Ad market faces slowdown: Auto, retail, and tech sectors cut budgets

New Delhi: A new study from WARC has found that global advertising spend is now on course to grow 6.7% this year to $1.15 trillion, a downgrade of almost one percentage point (pp) from WARC’s November forecast due to growing market volatility. A further cut of 0.7pp has been applied to 2026, downrating growth to 6.3%.

The underlying factors for these downward revisions are wide-ranging, but core among them is the rising risk of stagflation – or outright recession – across major economies, compounded by heightened costs being levied on trade by the US. Tightening regulation in the European Union, squeezed margins and low business and consumer confidence are also contributing factors.

James McDonald, Director of Data, Intelligence & Forecasting, WARC, and author of the report, 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.

“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.”

WARC 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 tech sectors set to bear brunt of tariff impacts

Automotive ad spend down 7.4% this year as manufacturing stalls and key players pare back on brand-building

The automotive industry contributes significantly to the revenues of leading ad agencies, spending $54.8bn last year, of which more than one in five (22.5%) dollars went to premium video formats – predominantly spots. Budgets are shifting away from linear TV and towards digital platforms, however, with more than half (51.1%) of automotive spend worldwide now going to search and social media.

Retailers set to lower ad spend by 5.3% as margins tighten; US retailers are vulnerable to disruption among Chinese suppliers 

Retail is the largest sector WARC monitors, with projected ad spend of $162.7bn this year equivalent to 14.1% of the global ad market. This total represents a fall of 5.3% from 2024 levels of spend, however, mostly reflective of the looming impacts of tariffs on supply chains

Ad growth set to halve among tech and electronic brands as barriers to trade impair access to components

The tech and electronics sector spent $84.3bn on advertising last year, a bounceback of 25.0% following two years of decline (due to rising interest rates affecting tech startups) which was propelled by increased demand for microchips from AI and more fluid supply chains. WARC forecasts a 6.2% ad spend growth in this sector to $89.5bn, a downgrade from the +13.9% forecast in November in large part reflective of new tariffs targeted at semiconductors. 

Online platforms shrug off regulatory pressures

Search to account for more than a fifth (21.7%) of the ad market, with spend rising 8.0% to $250.0bn this year despite regulatory threats

Social media – the largest single advertising medium globally – is poised to account for a quarter of all ad spend this year

Retail media set to be joint-fastest growing advertising medium this year, though trade disruption threatens ad receipts from consumer packaged goods (CPG) brands

WARC believes that retail media will be the joint-fastest growing medium this year, at +15.4%. 

This rate is ahead of the wider pure-play internet market (+10.1%) and more than double the total global growth rate, resulting in retail media’s share of global spend rising to 15.5% this year – equivalent to $178.7 bn. Disruption to this ecosystem could broadly dampen ad spend within the consumer packaged goods (CPG) sector, though.