A stronger than expected first quarter was seen for U.S. advertising, and that’s led respected media and marketing financial analyst Brian Wieser to update his firm’s quarterly domestic advertising model. Wieser explains that it is being adjusted “to reflect revised expectations” for the remainder of 2025.
As Wieser’s Madison & Wall noted last week, U.S. advertising in the first quarter of this year was robust, growing by 9.7%. Sequentially, Q1 2025 represented a slight acceleration relative to Q4 2024’s 6.8% level, Wieser says. However, he adds, “it’s even more impressive given the difficult comparable” of Q1 2024’s 10.5%.
“The quarter’s results and our interpretation of current economic data cause us to raise our projections for the remainder of the year,” Wieser shares.
Madison & Wall now forecasts U.S. ad growth of 6.0% for the second quarter and for the full year, ex-political.
“This full year figure was raised from an expectation of 3.6% growth at the time of our last update in March,” Wieser notes. At that time, Wieser wrote about how policy volatility in the U.S. might impact the advertising market. “It amplified a generally negative view on the advertising market initiated with our December 2024 forecast,” Wieser says. “We anticipated an environment that might look like stagflation with poor or negative ‘real’ growth but high levels of inflation. Although we continue to believe this take is accurate in the mid- to long-run, the current reality has delivered a relatively significant turn of fortune for the overall industry, at least for the present time.”
Wieser could frame this period slightly less favorably by looking at the industry including political advertising in both periods, as advertising grew by “only” 9% on this basis in Q1, a deceleration from the 13% pace of growth observed in Q4 2024. Yet, he notes, “either way the trends were much stronger than expected.”
Going beyond the present moment, on a mid-to-long-term basis, Wieser and his team believe tariffs make an economy less efficient and “retard real, underlying growth.”
He also believes that when supply chains involving factories and workers are disrupted in meaningful ways, not only is there less efficiency but there will be higher costs.
“When economic policies are uncertain, capital investment from all sources will be restrained,” Wieser says. “When governments threaten to tax foreign capital at higher rates, it will repatriate or find other places to invest. When policy outcomes are potentially determined by personal preferences of individual politicians, capital-inefficient lobbying becomes more important and, again, investment will be restrained by those who might otherwise be the most efficient companies. A high deficit building on a very high debt load with high interest expense rates places entities with those deficits and debt loads in a potentially precarious position unless the deficits are, in fact, capable of funding meaningfully faster growth than might otherwise occur. Political interference in the process around the setting of interest rates can be damaging.”
At the same time, “selectively” reduced regulatory oversight or reduced tax rates are not likely to have much of a positive benefit on economic growth, he says — at least when compared with the benefits that follow from a focus on innovation, productivity enhancement, global integration and efficient capital allocation.
“All of this causes us to maintain a broader outlook that is somewhat pessimistic – with significant downside risks that could occur in the event that the administration’s policies are fully implemented, and foreign suppliers of capital shift their investments elsewhere,” Wieser says. “The relationship between economic activity and advertising is imprecise of course, at best providing a headwind or a tailwind to the real variables that drive advertising growth — primarily the evolution of categories of advertisers with relatively higher or relatively lower levels of competitive intensity leading to relatively higher or lower amounts of spending on advertising.”
LACKLUSTER MOVEMENT FOR TV
Looking at platform-by-platform ad activity, TV was “roughly flat” for the first quarter overall (+0.1%) with national (including the pure-play digital platforms with Connected TV inventory, excluding YouTube) up by 2%.
Here’s the bad news: Local TV was down by 5.4% on an ex-political basis.
“Importantly, because of the increasingly blurry lines between what is considered national and what is considered local (i.e. a connected TV buy on a national platform may tap into the local markets that local stations otherwise served exclusively), we are increasingly of the view that the combined local and national total, ex-political, is the right headline number for the medium,” Wieser concludes.
For all of 2025, Wieser expects national TV media owners to decline by 2.7%, partially impacted by difficult comparables associated with the Olympics last year but primarily impacted by ongoing losses of revenue share within the industry.
While Wieser does not speak of Radio, he does look at all-Audio ad dollars. His assessment? Ad growth was up “only slightly” in the quarter. And, that brings “yet another period of stability despite the growing appeal of digital platforms such as Spotify’s.”
And, as with television, “despite the medium’s relative effectiveness, we continue to expect ongoing low single digit declines because of its lack of favorability among marketers (arguably, podcasts notwithstanding).”
