Marketers to slash display spend by 30% as AI and CTV redefine engagement: Forrester

Marketers are set to slash display ad budgets by 30% in 2026 as consumers increasingly move away from the open web, according to Forrester’s newly released predictions for B2C marketing, media and advertising, and consumer trends. As audiences shift toward AI-driven discovery and entertainment-first platforms, the research firm warns that marketers and agencies will need to overhaul how they create, deliver, and monetise engagement.

“Despite consumers’ scepticism about genAI, they will continue to turn to AI-generated summaries and chat interfaces designed to return answers,” Forrester noted. The shift will shrink addressable audiences and lower click-through rates, prompting brands to redirect spend toward connected TV (CTV), streaming audio, and social video.

Offline touchpoints are also making a comeback. According to Forrester’s 2025 data, 52% of US online adults actively pursue in-person experiences, a sign that digital fatigue is setting in. “Digital experiences aren’t going away, but consumers in 2026 will more intentionally choose to disconnect online to connect offline,” the firm said.

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Meanwhile, price hikes will test brand loyalty. As companies use AI to optimise pricing amid tariff pressures and margin squeezes, Forrester predicts that up to a third of customers of transactional brands will walk away.

Marketers, however, will not be left without tools. Forrester expects the debut of three AI-native B2C martech platforms in 2026 - one from a major vendor and two from startups - offering end-to-end capabilities in insight generation, campaign creation, and optimisation. 

Forrester also forecasts a decline in marketers’ confidence in measurement, falling by 7% from 2025, with only 72% of B2C marketing leaders likely to feel assured about their ability to measure business impact in 2026.

Agencies face structural upheaval

Forrester’s Predictions 2026: Marketing agencies report paints an equally transformative picture for agencies. “Once singularly focused client partners, marketing agencies are forgoing their franchise to act as agents on behalf of clients. Instead, they will become marketing purveyors that operate across several business modes,” Forrester wrote.

The analysis highlights how years of pressures - from insourcing and procurement constraints to AI-driven automation - have reshaped agency economics. Retainers have given way to low-margin, project-based work, forcing firms to diversify revenue streams through execution services, managed solutions, proprietary products, and strategic partnerships. 

Among the key predictions is that a major holding company merger or acquisition will spark a wave of agency reviews. Forrester suggests that Havas may acquire dentsu’s international operations, or that WPP could be restructured for sale to private equity or Accenture. Either outcome could trigger a mass reassessment, with 85% of US B2C marketing executives planning to review their media agencies in 2026.

“This marks a significant uptick from assignments governed by three-to-five-year MSAs - six major brands reviewed media assignments in 2021, and 20 did so in 2023. When the big six condense to the big three, their emphasis on technology, data, media scale, and products will further push agencies to operate as purveyors as much as providers,” Forrester said.

Principal media will account for a third of total media under management. Agencies are increasingly moving from agents to principals, reselling inventory with margins and guarantees. “While critics raise concerns about transparency, supporters argue that discounts and guarantees with disclosure make principal media a viable option,” Forrester wrote.

“Agencies such as Omnicom, Publicis Groupe, and WPP are already leaning into this trend, integrating AI into their media trading strategies. More importantly, agencies like dentsu, Havas Media Network, Horizon Media, and Tinuiti have recently developed principal media offerings, crossing the threshold of buyer to owner. We predict that more will follow,” it added. 

Automation will drive a 15% reduction in agency jobs. Following an 8% workforce cut in 2025, agencies will further streamline operations next year. “By 2028, we’ll double profits and halve the people,” said one global holding company CEO cited in the report. Forrester predicts that agencies will pivot from selling services to selling solutions, with remuneration shifting to outcome-based and product-led models.

“The result is an industry in rapid change - and by the end of 2026, marketing agencies will be materially changed,” Forrester concluded.

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