The US market faces a confluence of major headwinds, including tariff uncertainty, disrupted supply chains, lower consumer demand, and the risk of stagflation.
Stagflation is a particularly challenging economic phenomenon characterized by the simultaneous occurrence of high inflation, stagnant economic growth, and high unemployment. In such an environment, companies face a double burden of reduced real profits due to inflation and weak investment prospects due to a struggling economy. This prompts businesses to hold back on new investments and marketing budgets. Despite a strong first-quarter performance (7.6% growth to $105.7 billion), partly boosted by Chinese brands accelerating spend ahead of anticipated tariff changes, US ad market growth is expected to slow significantly through the remainder of the year as these pressures intensify.
Canada: A Limited Beneficiary of Reallocated Spend
While Chinese brands appear to be strategically redirecting ad spend to Canada to circumvent US market barriers, Canadian ad growth is still expected to ease to 3.2% this year. This moderation comes amidst deteriorating broader economic conditions within the country. The IMF has downgraded Canada’s GDP growth forecast for 2025 by 0.6 percentage points to 1.4%, and the Bank of Canada projects growth at approximately +0.5% in 2025. This weak economic outlook limits the overall advertising market’s potential, even with some reallocated foreign spend.
Digital platforms dominate Canada’s media landscape, projected to capture 77.6% of the total market this year. This reflects the pervasive influence of digital transformation, where granular targeting capabilities and the rise of retail media continue to draw advertisers away from traditional media channels.
China: Structural Shifts and Digital Dominance
The Chinese ad market continues to grapple with significant structural shifts and persistent weak domestic demand. While projected US tariffs are expected to dull China’s economic growth by 0.2 points in 2025, creating further economic uncertainty, the advertising growth expectations for 2025 have been revised downwards to 7.2% (from 8.3% in March).
China’s digital ecosystem is uniquely dominated by major domestic players, including ByteDance (owner of Douyin/TikTok), Alibaba, and Tencent. This concentrated market creates challenges for smaller platforms and advertisers navigating its complexities. Short-form video platforms like Douyin have become instrumental in brand promotion, reflecting a shift in consumer behavior. Marketers in China are increasingly prioritizing performance marketing over traditional brand-building initiatives, driven by the need for measurable returns in a competitive and price-conscious consumer environment. Despite the near-term economic headwinds, the outlook for 2026 has been upgraded to 7.9% growth, reflecting the inherent resilience and continued expansion of China’s highly digitalized online advertising sector.
Europe and Japan: Stalling Economies and Stagflation Risk
Several major European economies and Japan face a challenging outlook, with a severe risk of stagflation looming over the forecast period.
- The UK ad market is forecast to grow by 6.5% in 2025, reaching £44.3 billion ($54.7 billion). Despite weak economic prospects, the UK’s highly digitalized market sees online ads accounting for over four in five (84.6%) dollars this year, with social media (+13.1%) and search (+8.2%) continuing to fuel growth.
- Germany’s economy is also struggling, with the OECD projecting only 0.4% growth this year. Warc forecasts a modest 2.9% rise in German advertising spend to €26.4 billion ($29.5 billion).
- Growth in France’s ad market is similarly muted, at a projected 2.7% to €18.8 billion ($20.3 billion).
- Japan faces a challenging outlook, with advertising spend expected to rise by a modest 3.3% to ¥5.8 trillion ($39.0 billion) this year.
These forecasts highlight that even in highly developed economies, advertising spend remains sensitive to broader macroeconomic conditions. While digital channels continue to show resilience and capture an increasing share of budgets, overall growth is tempered by the cautious approach of advertisers grappling with economic uncertainty, inflation, and the looming threat of stagflation. The global advertising industry, therefore, is not merely growing but actively transforming, constantly adapting to a world shaped by economic volatility, technological innovation, and evolving consumer and trade dynamics. Agility, as Warc emphasizes, is indeed the new imperative for success.
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Photo Source: Google
By: Montel Kamau
Serrari Financial Analyst
16th June, 2025
