UK marketing budgets returned to growth in the final three months of 2024 after flatlining in Q3, but spend in main media budgets declined.

According to the Q4 IPA Bellwether report, 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%.

However, during the same period in 2023, a net balance of 14.7% of businesses made upward revisions to marketing spend, signalling a much weaker Christmas period this year than last.

The figure is the second-lowest since early 2021 as businesses continue to adopt an “understandably cautious” approach to spending, influenced by the Autumn Budget and changes to Employer National Insurance contributions.

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Offsetting the growth was main media budgets, which fell to –4.3% from 4.3% in Q3 after two consecutive quarters of growth, signalling a move away from traditional channels during uncertain economic times.

IPA director general Paul Bainsfair says it is “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,” he adds.

The decline was driven by cuts across audio (net balance of -17.4%, from -10%), out-of-home (-12.8%, from -15.7%) and published brands (-10.2%, from -4.4%).

Video experienced the steepest decline, falling to –10.7% from 11.7% in Q3. This marked the first decline in video spend in four years, a stark reversal from the strong growth seen earlier in the year.

Positive outlook

Despite these concerns, the Bellwether report offers a positive outlook for marketing expenditure in the 2025/26 financial year. A net balance of 25.6% of companies anticipate increasing their total marketing budgets, signalling renewed confidence.

“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,” says Bainsfair.

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All seven monitored categories are expected to see growth, with direct marketing leading the charge. A net balance of 15.6% of panellists forecast higher spending in this area, likely driven by efforts to integrate AI into workflows. Many companies highlighted AI’s potential to enhance personalisation in marketing strategies.

“The rise in investment towards direct marketing – driven by technological advancements and AI’s ability to enable hyper-personalisation – is an interesting development,” he adds.

Events marketing also shows strong promise, with a net balance of 15.5% planning to increase spend. While main media budgets ended 2024 on a subdued note, early data points to a brighter future in 2025/26, with 6.3% of panellists expect to increase spending in this area.

Channel breakdown

In Q4, events emerged as the top performer, achieving a net balance of 12.3% (up from +9.9% in Q3), signalling companies’ desire to continue generating leads in face-to-face environments.

PR came in second with a net balance of 6.8% of firms growing their budgets. While this marked a decline from Q3’s record high of 11%, it remained one of the strongest readings since the series began in late 2012.

Direct marketing budgets saw upward revisions for the eighth consecutive quarter. A net balance of 5.6% of respondents reported increases, although this reflected a more cautious approach compared to recent trends – dropping from 9.7% in Q3 to its lowest level in over a year.

After a slight dip in Q3 (-1.5%), market research budgets rebounded with a 3.1% increase, marking growth in three of the last four survey periods. Sales promotions also gained momentum, rising to 4.1% (up from 3.2%), and other – which covers forms of paid-for-marketing not otherwise tracked – showed improvement, narrowing its decline to -4.2% from -9.7%.

Despite plans to increase marketing budgets in the year ahead, data from the final quarter of 2024 revealed growing pessimism among panellists about their company’s prospects and the broader industry outlook.

At the industry level, a net balance of -20.1% of panellists predicted a decline in financial prospects – the most negative sentiment since Q4 2022. The data showed 34.9% of respondents are expecting a worsening outlook, while only 14.8% anticipated improvements.

Respondents flagged key threats for the year ahead, including the rise in the National Minimum Wage and the impact of Trump’s US Presidential Election victory, coupled with his commitment to impose tariffs on imported goods.

Panellists also expressed downbeat views on their own business prospects, although sentiment showed slight improvement. A net balance of -1.2% revealed only a slight degree of pessimism, an improvement from -2.2% in the previous quarter.

By contrast, firms’ assessment of their industry as a whole remained bleaker than the previous quarter, highlighting a continued sense of uncertainty.