The latest IPA Bellwether survey data for the opening quarter of 2025 indicated that total marketing budgets were revised down across the UK, marking the first decrease in four years.
IPA Bellwether Q1 2025
A net balance of -4.8% of firms cut their marketing budgets, a marked shift from the previous quarter which recorded growth with a net balance of +1.9%.
Just under a quarter of panel members reported a reduction in their marketing budgets (24.2%), compared to 19.4% indicating an increase.
Anecdotal evidence suggested that declining sales and reduced revenue led to a reallocation of marketing spend.
The segment breakdown of tracked marketing categories highlighted that the most significant drag came from the “other” marketing category, which encompasses any paid-for marketing not specifically included in the survey.
The net balance fell to a 16-quarter low of -11.7%, down from -4.2%.
Market research also dropped sharply, as signalled by the net balance coming in at -10.5%, down sharply from +3.1% in the prior quarter.
The only other sector to experience cuts in marketing budgets was the main media category, which recorded a net balance of -6.7%, down from -4.3%.
Further analysis of this segment revealed that the downward budget revisions were nearly widespread.
All of the following recorded contractions:
- Out-of-home (-18.9% vs. -12.8% previously)
- Audio (-10.8%, vs. -17.8% previously)
- Published brands (-8.3%, vs. -10.2% previously)
- Video (-1.0% vs. -10.7% previously)
Conversely, the other online advertising category saw a slight increase in marketing budgets (+0.7%, vs. +2.2% previously).
Despite the overall downturn, there were standout performers in the opening quarter, with direct marketing leading the way.
This category experienced a solid budget expansion, with the net balance rising to +9.0% (up from +5.6%).
Budgets were also revised higher for events (net balance of +5.4%, from +12.3%) and PR (net balance of +3.4%, from +6.8%), although both categories recorded weaker expansions than in the previous quarter.
Finally, sales promotions budgets were again revised upwards in the opening quarter of 2025, with a net balance of +8.0%, up from +4.1%, indicating the strongest increase in almost two years.
Budget plans for 2025/2026
While marketing executives revised their budgets down at the start of 2025, finalised data from Bellwether firms indicated largely positive forecasts for the 2025/26 financial period, albeit slightly less optimistic than the preliminary results suggested.
Just over 36% of respondents expect an increase in their total marketing budgets, roughly double the 17.8% who foresee a decrease.
This results in a final net balance of +18.4%, signalling strong optimism among marketing executives regarding their advertising spending budgets for the coming year.
Underlying data revealed that marketing budgets for all monitored categories, with the exception of sales promotions, are expected to increase.
The highest level of optimism was recorded for events, which registered a net balance of +16.6%, followed by direct marketing at +12.9%.
Projected budget growth for the other marketing tools was comparatively more modest. This includes PR (+3.3%), market research (+3.1%) and main media (+2.0%), with a subdued year-ahead outlook for the latter highlighting some caution regarding big-ticket campaigns.
Opportunities and Threats
Bellwether panellists continued to report a myriad of opportunities amid the existence of significant risks that could impact business performance in the coming year.
Growth prospects were tempered by concerns over the ongoing -of-living crisis and geopolitical tensions around the globe, creating a climate of uncertainty for businesses.
Additionally, rapidly moving changes in US trade policy have shrouded the future in unpredictability, making it difficult for companies to plan effectively and pushing many to withdraw into “wait-and-see” mode.
With the Bellwether survey field dates taking place prior to the April 2 announcement of tariffs from the US, panellists were already wary of potential increases in the costs of exporting and importing due to new trade barriers, as well as the knock-on effects on product pricing and customer demand, even citing the potential for a global economic downturn.
Other concerns expressed by companies regarding geopolitical instability surrounded supply chain disruption, weaker consumer confidence and a return of high inflation.
Nevertheless, the integration of AI was emphasised as a significant opportunity for growth and operational efficiency gains.
Respondents highlighted the potential for AI to enhance operational processes, personalise customer experiences, and drive innovation, contributing to a positive outlook for some firms.
There was also optimism regarding the adoption of new technologies and sustainable practices.
For instance, the increasing popularity of electric vehicles (EVs), the introduction of new models, and improvements in EV-friendly infrastructure are expected to drive new growth in domestic manufacturing industries, particularly if infrastructure investment expands.
There was also confidence regarding the housing market, with companies hopeful that increased homebuilding and reductions
Paul Bainsfair, IPA Director General, said: “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.
“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.”
Maryam Baluch, Economist at S&P Global Market Intelligence, said: “In the face of considerable macroeconomic headwinds for businesses, the Bellwether survey does provide some evidence of resilience among UK marketers.
“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.”