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Today, Magna released its spring update to its U.S. Ad Forecast report for 2025, and the results focus on what the market looks like during an uncertain time.
Magna found that U.S. ad sales reached $380 billion in 2024, as fourth-quarter earnings were strong across the board. This reflects a more than 12.4% increase (+9.9% excluding cyclical spending). However, Magna, which already expected a down year in 2025, is reducing that forecast even more.
“Confidence plays a crucial role in marketing and advertising investment decisions. The current—hopefully temporary—dip in confidence has already dampened the dynamics of the ad market, prompting U.S. to revise our growth forecast for 2025,” Vincent Létang, evp, global market intelligence, Magna, and co-author of the report, said in a statement. “While total ad spend is still expected to grow in the mid-single digits, digital media ad sales will continue to experience high-single-digit growth. In contrast, most traditional media channels may face stagnating ad revenues this year.”
Here are some of the standout points and key takeaways from the report:
Lack of visibility could slow down the ad market
Magna predicts that the lack of visibility and risk of a trade war may cause marketing and advertising budgets to either freeze or result in cuts in industries that are vulnerable to global trade, supply chain disruptions, and consumer confidence issues. That includes consumer packaged goods companies, in food, drinks, and personal care, as well as quick-service restaurants and the automotive industry.
These industries account for a sizeable share of ad spend in the U.S., but there are still large, growing industry verticals that are not particularly sensitive to global costs or economic fluctuations, like pharmaceuticals, retail, tech/telecoms, entertainment, finance, and insurance.
Moreover, endemic and organic growth factors (media innovation, retail media, ad-supported streaming) that drove ad spend faster than the general economic growth in recent years will continue to make advertising formats more effective, efficient, and attractive to brands and encourage advertisers to maintain or develop advertising budgets.
Considering the various business and economic factors, Magna has reduced its 2025 ad market growth forecast from +4.9% in December 2024 to +4.3%. Non-cyclical ad sales will grow by +6.7% (previous forecast +7.3%).
Still, some categories will continue with robust revenues. For instance, digital pure players (DPP) in search, retail media, social media, digital video, and digital audio (such as Google, Meta, Amazon, and Spotify) will see ad revenue grow by +9.6% to $293 billion.
Traditional media owners are the most vulnerable
Magna points out that traditional media owners (TMO) (categories that fall under television, premium long-form streaming, audio media, publishing, out-of-home advertising, and cinema) are more vulnerable when a lack of business visibility leads some marketers to prioritize short-term KPIs and lower-funnel channels.
Because of this, Magna expects TMOs’ non-cyclical ad sales to decline by -1% to $103 billion, while cross-platform TV sales stabilize, with growth in ad-supported streaming (+14%) helping to offset an ongoing decline in linear ad sales (-7%).
Ad-supported streaming—which includes FAST channels and all premium long-form streaming platforms like Hulu, Peacock, Netflix, Prime, etc.—benefits from growing reach and viewership as 75% of all streaming hours are now ad-supported, up from 58% a year ago, per Magna.
Among other highlights, sports will continue to grow for TV with content such as the college football playoffs, the WNBA on Prime Video, and exclusive NBA games on Peacock. Meanwhile, out-of-home (OOH) ad sales are predicted to grow by more than 4.8% this year to $10 billion, driven by double-digit growth in digital OOH revenues.
However, other traditional media channels may struggle in 2025. For instance, Magna forecasts a decrease of -2% for audio media and publishing ad revenues, with digital ad formats not being able to offset declines on legacy formats. Magna predicts that audio media will account for $16 billion, while publishing will account for $15 billion.
Despite uncertain times, the economy is healthy
The Magna report explores how business and consumer confidence deteriorated since January due to several factors, such as the stock market recording decreases and the cost of food rising.
Though overall food costs did not rise in Q1—staying around 3%—U.S. consumers were shaken by the sharp inflation in eggs, which is typically a food staple of American households.
The combination caused a drop in the consumer confidence index, which decreased from 74 in December to 58 in March, close to the all-time low recorded in June 2022 when gas hit $5 per gallon in the wake of the Ukraine invasion.
When it comes to the economic outlook on the U.S. ad market, the research notes how the core economic fundamentals like consumer price index (CPI) inflation, job market, retail sales, and corporate profits stayed healthy.
Additionally, international trade tensions don’t necessarily lead to extensive economic damage. However, the current confidence crisis has already impacted economic activity in Q1, and Magna expects negative GDP growth for the first quarter and cautious investment and marketing spending in the months ahead.
