UK marketing budgets have declined for the first time in four years amidst worldwide economic uncertainty, although the industry remains upbeat about the year ahead.
According to the Institute of Practitioners in Advertising’s (IPA) latest Bellwether report, which was release today (17 April), UK companies downwardly revised their total marketing budgets in the first quarter of 2025.
A net balance of -4.8% of firms cut their marketing budgets, compared to a net increase of +1.9% in the previous quarter. Just under a quarter of panel members reported a reduction in their marketing budgets (24.2%), compared to 19.4% indicating an increase.
According to the IPA, a more general decline in sales figures and overall revenue has led to a broad “reallocation” of marketing spend, with “other” marketing (-11.7%), which encompasses any paid-for marketing not specifically included in other Bellwether categories and market research (-10.55) taking a hit.
Main media also suffered, dropping to 6.7% down from -4.3%, with out-of-home (-18.9% vs. -12.8% previously), audio (-10.8%, vs. -17.8% previously), published brands (-8.3%, vs. -10.2% previously), and video (-1% vs. -10.7% previously) all recording contractions.
Despite this negative trend across the board, direct marketing proved resilient, with budgets growing by 9% (up from +5.6%). Events also grew (net balance of +5.4%, from +12.3%), as well as PR (net balance of +3.4%, from +6.8%), although both categories recorded weaker expansions than in the previous quarter. Sales promotions experienced its strongest quarter in almost two years (+8%, up from +4.1%).
Although Q1 proved difficult in growth terms, finalised data from Bellwether firms seems to indicate an imminent uptick for the rest of the 2025/26 financial period, with over 36% of respondents expecting an increase in their total marketing budgets, roughly double the 17.8% who foresee a decrease, resulting in a final net balance of +18.4%.
The latest data also revealed that 31% of respondents felt less optimistic about their own company’s financial outlook in Q1 compared to the previous quarter, while 18.1% reported a positive outlook.
As a result, the net balance fell to -12.9%, from -1.2% in Q4 2024, marking the lowest level since the closing quarter of 2022. Respondents recorded a pessimistic outlook for a third straight quarter.
Subscribe to Marketing Beat for free
Sign up here to get the latest agency-related news sent straight to your inbox each morning
A similar trend was observed at the industry level, where the net balance hit a ten-quarter low of -37.4%, down from -20.1% in the previous quarter, indicating a less confident start to the year.
“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,” 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.”
Bainsfair continued: “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.”
S&P Global Market Intelligence, which authored the report, has cut its 2025 GDP growth forecast to 0.6% from 1%, reflecting the weak economic performance in late 2024 and seen so far this year.
However, no changes have been made to adspend forecasts, with those for 2025 and 2026, at 1.3% and 1.8% respectively, already coming in below-trend given the weaker economic outlook since last year.
