Despite global economic headwinds and tightening ad budgets, the Interactive Advertising Bureau (IAB) has issued a revised forecast that points to a surprising winner in the second half of the year: podcast advertising.
In its September 2025 Outlook Study, the IAB confirmed that while overall U.S. advertising spending is expected to grow at a slightly slower pace than previously predicted, podcasting remains one of the fastest-growing digital channels, outperforming earlier projections.
Key Takeaways from the IAB Report
- Overall ad spending in the U.S. is now projected to grow 5.7% YoY – down from January’s 7.3% growth forecast.
- Macroeconomic uncertainty and tariff concerns remain top challenges for advertisers.
- Podcast ad spending is now forecasted to grow 7.9% in 2025, up half a point from the start of the year.
- Digital audio’s share of the ad market is expected to hit 10%, combining podcasts and other streaming audio.
- Linear TV spending faces the sharpest decline, predicted to drop 14.4% YoY, largely due to a lack of political ad dollars.
Economic Headwinds: Why Budgets Are Tightening
The IAB report highlights the dual pressure faced by advertisers:
- Tariff Impact: Nearly all buyers surveyed expressed concern over how tariffs are affecting ad budgets and pricing.
- Consumer Pullback: Changes in consumer spending habits are forcing marketers to scrutinize every dollar spent.
- Measurement Challenges: Difficulty proving ROI and cross-channel attribution is preventing some advertisers from ramping up budgets.
According to IAB VP Chris Bruderle, this environment is accelerating the shift toward performance-driven media:
“If consumers are pulling back, that means every single dollar of ad spend has to earn a return,” Bruderle explains. “Auto, retail, and consumer electronics advertisers are leaning harder than ever on bottom-funnel channels.”
Shift Toward Bottom-Funnel Advertising
In response to economic uncertainty, advertisers are prioritizing revenue-generating channels over brand awareness campaigns.
- Social media ads remain a top choice for driving repeat purchases.
- Performance campaigns are favored over expensive branding efforts.
- Customer retention is being prioritized over acquiring entirely new customers.
This reallocation reflects a trend across industries where ROI-driven marketing strategies dominate the conversation.
Podcast Advertising: A Bright Spot for Marketers
Despite overall caution, the IAB notes “solid increases” across most digital channels, with podcasts leading the way:
- Podcast ad spend forecast: +7.9% YoY (up from +7.4% in January)
- Digital audio excluding podcasts: +4.7% YoY (flat versus earlier projections)
- Combined audio share: Podcasts + streaming audio now account for 10% of total ad spend — one-third higher than January’s forecast
This upward revision signals marketer confidence in the medium’s effectiveness and its ability to deliver measurable results.
Other digital channels are seeing growth — but not at the rate originally expected:
