MUMBAI: The global advertising industry is set for a bumpier ride than expected thanks to Donald Trump's recent trade pronouncements and the retaliatory measures by the countries  affected and the continuing conflicts in certain parts of the world. 

With this background in mind, Warc has slashed its ad spend growth forecast for 2025 by almost a percentage point to 6.7 per cent. The revised estimate pegs global ad spend at $1.15 trillion, down $20 billion over the next two years, thanks to economic stagnation, trade tariffs, and regulatory upheaval. The outlook for 2026 has also taken a hit, with growth now expected at 6.3 per cent.

Warc director of data, intelligence & forecasting James Mcdonald put it bluntly: "The ad market is feeling the squeeze from tariffs, economic stagnation, and regulatory crackdowns, prompting brands to rein in budgets. Despite the volatility, digital ad spend remains robust, with Alphabet, Amazon and Meta set to control over half the market by 2029."

Automakers are slamming the brakes on ad budgets, cutting spend by 7.4 per cent as manufacturing stalls and supply chain woes deepen. Key players like General Motors and Ford have already slashed marketing budgets, focusing more on digital and social channels over traditional TV spots. Meanwhile, tariffs on Mexican, Canadian, and Chinese car imports threaten to worsen the crunch, with 40.7 per cent of the industry at risk, per the European Automobile Manufacturers Association.

Retailers, too, are tightening belts. The sector, the biggest spender in global advertising, is set to cut ad budgets by 5.3 per cent this year, as rising costs and trade barriers squeeze margins. Chinese disruptors like Temu and Shein, which fuelled a retail ad boom in 2024, are expected to dial back their spending due to new trade restrictions.

Tech brands, once the ad market's golden child, are now facing a slowdown. The sector's projected growth has been halved, down to 6.2 per cent, as new tariffs on semiconductors hit supply chains. Warc had previously forecast a 13.9 per cent jump in tech ad spend—now it's looking at a much cooler landscape.

Despite the broader slowdown, digital advertising remains a money-spinner. Search advertising will grab 21.7 per cent of global ad spend this year, rising eight per cent to $250 billion. Social media, the biggest single advertising channel, will rake in $286.2 billion—almost a quarter of all ad spend—powered by TikTok (+23.6 per cent), Instagram (+17 per cent) and Facebook (+8.6 per cent).

Retail media, the rising star, is set to be one of the fastest-growing advertising formats, with a 15.4 per cent surge this year. However, trade barriers could dent ad receipts from consumer goods brands that rely on global supply chains. 

Yet, there are storm clouds ahead. The EU has slapped Apple and Google with Digital Markets Act violations, putting billions in ad revenues at risk. UK courts could soon allow consumers to opt out of personalised ads, threatening the backbone of search and social media advertising.

The US remains a bright spot, with ad spend expected to rise 5.7 per cent to $451.9 billion. But that’s a far cry from the 13.1 per cent growth seen in 2024. Warc predicts a stronger 2026, with a 6.5 per cent uptick, thanks to the FIFA World Cup and US midterms.

China’s ad market, however, is losing steam. Growth is slowing to 5.3 per cent this year to $205.5 billion - compared to growth of 7.1 per cent recorded in 2024 - as weak domestic demand takes its toll. This year’s growth rate equates to a 3.5 per cent rise in real terms.

Europe’s major economies, meanwhile, are teetering. The UK’s ad market is still growing—up 7.1 per cent to $52.6 billion—but inflation-adjusted figures tell a less rosy story, with real growth at just 5 per cent. Germany, bogged down by economic sluggishness, is heading for a 2.1 per cent decline in ad spend, while Japan is bracing for a 2 per cent drop. Japan’s market is set to grow 3.3 per cent this year when measured in local currency, demonstrating the current strength of the greenback against the yen.

Trade wars, tariffs, and economic turmoil are reshaping global ad spend, forcing brands to rethink strategies. The digital giants remain dominant, but regulatory pressures are mounting. In a market full of uncertainty, one thing’s clear—advertisers will need to stay agile to keep ahead of the curve.