Published on The Wall Street Journal
Magna now expects U.S. ad sales to increase 4.3% this year, down from its earlier forecast of 4.9%
A major ad industry forecaster has downgraded its U.S. growth projection for 2025 because of a lack of economic visibility and a decline in consumer confidence that it said could be a drag on marketing and advertising budgets in the short term.
Magna, a research unit that is part of Interpublic Group’s IPG Mediabrands, said Wednesday that it expects U.S. ad sales to reach $397 billion this year, an increase of 4.3% from 2024 when factoring in cyclical events such as last year’s election season. The company in December released a forecast predicting growth of 4.9% in 2025.
The updated forecast, like the earlier one, anticipates a slowdown from U.S. advertising sales in 2024, which reached $380 billion and marked a 12.4% increase from the previous year, boosted by political campaigns and spending around the Olympics.
Excluding cyclical events, Magna says U.S. ad spending rose 9.9% last year. It now forecasts that U.S. ad revenue will grow 6.7% in 2025, trimming its previous estimate that noncyclical ad revenue would rise 7.3%.
“Confidence plays a crucial role in marketing and advertising investment decisions,” Vincent Létang, executive vice president of global market intelligence at Magna, said in the report. “The current—hopefully temporary—dip in confidence has already dampened the dynamics of the ad market, prompting us to revise our growth forecast for 2025.”
Magna also said that the lack of visibility and the risk of a trade war could cause marketing and ad budgets to see freezes or cuts in industries that are vulnerable to global trade, supply-chain disruptions and consumer confidence issues. Those could include quick-service restaurants and the consumer-packaged goods, food, drinks, personal care and automotive sectors, which are exposed to international supply chains and global prices.
Still, Magna said some factors will help the advertising business this year.
“Despite the challenges posed by economic uncertainty, organic growth factors—such as media innovation, AI, retail media and ad-supported streaming—will continue to enhance the effectiveness and efficiency of advertising formats, encouraging advertisers to maintain or expand their budgets,” the report said.