UK marketing budgets experienced their first overall decline in four years during the opening quarter of 2025, as businesses opted for caution amidst the opening months of Donald Trump’s second presidential term and rising costs associated with National Insurance and minimum wage.
The latest IPA Bellwether Report found that a net balance of -4.8% of firms cut their marketing budgets – a significant swing from the +1.9% recorded in the previous quarter. A reduction in marketing budgets was reported by 24.2% of businesses, compared to 19.4% who increased spending.
The most significant decline came in the “other” marketing category, which represents any paid-for marketing not specifically included in other Bellwether categories. The net balance fell to a 16-quarter low of -11.7%, down from -4.2%. Market research also took a considerable hit, making a sharp drop from +3.1% in Q4 2024 to -10.5% in Q1 2025. The only other sector to receive cuts was the main media category, which reached -6.7%, further down from -4.3%. Within this, out-of-home, audio, published brands, and video all recorded contractions, with only the “other online advertising” category seeing a slight increase.
On a more positive note, direct marketing (+9%), sales promotions (+8%), events (+5.4%), and PR (+3.4%) all experienced budget expansion.
“In the face of President Trump frequently overturning political and economic norms, it’s understandable that more UK businesses have adopted a cautious, ‘wait and see’ approach to marketing spend this quarter. Even before the introduction of US tariffs on 2 April (thankfully now paused), the anticipation alone – combined with rising costs from National Insurance increases and the minimum wage hikes – was already influencing budget decisions,” said Paul Bainsfair, IPA Director General.
“We’re seeing a familiar pattern emerge in these challenging times: increased investment in short-term sales promotions and cuts to main media budgets. While these adjustments may offer immediate relief, they are not a sustainable path to long-term brand growth. That’s why it’s encouraging to see that, when looking ahead to annual marketing budget plans, many businesses are preparing to reinvest in main media, demonstrating a continued belief in the importance of brand building, even in uncertain times.
“It is also noteworthy that revisions to direct marketing budgets remain firmly in positive territory, reinforcing last quarter’s insight that AI is playing a growing role in enhancing both the personalisation and efficiency of this medium for UK companies.”
Despite revising their budgets down at the start of 2025, the outlook for the 2025/26 financial period is largely positive. Just over 36% of respondents predict an increase in their total marketing budgets, versus 17.8% who expect a decrease, with all categories except sales promotions expected to increase.
This sentiment, however, isn’t reflected in outlook for both company and industry-wide financial prospects. The latest data revealed that 31% of respondents felt less optimistic about their own company’s financial outlook, while 18.1% reported a positive outlook. The net balance of -12.9% is the lowest since Q4 2022, and represents a pessimistic outlook for the third straight quarter.
Industry-wide, the net balance hit a 10-quarter low of -37.4%, with 45% feeling less optimistic about the financial outlook for their industry, and just 7.6% expressing stronger growth forecasts.
“In spite of considerable macroeconomic headwinds for businesses, the Bellwether survey does provide some evidence of resilience among UK marketers,” said Maryam Baluch, Economist at S&P Global Market Intelligence and author of the Bellwether Report. “While the opening quarter of 2025 saw overall marketing budgets revised downwards, surveyed executives remain optimistic about the future on balance. Over 36% anticipate an increase in their marketing spend for the 2025/26 period, reflecting businesses’ commitment to driving growth and sales through volatile trading conditions. Increased budgets for direct marketing, events and sales promotions indicates a proactive and agile approach to overcoming these challenges.”
The report author, S&P Global Market Intelligence, has cut its 2025 GDP growth forecast to 0.6% from 1%, reflecting the weak economic performance in late 2024. Growth prospects for 2026 through to 2028 have also been lowered since the previous quarter. However, no changes have been made to adspend forecasts, with those for 2025 and 2026 at 1.3% and 1.8%, respectively.
