WARC has released its Q2 2025 forecast update, revealing a downgrade in the global advertising spend outlook for 2025/26. The forecast now predicts a growth of 6.2% for this year, following a $20 billion reduction in March. This adjustment is attributed to tariff pressures affecting supply chains, leading to anticipated cuts in advertising budgets by the retail and automotive sectors, with reductions of 6.1% and 4.0% respectively.

Alphabet, Amazon, and Meta are projected to maintain a significant presence in the advertising market, with a combined market share of 54.7% outside China this year, equating to $524.4 billion. This share is expected to increase to 56.2% by 2026. In the United States, growth prospects for the advertising market have been revised downward by half a point to 5.2%, as Chinese retailers redirect their spending towards Canada, Australia, and Europe.

Global advertising market growth is anticipated to accelerate to 6.5% next year, reaching a total of $1.23 trillion, which is approximately $150 per capita. Search advertising is expected to account for 21.5% of the ad market this year, with spending rising by 7.4% to $248.6 billion. Social media is set to represent 25.8% of all ad spend this year, amounting to $298.3 billion.

Retail media is projected to be the fastest-growing advertising medium this year, with an increase of 14.4%. In Q1 2025, pure play internet advertising grew by 11.5% to $195.2 billion, but this growth is expected to moderate to 9.9% in Q2 and 8.9% in the latter half of the year. The pure play internet sector is forecasted to surpass $1 trillion in ad revenue by 2028, accounting for nearly 80% of all advertising spend.

Google is anticipated to capture $213.3 billion from search advertising, representing 85.8% of the market this year. Meta's advertising business is forecast to grow by 12.6% to $142.1 billion this year. Amazon's retail media advertising business experienced a growth of 21.0% to $13.3 billion in Q1, with projections indicating a 16.1% increase to $60.6 billion for the year.

Global video advertising expenditure is expected to decline by 2.6% in 2025 to $183.9 billion, driven by a decrease in linear TV spending, which is projected to fall by 6.3% this year. Conversely, video-on-demand advertising is forecast to rise by 13.2% to $39.9 billion.

The automotive sector's advertising spend is projected to decrease by 4.0% this year, with a rebound anticipated next year with a 7.5% increase. Retail advertising spend is expected to fall by 6.1% this year due to US trade tariffs. The tech and electronics sector is projected to see a 5.5% rise in ad spend this year, marking a slowdown from the previous year. The Consumer Packaged Goods (CPG) sector is expected to increase its advertising spend by 6.7% this year, reaching $200.5 billion.

The US advertising market is expected to grow by 5.2% this year, down from 13.5% in 2024. Canadian advertising spend growth is anticipated to slow to 3.5% this year. The Chinese advertising market growth is set to decelerate to 7.2% this year. The UK advertising market is forecast to grow by 6.5% in 2025, reaching £44.3 billion ($54.7 billion). Germany's advertising market is expected to rise by 2.9% to €26.4 billion ($29.5 billion), while France's market growth is projected at 2.7% to €18.8 billion ($20.3 billion). Japan's advertising market is expected to increase by 3.3% to ¥5.8 trillion ($39.0 billion) this year.

Director of Data, Intelligence & Forecasting at WARC, James McDonald, said: "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."