Warc said that global advertising spend was now on course to grow 6.7% in 2025 to $1.15 trillion, one percentage point lower than its November forecast, with a 0.7 percentage point cut to forecasts for 2026 also applied, with growth now expected at 6.3%.

Stagflation or outright recession across major economies, compounded by heightened costs being levied on trade by the US, were among the key reasons for the changes to Warc’s forecasts, alongside tightening regulation in the EU, squeezed margins, and low business and consumer confidence.

Warc said it had modelled three scenarios based on different underlying market conditions, including its current baseline forecast drawing on current economic indicators.

The second scenario – from the Organization for Economic Cooperation and Development (OECD) – was 10% universal trade tariffs coming into force, which would cut 0.5 percentage points from gross domestic product in key economies over three years, as well as adding 0.4 points to inflation.

The third, and most serious, scenario removed a full point from global growth and 0.4 points to inflation over the next three years.

Applying the OECD scenario to the advertising market cut a further 0.3 percentage points and $4bn from global growth compared to Warc’s baseline.

If new reciprocal tariffs between the US and its trading partners are implemented on 2^nd April, Warc said there was a potential for the third scenario to occur, which would equate to a 0.8 percentage point downgrade in advertising growth compared with Warc’s baseline, equivalent to a drop of $9.5bn.

Warc said that it believes the impacts of trade fragmentation will begin to be felt in the advertising market from the second half of this year, before becoming more pronounced during the first half of 2026.

Automotive, retail and technology sectors would be hardest hit, Warc said, with automotive advertising spend down 7.4% this year as manufacturing stalls and companies reduce focus on brand building.

Warc also said that retailers are set to lower advertising spend by 5.3% as margins tighten, with US retailers vulnerable to disruption among Chinese suppliers, while advertising growth is set to halve among tech and electronic brands as barriers to trade impair access to components.

The US advertising market was expected to grow 5.7% this year to $451.9bn – less than half the growth rate recorded in 2024 ( 13.1%). However, Warc said that US ad market growth should accelerate in 2026, with spend rising 6.5% (up 4.4% in real terms) due to the country co-hosting the Fifa World Cup and the US midterm elections. 

China was expected to see a slowdown in both advertising and economic growth this year when compared to 2024, with advertising spend set to rise by 5.3% to $205.5bn this year compared with 7.1% last year.

Warc said it expected the UK’s advertising market to grow by 7.1% to $52.6bn this year, though reducing to a 5% rise when accounting for inflation. 

Japan’s advertising spend was expected to fall by 2% to $40.0bn this year, or down 3.9% in real terms, albeit the market is set to grow 3.3% this year when measured in local currency.

Germany was predicted to see a 2.1% fall in advertising spend to $27.1bn this year, equivalent to a 4.1% dip in real terms after accounting for inflation.

James McDonald, director of data, intelligence and forecasting at Warc, 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.

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

However, McDonald added: “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.

“Regulatory scrutiny and uncertainty around TikTok’s future in the US further compound risks to growth, however, advertisers must be nimble in order to seize initiative in this shifting landscape.”