Market analysts have started revising downwards advertising spend forecasts for the US as the Trump administration goes ahead with raising tariffs.
IPG’s Magna cited a “decline in confidence” and a lack of economic visibility which may impact marketing and advertising budgets in the short term.
The most vulnerable sectors are consumer goods (packaged food, beverages and personal care), quick-service restaurants (QSR) and automotive.
Magna analysis now puts advertising revenue growth at 4.3% in 2025, down from the previous forecast of 4.9%.
The latest forecasts are for the US only. Magna hasn’t updated its global or country-specific, including Australia, outlook.
Other forecasters also see a constrained advertising market due to “policy volatility adding to existing uncertainties”.
Madison and Wall’s new forecast for 2025 sees 3.6% growth, excluding political advertising, down from 4.5% previously.
Industry analyst Michael Nathanson of MoffettNathanson has cut his forecast for advertising growth to 5.8% from 6.9%.
Magna said the combination of a strong, stable economy and ongoing media/advertising innovation drove record ad spend growth in 2024 of 12.4% (+9.9% excluding cyclical spending such as elections).
“Innovation will continue into 2025, and most economic fundamentals remain healthy,” said Vincent Létang, EVP, global market intelligence at Magna.
“However, confidence plays a crucial role in marketing and advertising investment decisions.
“The current – hopefully temporary – dip in confidence has already dampened the dynamics of the ad market, prompting us to revise our growth forecast for 2025.
“While total ad spend is still expected to grow in the mid-single digits, digital media ad sales will continue to experience high-single-digit growth.
“In contrast, most traditional media channels may face stagnating ad revenues this year.”
Magna analysts expect organic growth factors, such as media innovation, AI, retail media, and ad-supported streaming, will continue to enhance the effectiveness and efficiency of advertising formats, encouraging advertisers to maintain or expand budgets.
Digital Pure Players in Search, Retail Media, Social Media, Digital Video, and Digital Audio (such as Google, Meta, Amazon, and Spotify) will see advertising revenues grow by 9.6%.
However, ad sales of traditional media owners, including Television, Premium Long-Form Streaming, Audio Media, Publishing, OOH, and Cinema, may face challenges in this “uncertain environment” resulting in a decline of 1%.
The latest forecasts for Australia were put together in December.
The Australian advertising market will grow 3.8% in 2025, according to dentsu.
GroupM sees ad spend up 3.7% in 2025, from 2.2% in 2024. A federal election will likely lead to 150%-160% growth in the political category.
MAGNA was then more upbeat, forecasting ad spend up 6.5% in 2025 in Australia.
Australian media analyst Steve Allen, at Pearman, sees the overall market growing in 2025 by 7.95%.
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