Consumer Jitters Impact Ad Sales Growth

Tariff threats, market turbulence causing jitters

Magna, a prominent advertising forecaster and part of the Interpublic Group, has revised its growth prediction for 2025, lowering its expectations for U.S. ad sales growth from an earlier forecast of 4.9% to 4.3%. This adjustment reflects concerns over poor economic visibility and declining consumer confidence, which are seen as significant factors influencing marketing and advertising investments.

The decision to trim the forecast stems from a combination of economic uncertainties and a noticeable dip in confidence among both consumers and businesses. Reports indicate that consumer confidence, as measured by the Conference Board, fell sharply in March 2025 to 92.9, marking a four-month decline and reaching its lowest level since January 2021. 

This drop is attributed to worries about potential tariffs, stubbornly high inflation, and broader economic instability, all of which have rattled financial markets and consumer sentiment. Magna’s revised outlook aligns with these trends, suggesting that the advertising market is feeling the ripple effects of a cautious economic environment.

Despite the reduction, Magna notes that the updated 4.3% growth figure remains "solid by historical standards," especially when compared to the robust 12.4% growth in U.S. ad sales in 2024, which reached $380 billion—the highest in over two decades outside the 2021 post-COVID rebound. The firm highlights that while core economic fundamentals like job growth and retail sales remain healthy, the lack of clear economic visibility—exacerbated by factors such as proposed tariffs and market volatility—has prompted a more conservative stance. Vincent Létang, EVP of Global Market Intelligence at Magna, emphasized that confidence is a critical driver of advertising investment, and the current downturn, though hopefully temporary, has already softened market dynamics.

The forecast also breaks down performance across media sectors. Digital media, including platforms like Google, Meta, Amazon, and Spotify, is expected to see a strong 9.6% growth in ad revenue, reaching $293 billion, driven by innovation and demand in areas like search, social media, and streaming. Conversely, traditional media—such as television, publishing, and audio—is projected to face challenges, with a collective 1% revenue decline to $103 billion, as advertisers shift focus to short-term, performance-driven channels amid uncertainty.