Another U.S. 2025 ad sales forecast has been lowered due to rising inflation and the overall lack of visibility into the economic situation in the year ahead, hampering business and consumer confidence.
IPG Mediabrands-owned intelligence firm Magna slightly lowered its prediction for 2025 U.S. ad sales growth to 4.3% from 4.9%, which it projected in December, in a new report on Wednesday. The firm anticipates that the lack of visibility into how the economic landscape will pan out in 2025, as well as a “risk of a trade war,” may cause marketing and advertising budget freezes and cuts, it wrote in the report.
This development follows consultancy Madison and Wall lowering its 2025 ad revenue growth forecast to 3.6%, excluding political advertising spend, from its prediction for 4.5% growth made in December. That 4.5% growth prediction was already a decrease from the firm’s prior forecast calling for 5.3% growth. Brian Wieser, who leads Madison and Wall, wrote that the revision is due to factors including U.S. President Donald Trump’s imposed increased tariffs that restrict free trade and proposed travel bans that could limit foreign workers.
Magna’s lowered forecast comes after the U.S. experienced one of its highest-performing years in terms of ad sales growth in 2024—the firm said domestic ad sales reached $380 billion, reflecting a 12.4% increase year-over-year (and a 9.9% increase excluding cyclical events), which was the second best performance in 25 years next to the rebound of 2021 that saw U.S. ad sales grow 25% (and 28% excluding cyclical events). In the fourth quarter of 2024, ad sales rose by 13% year-over-year, per the report. The 2024 gains were driven by advertising growth in search and commerce media, social media and streaming, Magna wrote.
“Innovation will continue into 2025, and most economic fundamentals remain healthy,” said Vincent Létang, executive VP of global market intelligence at Magna and co-author of Wednesday’s report. “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 U.S. to revise our growth forecast for 2025.”
Deteriorating business and consumer confidence
New Kantar research released on Monday found that 80% of U.S. consumers are concerned about the impact Trump’s imposed and enacted increased tariffs will have on their finances and spending and as a result are “restraining spending.” Worsening consumer confidence, particularly Hispanic consumers pulling back on spending due to threats of tariffs, has already fueled early warning signs of a years-long anticipated recession.
Magna pointed out in its report a deterioration in business and consumer confidence—the firm wrote that U.S. consumers are “shaken” by the recent “sharp inflation” in egg prices (the cost of a carton of eggs reached an all-time high of $6 in February), almost doubling from a year prior, while significant U.S. stock market declines in the past month have rattled Wall Street.
The stock market has recently started to see some gains following hope that Trump’s tariffs may not be as expansive as previously thought. Nonetheless, Magna said in its report that its new forecast is not hinged on political policies, noting the egg shortage causing inflation was due to “bird flu outbreaks and the inelasticity of demand for eggs.” Despite Magna reporting that overall food costs did not increase in the first quarter of 2025, but stayed around 3%, consumers were still unnerved by rising egg prices, coupled with the stock market woes.
Impact on ad budgets
Uncertainty is not good for advertising.
More than anything, the uncertainty surrounding how many of Trump’s proposed increased tariffs will eventually pass, and for how long they will be in place, is causing disruption to advertising budgets, Kantar Americas CEO and Global Chief Client Officer Wayne Levings had told Ad Age.
“Business in and of itself prefers certainty, even if that certainty means a high tariff or whatever,” Levings had said, “because it allows them to plan, to be able to make investment choices, to be able to launch campaigns.”
Levings had said some brands are already delaying marketing decisions due to the unpredictability.
Increased tariffs would be the most disruptive to consumer packaged goods companies across food and beverage and personal care, as well as quick-service restaurants and the automotive industry, Magna reported. A global trade war would likely cause international supply chain disruptions and price inflation, making these industries in particular vulnerable, according to Magna.
“CPG companies may face the dilemma of raising consumer prices or seeing reduced margins, which may affect their marketing budgets,” the firm wrote.
Magna still anticipates that the U.S. ad revenues of digital pure players in search, retail media, social media, digital video and digital audio (such as Google, Meta and Amazon) will grow by nearly 10% to reach $293 billion in 2025. Search and retail ad formats in the U.S. are expected to grow by 10% to $167 billion this year, while social media formats will rise by 11% to $92 billion, according to the report.
Traditional media owners in the U.S., including TV and publishing, “are typically more vulnerable when a lack of business visibility leads some marketers to prioritize short-term KPIs and lower-funnel channels,” Magna said in its report, calling for domestic ad sales for this market to decline by 1% to $103 billion in 2025.
Cross-platform national TV sales in 2025 are expected to be stable year-over-year (down 1% to $46 billion), “thanks to demand for streaming and interest in live sports events." Streaming sales will also remain strong, with Magna predicting a 14% increase to $12.4 billion in U.S. ad sales in 2025, the firm wrote.
