With UK marketing budget growth having stalled in the third quarter of 2024, amidst uncertainty around the current Labour government’s first Budget announcement, growth returned during the final three months of 2024.
According to the latest IPA Bellwether Report, 21.7% of marketers increased their total marketing budgets in the fourth quarter, compared to 19.9% who made cuts, resulting in a net balance of +1.9% (up from 0.0% in Q3). Though an improvement over the previous quarter, it was still the second-lowest figure recorded since the beginning of 2021, signalling continued caution.
“The pause in UK marketing budget growth seen in the third quarter, was very much that, a pause,” said Joe Hayes, Principal Economist at S&P Global Market Intelligence and author of the IPA Bellwether Report. “It’s encouraging to see there was a resumption of growth at the end of 2024, meaning 14 of the past 15 quarters have seen increases. That said, the post-Autumn Budget rebound was a shallow one, indicating that companies trod carefully as they assess the impact that some of the announced policies would have on their bottom lines.”
Breaking budget growth down by category, events was the top-performer in Q4, achieving a net balance of +12.3% (up from +9.9% in Q3). PR came in at second with a net balance of +6.8% of firms growing their budgets (down from +11.0% in Q3). The remaining three segments to see growth were direct marketing (net balance of +5.6%, down from +9.7), sales promotions (+4.1%, up from +3.2), and market research (+3.1%, up from -1.5%).
Meanwhile, main media advertising (net balance of -4.3%, down from +4.3%) and the “other” categories (-4.2, up from -9.7%) both recorded contractions.
“Given the significant economic and geopolitical challenges that UK companies are facing, this latest IPA Bellwether Report paints an understandably cautious picture. However, it is encouraging to see that, despite these headwinds, UK companies are increasing their overall marketing budgets,” said Paul Bainsfair, IPA Director General.
“Digging into the detail, it’s disappointing to see reductions in main media budgets, which remain the most effective channel for sustaining and growing brands in the long term. Cuts to this category are not uncommon in tougher times given their need for greater financial contribution, which is also why we’ll often see concurrent increases by marketers to other shorter-term media. All of which reflects companies’ concerns on profitability following the Budget.
“Meanwhile, the rise in investment towards direct marketing – driven by technological advancements and AI’s ability to enable hyper-personalisation – is an interesting development.”
The outlook is looking positive for those surveyed, with +25.6% of companies anticipating an upward revision of their total marketing budgets in the 2025/26 financial year. However, companies continued to express downbeat sentiment toward their own business outlook – with a net balance of -1.2% recorded (a slight improvement over the -2.2% of Q3) – and have grown more pessimistic about the industry as a whole (-20.1% of panellists predict a deterioration in financial prospects at industry level).
Since the previous Bellwether survey, S&P Global Market Intelligence has narrowly reduced its annual UK GDP growth forecast for 2025 to 1.0%, from 1.3%. But its UK adspend growth prediction remains unchanged at 1.3%.
“Looking ahead, it’s promising that both UK companies’ provisional budget plans for 2025/26 and S&P Global’s ad spend forecasts are trending upward. Advertising remains a vital tool for brand growth, economic development, fostering competition, and driving innovation. As such, companies shouldn’t overlook the importance of sustained investment,” added Bainsfair.
