IAB Upgrades Podcast Outlook Despite Economic Drag On Overall Ad Spending.

The IAB is tempering its outlook for the second half of the year, saying macroeconomic headwinds and tariff ramifications are top of mind for buyers, who expect to spend less than originally projected. The trade group says it now expects to see U.S. ad spending climb 5.7% from a year ago. While that remains a better-than-inflation increase, it is slightly reduced from the 7.3% growth forecast release in January with “mounting economic uncertainties” blamed as the culprit.

“The shadow of imposed/proposed tariffs looms large, with nearly all buyers expressing concern about their impact on advertising budgets,” the IAB says in a just-released report.

The good news is that the IAB says first-half projections met expectations. IAB calculates that total ad spending grew 7% during the first six months of the year. But it projects second-half spending will increase at a slower 5% pace.

“Amid tariff concerns, buyers are most challenged by macroeconomic headwinds and changing consumer habits,” says IAB. Four in ten buyers cited both factors. The other big concern said to be hampering spending increases is buyers’ difficulty in proving more media spending leads incremental sales gains. And a third of buyers also blamed the continued difficulty in cross-channel measurement as a challenge to increasing ad budgets.

But the biggest drag on the second half is out of media companies’ hands. IAB says nearly all buyers cite tariffs as an issue negatively affecting ad spend. When it surveyed buyers in February to capture their initial reactions to the tariffs, concern was just as widespread. But with greater clarity today, fewer are labeling their level of concern as “extreme” and more say they’re “somewhat concerned” as it is clearer which industries are most effected.

IAB VP Chris Bruderle says that led to an accelerating shift toward performance-driven media. “If consumers are pulling back, that means every single dollar of ad spend has to earn a return,” he says. “And that’s more important than ever for auto, retail, and consumer electronics advertisers.”

Facing these headwinds, IAB says buyers focused most on bottom-funnel tactics like social media to generate revenue with more of a focus on repeat purchases rather than branding messages with less of a mission to acquire new customers.

Podcast Outlook Upgraded

Ad budgets may be under more scrutiny than expected in the second half, but the IAB says it sees “solid increases” across most digital channels. That includes podcast ad spending, which the IAB now projects will climb 7.9% this year, a half-point increase from its outlook released in January.

Ad spending on digital audio not including podcasts is forecast to increase 4.7% this year, which is essentially even with the IAB’s outlook released earlier in the year.

The result of the reconfigured data means that IAB now believes both podcasting and other digital audio channels will each grab a 5% share of the overall ad pie this year. That combined 10% share of audio is a third larger than in its January forecast.

Though strong growth is still seen for online video and CTV, the IAB says it has seen “slight pullbacks” in ad spending to both versus previous projections. It now forecasts that online video ad spending will increase 7.4% this year, down from an 8.8% growth projected at the start of the year. CTV spending is predicted to jump 11.4% year-to-year, although that is down from the earlier 13.8% forecast. IAB says the declines are driven by small-to-medium ad spenders tightening budgets.

The revised forecast also predicts a somewhat weaker year for traditional media. The IAB now believes spending in several media channels — including AM/FM radio, print, out of home, and direct main —will dip 3.4% this year compared to a year ago. That is more than double the 1.5% decline it forecast earlier. But things are the worst for broadcast television, where the lack of political dollars is a particularly large drag. IAB now estimates linear TV spending will fall 14.4% this year.

The IAB September update is based on a survey of over 200 buyers at brands and agencies to understand their growth strategies, anticipated spending by channel, and the challenges they foresee. David Cohen, CEO of the IAB, says with tariff impacts starting to roll through the supply chain, there is “a lot of hesitance” as to where the economy and consumer sentiment will go over the coming months.

“The marketplace reacts poorly to uncertainty,” says Cohen. “The silver lining in all of this is that the overall attitude of buyers remains positive. Budgets may tighten somewhat, but they’re confident that digital media can deliver the measurable results they need.”

The IAB’s “2025 Outlook Study September Update” is available HERE.