WARC Global Ad Spend Forecast Q1 2026 update: Implications of the Gulf energy crisis

A new study from WARC, the experts in marketing effectiveness, has found that a prolonged conflict in the Middle East could threaten $49.9bn of global advertising growth this year, and $93.9bn over the next two years. A milder crisis still risks $19.0bn this year, with residual impacts lasting well into 2027. 

James McDonald, Director of Data, Intelligence & Forecasting, WARC, and author of the research, says: “Even in a contained scenario, an oil shock of this nature acts like a tax on consumers – pushing up prices while eroding real spending power. In a more prolonged or severe disruption, we move into stagflation territory, where sectors like travel, automotive, food and consumer electronics take a direct hit from both rising costs and falling demand.  

“The net effect is a meaningful squeeze on discretionary spend that puts up to $50bn of anticipated ad market growth at risk this year, as brands pare back their media investment in a bid to preserve thinning margins.” 

WARC’s latest global projections are based on data aggregated from 100 markets worldwide and leverage a proprietary neural network which projects advertising investment trends based on over two million data points. 

Scenario A: Short-lived, contained shock; temporary oil spike, Hormuz disruption avoided

• WARC’s baseline scenario, which results in 10.4% ad market growth in 2026 
• Risks 0.2pp of global economic growth, adds 0.5pp to inflation, and dampens real household spend by 0.3pp 
• Travel & transport sector decreases ad spend by 3.5%, though the impact is more muted on other categories 

Our baseline scenario predicts global ad market growth of 10.4% to a total of $1.32trn this year, an upgrade of 1.3pp from our last forecast in December owing to strong performances from the major online platforms carrying into the start of the new year. 

This scenario assumes an oil price holding around $100 per barrel for up to six months, before normalising in the fourth quarter. Second-order inflation is limited in this scenario, and central banks, mindful of economic fragility, do not tighten fiscal policy. The effect on household incomes is relatively modest, with the main impact felt through higher energy bills in importing markets. 

In this scenario, the product categories identified as being most susceptible to the shock – automotive (+6.8%), food (+10.3%), leisure & entertainment (+11.4%) and technology & electronics (+13.7%) – are mostly expected to record ad spend growth in line with the global rate. 

The outlier is travel & transport, where spend is set to fall by 3.5% – equivalent to a net cut of $1.3bn. WARC understands that global airlines and tourism firms active in the Middle East are already holding back media budgets, and while these may be reallocated later in the year, high fuel prices and a squeeze on family incomes present serious headwinds for the sector. 

Scenario B: An extended shock; oil elevated for 1-3 years, partial supply disruption

• Cuts 1.6pp from ad market growth this year, equivalent to $19.0bn dollars 
• Sustains into 2027, removing a further $13.3bn from ad market growth – resulting in the erosion of up to $32.3bn from global growth over the next two years 
• Removes 0.5pp from global GDP and adds 1.1pp to inflation resulting in modest real household spend 

While this scenario is at the more severe end of those proposed by central banks, it is consistent with economic and advertising trends recorded during the 1991 Gulf War. It assumes that an oil price above $100 per barrel sustains over the two-year forecast period, resulting in monetary tightening by central banks in a bid to combat stagflation. 

Real household spend is muted in this scenario, and the pass-through from the supply side shock hits the consumer-packaged goods (CPG) sector – particularly among products with supply chains dependent on grain and fertiliser – much harder than in our baseline scenario. 

Scenario B presents a greater risk to the advertising and media industry, as consumer purchasing power is limited and businesses act to protect margins in a challenging trading environment. Here, we foresee ad growth in the food sector halving compared to our baseline, with consumer technology and leisure & entertainment spend growing behind the total market. 

Scenario C: A severe, systemic shock; prolonged closure of Strait of Hormuz, oil reaching $150 per barrel 

• A prolonged Gulf crisis removes 7.3pp and $93.9bn from ad market growth over the next two years 
• Cuts 2.0pp from global economic expansion, adds 3.0pp to inflation, and real household spend falls year-on-year 
• Ad spend growth flat or falling among over-exposed product categories 

The prolonged Gulf crisis scenario assumes a persistent supply shock with strong second-round inflation, comparable to the 1973 oil crisis. This results in aggressive monetary tightening across key markets as central banks attempt to prevent mounting recessionary risks. 

Consumer confidence collapses in this scenario, and real household spend falls year-on-year. As a result, ad spend growth is either flat – food (+0.7%), leisure & entertainment (+0.2%) – or falling; travel & transport could cut budgets by 5.8%.  

Taken together, the global ad market would still grow 6.2% this year, but this is 4.2pp behind our baseline, equivalent to a cut of $49.9bn. The impacts of this severe market shock would carry into 2027, resulting in a further $44.0bn of lost growth versus our baseline. 

Tech slowdown hinders social media momentum, but growth expected across the board 

• New, platform-level spend data in 20 key markets shows tech sector set to ease social spend over the forecast period 
• Instagram (+26.9%), Facebook (+19.2%), and TikTok (+24.9%) all expected to record healthy gains this year 
• Social spend among the US tech sector set to cool as AI boom eases 
• X expected to record growth of 5.6% this year, buoyed by heightened user and advertiser activity around the US midterms in November

Social media trends update 

Working with Omdia, WARC Media is for the first time publishing quarterly, category-level ad spend data for eight social media platforms – Facebook, Instagram, LinkedIn, Pinterest, Reddit, Snap, TikTok, and X – across 20 key markets. 

Analysis of the social media industry’s growth prospects show that Meta has seen investment with its properties soar since 2023, driven by advances in AI-enhanced campaign management tools such as Advantage+ and gains from cross-border advertisers based in markets like China.  

This momentum will continue into 2026, with annual ad revenue forecast to reach $101.6bn for Instagram (+26.9% year-on-year) and $137.8bn for Facebook (+19.2%). However, WARC Media anticipates more measured gains in 2027, with Instagram’s year-on-year growth slipping below 20% for the first time (+15.5%) and Facebook returning to single-digit gains (+9.6%). 

TikTok is forecast to maintain global ad spend growth in excess of 20% over the next two years, driven in part by a wave of investment from UK advertisers (+54.8%) this year. Total revenue is expected to reach $43.1bn next year, but the rate of growth is set to ease by more than 16pp between 2025 and 2027. 

TikTok ad revenue from technology & electronics advertisers worldwide was up 83.5% year-on-year to $5.0bn in 2025. This year, in contrast, increases in tech spend with the platform will drop to single digits – caused in large part by growth of only 5.4% in the all-important US market as a cooldown in the AI market carries through to ad budgets.   

Reddit’s global ad business continues to grow rapidly and is forecast to double from $2.1bn in 2025 to $4.1bn in 2027. The US accounts for more than three-quarters of that revenue, but the platform is making swift gains elsewhere: ad spend by UK brands is forecast to rise 86.9% year-on-year in 2026, and grow 2.5x in Australia.   

The tech category is vital to Reddit’s performance and is forecast to account for more than a quarter (25.3%) of total worldwide ad revenue in 2027. It has benefitted from marketers targeting Reddit’s role in product research, as well as the use of conversations on the platform to inform large language model (LLM) responses.   

After four consecutive years of ad revenue decline following the acquisition by Elon Musk, X’s ad business finally returned to growth in 2025 – rising 1.6% to $1.8bn. The platform’s continued overtures to marketers are forecast to bear further fruit in the coming years, with ad revenue set to grow to nearly $2.0bn in 2027.   

This sum remains some way short of the $4.5bn earned by Twitter in 2021, with many brands still eschewing X over concerns about brand suitability – compounded by use of its Grok AI tool to non-consensually alter images of individuals, including children. An anticipated increase in activity around the US midterms is expected to lift X’s ad revenue this year, however.