Advertising at risk: Course correction, but when and how much?

US tariffs and regulations are sparing no one in 2025—Microsoft, the ‘winner’ of the earnings quarter, is still making plans to protect its European business in a doomsday scenario.

Hyperscalers who have piled their eggs into cloud cannot afford a misstep—this is driving record capex to satisfy cloud demand. We expect to see lumpiness in Q2-Q3, feeding investors’ worries.

Revenue impacts have been felt first at US retail, softening ad demand, with the UK relatively protected for now. Despite relief at the 90-day ‘reset’ with China, economic and political uncertainty remains the story of the year.

Two-year-old Temu is mounting a serious challenge to Amazon's 20-year-old Prime value proposition. Temu's extreme low prices at the cost of speed threaten to erode consumer perceptions of Prime's value and convenience.

US tariffs and de minimis changes make the UK more attractive as a destination. Greater competition for sales and advertising will continue in the near term as the platforms adjust.

Temu and Amazon spent billions on ads in the UK in 2024 in the battle for buyers and sellers. Smaller brands and retailers may need to boost brand advertising to fend off the platforms.

From the depths of 2023, advertising expenditure on legacy media rose moderately in 2024, on the back of an uptick in real private consumer expenditure thanks to lower inflation and reduced costs of credit—the outlook for legacy media is about the same for 2025.

Online stands apart from legacy media due to the growth of ecommerce—driven by both goods (over 26% of retail sales) and services such as travel, as well as intense competition among platforms (Amazon, Shein, Temu)—with double-digit growth in 2024 set to continue in 2025.

Television remains the most effective medium for brand advertisers—despite the decline in viewing—with broadcasters’ digital innovation and SVOD ad tiers providing greater targeting alongside the mass broadcast reach.