IAB cuts ad forecast as tariffs take a bite out of spending

Tariffs are cutting into digital advertising: The IAB has revised its 2025 U.S. ad spend outlook downward, trimming projected growth from 7.3% to 5.7%. The cut reflects rising concern over tariffs and broader economic headwinds, with second-half growth now forecast at just 5.0%. Marketers are reacting in real time: 91% of buyers say tariffs are affecting budget decisions, forcing brands to prioritize flexibility and short-term performance. Sectors dependent on imported goods—automotive, retail and consumer electronics—are expected to feel the most pressure as they juggle higher costs and heightened performance demands.  “The marketplace reacts poorly to uncertainty,” IAB CEO David Cohen said in a statement. “Marketers are laser-focused on maintaining the utmost flexibility while driving short-term performance that delivers on their business goals.” Dig deeper: OpenAI is staffing up to turn ChatGPT into an ad platform Beyond tariffs, buyers cite macroeconomic headwinds (41%) and changing consumer habits (40%) as their top two overall challenges for the rest of the year. Customer acquisition remains the top priority (64%), while the push for repeat purchases has grown by five points since January. Social (+14.3%), retail media (+13.2%) and CTV (+11.4%) are all still on track for double-digit growth. Meanwhile, linear TV continues to slide, with spending now expected to fall 14.4% this year. Other traditional channels are projected to decline by 3.4%—more than double the forecast for January. Other predictions IAB’s numbers aren’t an outlier. eMarketer downgraded U.S. digital ad growth to 9.5%—two percentage points below its prior estimates—citing pressure from tariff-sensitive sectors such as retail and auto. The U.S. headwinds are good news for other nations. WARC increased its global forecast to 7.4%, describing it as a “pre-tariff windfall” that disproportionately benefited digital platforms. Dentsu remains bullish on digital world-wide, forecasting 7.9% growth globally, with retail media up 13.9% and programmatic and search continuing to expand. Dig deeper: Marketers must deliver value and trust to shoppers facing higher holiday prices These forecasts reveal two dynamics: Overall growth is moderating, but digital remains the driving force behind momentum. Variability across sectors and geographies is increasing, with greater volatility arising from trade policy, consumer sentiment, and platform evolution. Despite the tightening, sentiment isn’t all bleak. Buyers remain optimistic about digital’s ability to deliver measurable returns, underscoring the broader shift: in a trust-and-results economy, every ad dollar has to prove its worth. Fuel up with free marketing insights. Email: See terms. The post IAB cuts ad forecast as tariffs take a bite out of spending appeared first on MarTech.