• by Laurie Sullivan  @lauriesullivan, April 22, 2025

Analysts have begun lowering ecommerce and paid-media industry forecasts as tariff policies persist and consumer sentiment continues to fall.

New Street Research in a note published Tuesday, revised revenue and advertising models downward. The analyst firm expects forecasts for U.S. and global ecommerce -- as well as for digital advertising, excluding China -- to fall.

U.S. ecommerce growth for 2025 is now projected at 4.5% -- down from 7.5% -- and globally, excluding China, dropping to 6.5% from 9%.

The firm also lowered its estimate for digital advertising growth. U.S. growth is expected to fall to 5.9%, down from 11.3%. Globally, excluding China, is expected to drop to 6.8%, New Street analysts wrote in the report.

"At this stage, we assume a more stable environment going into 2026 and bounce-back year helped by easy comparisons," per New Street analysts. "Our 2027 estimates also increase as we have a more favorable view of long-term trends owing to continued growth of new digital-native business growth."

Rather than focus on predicting advertising and ecommerce performance, the report explains how analysts often look at how closely these activities are related to the growth of the overall economy measured by Gross Domestic Product (GDP), which is what New Street Research did.

Paid media, digital and offline advertising, has the highest correlation and a positive relationship with growth, as do search and all digital media, but most of the remainder -- such as social media ads, retail media ads and ecommerce -- have limited data and tracking records and often see secular drivers overtake cyclical ones, according to the report.

Tinuiti had a similar view on tariffs. Andy Taylor, vice president of research at the independent ad agency, expects the company’s Q2 2025 Digital Ads Benchmark ads report to look quite different than the Q1 2025 Digital Ads Benchmark report released this week.

“Clients are mapping out how tariffs will impact them based on where they manufacture their products,” Taylor said. “There’s a lot of uncertainty as to when the policies might change, but most advertisers are evaluating their marketing and advertising to determine what channels perform best for them.”

Some advertisers are looking to shift production to countries that might be less impacted by tariffs, as well as reevaluating budgets, he said.

Q1 2025’s report does not show any impact from tariffs, but he expects that to look much different in the second quarter.

Google, Meta, and Amazon ad spend trends in the first quarter tracked in line with expectations prior to the quarter given year-ago comparisons.

Amazon Sponsored Products spending growth rose to 11%, with click growth on the format growing double digits for the second straight quarter. Despite calls to boycott Amazon based on concerns of it rolling back its focus on diversity, equity, and inclusion (DEI) initiatives, Amazon advertisers did not see a noticeable impact from these efforts in the first quarter.

Google’s ability to continue to produce advertising clicks ad the industry enters the world of generative AI-powered search and answer engines, the company’s search click growth accelerated from 3% in Q4 to 4% in Q1.

Ad buys in Google Shopping fell in Q1 2025, but click growth improved, compared with the prior quarter.

Click growth for Google Shopping ads, including Performance Max campaigns, jumped from 1% in the fourth quarter to 9% year-over-year growth in Q1.

Amazon's presence in Google shopping advertising auctions remained similar to a year earlier as its impression share of the median retailer trended close to 60% throughout Q1 2025 just as it did in Q1 2024.

Across retail brands running Performance Max and standard Shopping campaigns, PMax campaigns accounted for 53% of Google shopping ad spending for the median retailer, down from 69% during the Q4 holiday season. Early in 2025, some advertisers shifted their ad spending back to standard Shopping campaigns, in part for the additional controls they provide.

Still, more than 90% of advertisers using Google Shopping use Performance Max to some extent.

“Advertisers are looking for more control than what Pmax offers, despite Google rolling out a lot of tools during the past couple of years to let advertisers trigger campaigns that can show through the platform,” Taylor said. “But it’s not as transparent as Google Shopping.”