Marketing Budgets up Marginally in Q4 2024 as Caution Remains, Reveals IPA Bellwether Report

After the uncertainty surrounding the Autumn Budget led firms to hit the pause button in the third quarter, the latest IPA Bellwether Report, published today (16 January 2025) highlighted renewed marketing budget growth across the UK in the final three months of 2024.

Over a fifth (21.7%) of panellists reported an increase in their total marketing budgets during the fourth quarter, which was higher than the almost 19.9% who made cuts, resulting in a net balance of +1.9% (up from 0.0% in Q3). This meant that upward revisions to advertising spend have been registered in 14 out of the last 15 quarters.

While the latest net balance was positive overall and marked an improvement from the previous quarter, it was the second-lowest figure recorded since the beginning of 2021 and pointed to a still-cautious approach among businesses towards spending. However, there was a strong sense of optimism towards the 2025/26 marketing outlook, with many companies expecting budget increases despite ongoing global geopolitical and economic uncertainties and fresh costing challenges for UK firms following the announced changes in the Autumn Budget to employers' National Insurance contributions.

Growth or decline by category in Q4 2024

Of the seven monitored sub-categories, Events emerged as the top-performer in the final quarter, achieving a robust 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%). Main media advertising saw a fresh reduction in Q4 (net balance of -4.3%, down from +4.3%), as did the category tracking any Other form of paid-for marketing activity not already accounted for (-4.2, up from -9.7%).

The detailed breakdown of the main media segment indicated that the drags were broad, with Audio (net balance of -17.4%, from -10.0%), Out of home (-12.8%, from -15.7%), Video (-10.7%, from +11.7%) and Published brands (-10.2%, from -4.4%) posting contractions. These more-than-offset growth to the 'Other online' segment (+2.2%, from -1.4%).

Budget plans for 2025/2026

The latest Bellwether survey indicated a promising outlook for marketing expenditure in the 2025/26 financial year as a net balance of +25.6% of companies anticipate an upward revision of their total marketing budgets.

The preliminary data showed that marketing executives anticipate increased spending for all the seven monitored categories, although the results provided insight into which areas firms will be centring their plans around. Direct marketing is expected to be the strongest area of growth, with a net balance of +15.6% of panellists provisionally estimating higher spending here. Events marketing had the second-strongest outlook, with a robust net balance of +15.5%.

Firms were confident of being able to spend more on PR, with a net balance of +8.3% predicting budget growth here. Initial budget setting for Main media and Market research were more modest, with net balances of +6.3% and +3.2%, respectively. Sales promotions was an area which received the least amount of attention in firms' preliminary budget setting, with a net balance of just 1.0% expecting to spend more here in the 2025/26 financial year.

Firms less pessimistic towards company prospects

Following the gloominess seen in the Q3 survey, UK companies continued to express downbeat sentiment towards their own business outlook in the latest quarter. Nevertheless, a net balance of -1.2% revealed only a slight degree of pessimism and a slight improvement from -2.2% previously.

In contrast, firms' assessment of their industry as a whole was bleaker than in the previous quarter. A net balance of -20.1% of panellists foresee a deterioration in financial prospects at the industry level, representing the highest degree of pessimism since the Q4 2022. The underlying data revealed that 34.9% of panellists anticipate a worsening industry outlook, while 14.8% expect improvements.

Adspend forecasts revised up for 2026

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%. Expectations that US imports of goods will be subject to tariffs was a key reason for this reduction, with the US being the UK's largest single export market. This is a considerable headwind to the UK manufacturing industry, which is already set to be challenged by higher labour taxes from April as changes to employers' National Insurance contributions come into play.  

In tandem with still-high interest rates and ongoing cost-of-living pressures, which continue to weigh on consumer confidence, adspend growth is also forecast to be modest in 2025. S&P Global Market Intelligence's prediction for UK adspend growth was nevertheless unchanged for 2025 at 1.3%.

For 2026 onwards, GDP growth forecasts are little-changed from the previous Bellwether report, with small upward revisions in each case. As for adspend, growth is set to recover to a more robust pace from 2026, with the forecast being lifted to 1.8% for this year, from the 1.6% previously estimated. Increases of 2.0% are pencilled in for 2027 and 2028, which are in line with trend-rate growth for adspend.

Commenting on the latest survey:

Paul Bainsfair, IPA director general said, "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.

“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.

“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.”

Joe Hayes, principal economist at S&P Global Market Intelligence and author of the IPA Bellwether Report said, “The pause in UK marketing budget growth seen in the third quarter, was very much that, a pause. 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.”

Further industry commentary on the Q4 2024 IPA Bellwether Report:

Bill Doris, VP analytics, EMEA, EssenceMediacom & IPA Media Research Advisory Group chair said, “Good news for Market research! The latest IPA Bellwether Report shows a resurgence in the research sector. Budgets bounced back in Q4 2024, and we're seeing a continued upswing heading into 2025. Businesses are doubling down on research into their brands, consumers and markets, and the future looks bright for Market research as we head into 2025."

Gill Jarvie, client services director, Republic of Media and IPA chair for Scotland, “It is heartening to see a return to growth in the latest Bellwether Report, although it’s disappointing that this doesn’t seem to have followed through into Main media where there was a net balance of -4.3% (down from +4.3% in Q3). Audio took the biggest hit (-17.4%) but the trend was downward across most media. On a positive note, the outlook for Main media is sitting at +6.4% for 2025/26, although this is conservative compared to an overall marketing sector outlook uplift of +25.6%.”

Helen Blakley, managing director, Genesis and IPA chair for Northern Ireland, “It is encouraging to see an anticipated increase, albeit a shallow one, to budgets for 2025 and whilst cautious, there is still a sense of optimism as we embark upon 2025.  There are many things for the industry to navigate this year.  Firstly, the increased operating costs from the National Insurance raise and then later in the year the introduction of the new advertising legislation for HFSS/Less Healthy Foods.  We are still to understand the intricacies on the latter as the ASA/CAP work through the implementation guidance, but going live from October 2025, this will be a key area to navigate for the Food & Drink sector and clients. Thankfully, problem solving is a core strength of our sector, so we will work in partnership with our clients to navigate what lies ahead and may affect the latter half of 2025 activities in this area.”

Alex Uprichard, managing director, IMA and IPA City Head for Leeds, Yorkshire and Humberside, “Like many, we are looking to 2025 with a sense of optimism and seeing this supported with UK marketing spend returning to growth in Q4 2024 is a positive boost. That said, there is still some degree of uncertainty as to the impact of new government policy, and with businesses having to bear the brunt of additional costs, 2025 is sure to be a year where marketing and agencies have to evidence why investment matters more so than ever. This is no doubt a factor in the continued pattern of redistributing Main media investment into the direct communication and instant gratification that can benefit both the consumer and the brand via events and promotional activity. However, we know from experience, sustainable growth means priming future audiences as much as harvesting existing demand that balance and agencies that can plan and activate across the whole journey will be ever more critical in deciding the winners and losers in the coming year.”

Sue Benson, managing director, The Behaviours Agency and IPA City Head for Manchester & North West, “The latest IPA Bellwether results are a mixed bag for agencies in the North West. While the overall rise in marketing budgets is encouraging, the cautious approach to Main media advertising continues to be a concern. The growth in Events and Direct marketing aligns with what many of us are seeing on the ground – clients are eager to connect directly with customers and drive tangible results. Hopefully, the optimism shown in the 2025/26 budget plans will translate into bolder main media investment as we head into the year.”

Samantha Smith, MD, April Six (Mobility) and IPA City Head for Bristol, South West & Wales, “The Q4 2024 IPA Bellwether Report reflects the continued uncertainty within the business community, whether caused by economic, technological or political uncertainty (or a combination of all three). We see big differences across different business sectors, with high-value purchases being impacted the most. This trend doesn’t look as if it’s going to change over H1 of 2025, or at least until stability and direction are clearer and consumer confidence returns. Spending on Main media is somewhat concerning, with any growth we have seen coming from channels that are traditionally easier to measure such as DM and Events, but account for a lower percentage of total spend.”

Gareth Evans, MD, Cogent and IPA City Head for Birmingham and the Midlands, “It’s pleasing to see a return to growth for the sector after a tumultuous 2024 – justifiably tempered with caution, as the growth is slow. It’s great to see Event marketing and direct channels enjoying a rich vein of form as brands demand results they can measure; perhaps we’ll now see other media catch up as focus broadens to the bold brand ideas that will really drive those results over the longer term. AI-driven personalisation is helping agencies to get smarter and faster – but it’s not yet landing the killer creative blows. Excitingly, that remains our focus in 2025.”