Tariffs and uncertainty to pull down ad spend, analyst predicts

Global tariffs and economic uncertainty will slow down the US ad economy, industry analyst Brian Wieser wrote on Tuesday.

US advertising revenue will grow just 3.6% in 2025, Wieser, a former GroupM economic analyst who is now CFA, CEO and principal of the advisory firm Madison and Wall, wrote in a report published on Tuesday, down from the 4.5% growth he predicted in December.

Wieser attributed the change to “falling productivity associated with reduced international trade and uncertainty in terms of the domestic business environment” and increased inflation.

“What we can see is a certainty of additional negative factors, including volatility around trade policies and a more extreme threat to supply chains and corporate decision-making than we previously expected,” he wrote.

In December, Wieser predicted that the US ad industry would end 2024 with roughly 9% growth, although on Tuesday he adjusted that figure to 8.6%, noting that growth “ended up slowing fairly meaningfully.”

Slowdown ahead: Fears of a recession have already begun to spook Madison Avenue. According to a February survey of “advertising decision-makers,” 94% of US advertisers said they were concerned about the impact of tariffs on ad spending, according to the Interactive Advertising Bureau (IAB). Just under half (45%) told the IAB they planned to reduce their ad spend because of it.

“Due to the potential impact of the recently imposed tariffs, the 2025 ad market is expected to tighten, adding to overall economic uncertainty,” the industry trade group said in a report about the results. “This impact will likely be most noticeable mid-year, with the retail, consumer electronics, and media sectors seeing the largest reductions.”

Tariffs on imports from Canada and Mexico, which have been temporarily halted, are expected to severely hamper US automakers, whose budgets have an outsized impact on the advertising economy, representing between 7% and 13% of the major holding companies’ global revenue base, according to an estimate from Wieser.

There could also be effects on the pharmaceutical industry, another major ad spender, with the threat of additional tariffs on the European Union. In 2024, more than one-third of US pharmaceutical products were imported, with much of that coming from Germany, Ireland, and Switzerland, according to figures from the financial services firm ING cited by CNBC. The industry was projected to contribute more than $30 billion in ad spend last year in the US, according to eMarketer.

Beyond that, HHS Secretary Robert F. Kennedy Jr. has vocally criticized the category and has repeatedly said he would like to ban pharmaceutical television ads.With that said, there are no “active signs” to indicate a ban on pharmaceutical advertising yet, Wieser wrote.

Look alive: Other earlier predictions about ad spend growth have been rosier. In December, GroupM projected ad revenue growth of 7.7% this year, reaching roughly $1.1 trillion. The agency will update its forecast in June, Kate Scott-Dawkins, global president of business intelligence at GroupM, previously told Marketing Brew.