IPA Bellwether Report Reveals UK Marketing Budgets Bounce Back in Q2, Reversing Previous Decline

Above: IPA director general Paul Bainsfair

Following a reduction in marketing budgets for the first time in four years in the opening quarter, the latest IPA Bellwether Report revealed a robust rebound in advertising spending. Despite the challenges stemming from geopolitical and economic uncertainty, increased operational costs following April’s tax changes, as well as a general lack of confidence across the marketplace, the report highlights how firms adopted a resilient mindset and expanded their marketing expenditure.

A net balance of +5.5% of panellists reported a rise in their total marketing budgets for the second quarter of 2025, a notable improvement from -4.8% in the prior quarter. The uptick in advertising budgets was historically strong and the most significant since Q2 2024. Underlying data indicated that 22.7% of panellists registered a rise, compared to 17.2% reporting a reduction in their budgets.

Growth or decline by category in Q2 2025

A breakdown of spending plans revealed that marketing executives raised their expenditures for sales promotions and direct marketing to the greatest degrees, with the respective net balances rising from +8.0% in Q1 to +9.4% in Q2 and from +9.0% in Q1 to +9.1% in Q2.

Marketing budgets were also raised for events and public relations, although both segments recorded a slight decline in their respective net balances, from +5.4% in Q1 to +3.9% in Q2 and +3.4% in Q1 to +2.7% in Q2. Meanwhile, after signalling a reduction in the previous two quarters, budgets for the big-ticket main media category remained unchanged on the quarter at 0.0% (net balance at -6.7% previously).

A granular breakdown of this main media category revealed that growth in marketing budgets was limited to other online advertising channels, with the net balance rising from 0.7% to +2.2%, while video marketing spend was stable (net balance up from -1.0%). All remaining categories recorded quarterly downward revisions, with the out-of-home sub-segment leading the decline with the net balance recording -8.9% (up from -18.9 previously). Audio and published brands recorded net balances of -6.3% (-10.8% in Q1) and -4.8% (-8.3% in Q1), respectively. However, all five sub-categories noted net balances rising across the board.

Market research and the “other” category were the only two tracked areas that experienced reductions to their advertising budgets, with net balances at -7.0% and -8.7%, respectively. That said, the degree to which expenditure was lowered was weaker than that observed in Q1, when the net balances recorded -10.5% and -11.7%, respectively.

Financial prospects for upcoming month less downbeat in Q2

According to the latest Bellwether survey, panellists were notably less pessimistic when evaluating financial prospects at both the company and industry level, following a quarter of deep negativity at the start of the year.

At the company level, underlying data revealed that 21.9% of panel members expressed increased optimism compared to three months ago, just shy of the 24.9% indicating pessimism. Although the resulting net balance remained in sub-zero territory for the fourth consecutive quarter, it improved significantly from Q1's reading of -12.9% to -3.0%.

In contrast, survey respondents remained severely downbeat towards industry-wide financial prospects, continuing a trend of pessimism that has persisted since Q4 2021. While the respective net balance edged up from the previous quarter's recent low of -37.4% to -26.2% in Q2, the latest reading still highlighted considerable negativity at a broader level. Specifically, 36.9% of firms were less upbeat towards financial prospects than they were three months ago, overshadowing the mere 10.7% that were more positive.

Adspend growth forecasts for 2025 revised down in Q2

The UK economy has already faced several challenges in the first half of 2025, yet growth is still anticipated, indicating a level of resilience. However, S&P Global Market Intelligence’s expectations remain subdued. GDP is projected to grow by 0.8% this year, slightly higher than the 0.6% forecast in the previous quarter. This adjustment was influenced by stronger-than-expected growth in the opening quarter of the year, although rising job losses and a general sense of economic uncertainty keep our forecast in subdued territory. Consequently, surveyed respondents have indicated a loss in appetite for advertising. Forecasts for adspend in 2025 have been revised down from 1.3% to 0.7%, but 2026 is expected to see a recovery with adspend growth to more-than-double to 1.6%.

Inflation is expected to remain above the central bank's 2% target throughout the year, which poses additional risks to growth. Moreover, uncertainties related to recent tariff changes from the US and ongoing geopolitical tensions in the Middle East are likely to dampen business and household sentiment. Conditions are not predicted to become more supportive in 2026, with annual GDP growth anticipated to also come in at 0.8%, slightly below the 1.0% forecast in the previous Bellwether report. The GDP growth forecasts for 2027 and 2028 are higher, coming in at 1.4%, a fraction above the previous projections. Additionally, marketing budgets for these two years are also anticipated to increase, with expectations rising slightly from 2.0% to 2.1%.

Commenting on the latest survey:

Paul Bainsfair, IPA Director General:

"Looking at the broader picture, we welcome the news that UK companies have revised their marketing spend upwards in Q2. Advertising is a fundamental part of the Creative Industries, one of the eight sectors prioritised by the Industrial Strategy as key to the UK's growth. This uptick in marketing investment not only contributes to the overall health of the UK economy but, for businesses with the foresight to invest strategically, it can also lead to significant growth and competitive advantage.

"However, a closer look at this quarter's findings reveals that the increase in spend is largely driven by tactical approaches. While agility is crucial in today’s fast-paced market, it’s essential that short-term activation efforts are balanced with sustained investment in long-term, emotionally-driven brand-building strategies. By striking this balance, companies can position themselves not only for immediate success but also for enduring growth in an increasingly competitive landscape."

Maryam Baluch, Economist at S&P Global Market Intelligence and author of the Bellwether Report:

"2025 Q2 was a more upbeat month for UK marketing budgeteers, with spending rising markedly, reversing the previous quarter's decline - the first in four years. This rebound reflects businesses' renewed commitment to growing their brands, even amid ongoing economic challenges.

"Notably, budgets for sales promotions and direct marketing saw the biggest gains, indicating that companies are balancing short-term revenue and cashflow gains – likely necessitated by the intensification of global headwinds – with strategic and targeted marketing initiatives to help drive longer-term success. Less pronounced growth in events and PR budgets highlight a comprehensive yet measured approach.

"Furthermore, reduced pessimism regarding financial prospects at both the company and industry levels suggests that businesses are becoming more acclimatised to current market conditions."

Jim Kelly, Deputy MD Head of Planning, Story and IPA Chair for Scotland:

“I’m encouraged that there’s been some rebound in marketing budgets despite the significant challenges facing businesses on both the domestic and global fronts. In this context, boosts in spending for any category need to be welcomed. So increased investment in direct marketing, sales promotion and events recognise the importance of engaging prospects and customers.

“However, any confidence remains fragile. Whilst there’s slightly less pessimism around financial prospects at both company and industry level this quarter, the continuing economic uncertainty has seen S&P Global revise down their adspend forecast to just +0.7% for 2025. We need to see a sharp reversal in this trend to move beyond anything other than very cautious optimism.”

James Ray, CEO, Armadillo and IPA Chair for England & Wales:

“It’s great to see a positive shift in this quarter’s report, with marketing budgets expanding despite (or even because of) ongoing uncertainly and flux in the general economic picture. As a life-long direct marketer, it’s especially encouraging to see a strong uptick in direct marketing investment, as tech and AI capabilities continue to accelerate. While this might reflect a degree of short-term sales chasing, I believe it also reflects businesses backing the growing potential of one-to-one channels to support brand-building and long-term customer value.”

Alex Uprichard, Managing Director, IMA and IPA City Head for Leeds, Yorkshire and Humberside:

“The latest IPA Bellwether data would indicate that brands are back in market with a keener focus and momentum. After the dip we saw in Q1, it’s encouraging to see budgets bouncing back in Q2, showing a resilience, but also a clear strategic drive into digital and innovation. The uplift in digital marketing investment reflects a weighting towards greater precision and performance, with brands looking to channels that offer targeted, real-time engagement. At the same time, there’s also an increase in new product launches, which is a positive indication that businesses are aligning to creativity and growth. This all suggests good news for agencies who can offer expertise across brand, experience and conversion married with agility as there is an obvious energy towards this approach coming through in the report this quarter.”

Sue Benson, Managing Director, The Behaviours Agency and IPA City Head for Manchester & North West:

“This quarter’s IPA Bellwether Report brings a welcome dose of optimism, and the rebound in marketing budgets is a much-needed shot in the arm. It certainly reflects the resilient mindset we’re seeing in the North West. The strong growth in direct marketing and sales promotions is no surprise, as businesses continue to prioritise short-term, measurable results in a competitive market. It is heartening, however, to see main media spend finally stabilise. This suggests a renewed, if cautious, commitment to brand building, which as we all know is crucial to long term success.”

Samantha Smith, CEO, krow kinetic and IPA City Head for Bristol, South West & Wales:

“It was good to see UK marketing budgets rebound in Q2 2025, reversing Q1’s decline. Total budgets grew at the fastest rate in a year too, but still being driven by strong increases in sales promotions and direct marketing, suggesting the continuing need to drive revenue. Confidence improved slightly, although broader economic uncertainty persists. Events and PR saw modest gains, while main media spend stabilised. AI adoption, easing inflation, and digital marketing expansion were seen as key opportunities, despite ongoing threats from global instability, rising costs, and recruitment challenges. Financial prospects improved marginally, but employment sentiment remained cautious amid cost pressures and cautious planning, so it is still a tough world out there!”

Nichola Elgie, Senior Account Director, Drummond Central and IPA City Head for Newcastle and the North East:

"It’s positive to see the UK advertising market returning to growth, but this is largely driven by immediate, response-focused channels. Brand-building channels like OOH and radio are seeing sharp declines. While brands are adapting quickly, there's a risk in over-prioritising short-term, sales-driven tactics. The most effective results still come from distinctive, memorable ideas that endure beyond a quick promotion. Agencies must stay focused on what brands truly need: calm, strategic thinking that avoids the trap of short-termism and supports long-term brand growth."

Bill Doris, VP Analytics, EMEA, EssenceMediacom & IPA Media Research Advisory Group Chair:

"While market research budgets saw a modest decline this quarter, the rate of reduction has slowed significantly compared to earlier in the year. This improvement comes as overall marketing budgets expand at their fastest pace in a year and business confidence continues to build. Forecasts for 2025/26 point to growth in market research investment, the first positive outlook in three years, highlighting the sector's vital role in driving strategic marketing decisions.”

Find the full report here.