Dive Brief:
- The IAB revised its 2025 full-year U.S. advertising spend forecast down from 7.3% growth to 5.7%, based on continued concerns about tariffs and other macroeconomic pressures, in a new report.
- In September, more marketers (42%) said they are focusing on performance or lower-funnel campaigns compared to February (35%). More marketers are also shifting spend to channels with better measurement (39% vs. 29%) and negotiating more flexible contracts (36% vs. 21%).
- Marketers are also prioritizing loyalty in a tough economic environment, with motivating repeat purchases becoming an increasingly important part of media investments, up five percentage points, to 21%, since January.
Dive Insight:
Earlier in the year, when tariffs were largely theoretical, IAB expected overall advertising spending increases to be in the 7% range compared to 2024. Now that tariffs have become policy, media buyers are much more concerned, which is evident in the lower spending forecast. IAB’s revision is based on a survey of more than 200 media buyers, more than 90% of whom had concerns about how the tariffs would affect their media budgets, customer acquisition and retention strategies.
As macroeconomic uncertainties continue, marketers are once again falling back on performance-driven marketing strategies that often favor digital media spend over more broad-based, brand building linear TV investments. Indeed, IAB’s latest forecast anticipates social media will grow 14.3% in 2025, retail media 13.2% and CTV 11.4%.
“In our January report, we saw real concerns about the economy, and a shift toward performance-driven media. Now that shift is accelerating. If consumers are pulling back, that means every single dollar of ad spend has to earn a return,” said Chris Bruderle, vice president, industry insights and content strategy at IAB, in a statement.
Buyers are intending to focus on media where the return can be best quantified, i.e. digital vs. traditional, linear media. However, there are signs that even here, challenges may be growing. While social media’s forecast reflects an increase since earlier in the year, the forecast for connected TV has been revised down by 2.4 percentage points. The projection for commerce media has also decreased by 2.4 percentage points since the beginning of the year, as the channel continues to face challenges with measurement and fragmentation.
A shift to performance marketing has, in the past, been a short-term strategy as marketing best practices recognize that more broad-based brand building is imperative for the long-term health of a brand.
