Key Points:
- IAB lowered its 2025 U.S. ad spend forecast to 5.7% growth, down from 7.3%, citing tariff concerns and broader economic headwinds.
- Digital channels remain resilient, with social media up 14.3%, retail media up 13.2%, and connected TV up 11.4%.
- Traditional media continues to decline, with linear TV expected to fall 14.4% and other formats down 3.4% compared with January projections.
Advertisers are pulling back on planned spending in the second half of 2025 amid growing concerns over tariffs and broader economic challenges, according to new data from the Interactive Advertising Bureau.
In its “2025 Outlook Study September Update,” the IAB revised its full-year U.S. ad spend forecast down 1.6 percentage points to 5.7 percent growth, from the 7.3 percent growth projected earlier this year.
Spending trends in the first six months aligned with expectations at 7 percent growth. But sentiment has weakened heading into the fall, with second-half projections slipping to 5 percent. The report is based on a survey of more than 200 brand and agency buyers about their strategies, channel allocations, and near-term concerns.
The downward shift is being driven largely by uncertainty surrounding tariffs. The report found 91 percent of buyers are concerned about how tariffs will affect their media budgets. Industries that rely heavily on imported products, including automotive, retail, and consumer electronics, are expected to be the hardest hit. Between 62 percent and 69 percent of buyers said those sectors would bear the brunt of cost pressures, forcing shifts in strategy.
“The marketplace reacts poorly to uncertainty. With tariff impacts starting to roll through the supply chain, there is a lot of hesitance as to where the economy and consumer sentiment will go over the coming months,” said David Cohen, the CEO of IAB. “Marketers are laser-focused on maintaining the utmost flexibility while driving short-term performance that delivers on their business goals.”
Beyond tariffs, 41 percent of buyers cited macroeconomic headwinds and 40 percent pointed to shifting consumer habits as additional challenges for the rest of the year.
The focus on performance is pushing advertisers toward digital platforms with measurable returns. Customer acquisition remains the top objective for 64 percent of buyers, with a growing emphasis on repeat purchases, up eight percentage points from last year and five points from IAB’s January survey.
Digital channels are still expected to see double-digit growth despite the weaker overall outlook. Social media is forecast to rise 14.3 percent, retail media 13.2 percent, and connected TV 11.4 percent.
“In our January report, we saw real concerns about the economy, and a shift toward performance-driven media. Now that shift is accelerating,” said Chris Bruderle, the Vice President of Industry Insights & Content Strategy at IAB. “If consumers are pulling back, that means every single dollar of ad spend has to earn a return — and that’s more important than ever for auto, retail, and consumer electronics advertisers.”
Traditional media continues to lose share, with linear television spend projected to fall 14.4 percent, steeper than the 12.7 percent decline forecast in January. Other legacy formats are expected to shrink 3.4 percent, more than double the 1.5 percent decline previously anticipated.
“The silver lining in all of this is that the overall attitude of buyers remains positive,” Cohen said. “Budgets may tighten somewhat, but they’re confident that digital media can deliver the measurable results they need. This update to our projections should help the industry make the most of the remainder of 2025 while keeping an eye on 2026.”
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