UK marketing budgets hold firm during turbulent final quarter

The majority of Bellwether respondents (57.4%) left their marketing budgets unchanged over the course of the quarter, while the remaining panellists were evenly split, between those reporting an increase and those implementing cuts.

According to anecdotal evidence from Bellwether respondents, cost pressures, muted economic activity and budget constraints led to a re-evaluation of marketing budget allocations. Additionally, the Autumn Budget was noted as a headwind in the final quarter. The Q4 2025 Bellwether Report also advises that this is compounded by escalating geopolitical tensions, global and domestic policy uncertainty, US tariffs and fears of an AI-fuelled stock market bubble. Where budgets were expanded, however, businesses sought to strengthen their online presence and reach wider audiences.

Growth or decline by category in Q4 2025

The breakdown of the seven monitored categories showed that budgets were raised for PR and events. The net balance for PR rose from +2.5% to +3.5 in Q4. However, the net balance of firms raising the spend for events fell steeply from +10.9% to +1.4%. 

Main media and sales promotions budgets both recorded no change to their budgets in the final quarter of 2025 (0%).

A detailed breakdown of the main media category painted a distinctly downward-skewed picture in Q4, with four out of the five tracked sub-components registering reductions in spending. The most pronounced decline was seen in out-of-home marketing, where the net balance fell to -17.6%, down from -15.2% in Q3. Audio emerged as the second-worst performer, with a net balance of -10.2% of panellists reporting a decrease (an improvement from -13.0% in the previous quarter, however). Published brands and video also saw reductions, with net balances shifting from -6.2% and +6.7% in Q3 to -6.5% and -5.0% in Q4, respectively. Other online was the only sub-component to record a rise in budgets in Q4, with the net balance rising notably from +2.1% to +13.2%

The remaining three areas, namely market research, direct marketing and other, all recorded reductions to marketing budgets in the closing quarter of 2025. The net balance came in at -4.0%, -4.3% and -12.8%, from -6.8%, +9.7% and -12.1% in the quarter prior, respectively. The other category recorded the steepest decline in marketing spend, meanwhile direct marketing recorded a fresh fall.

Budget plans for 2026/2027

Initial budget setting shows that a net balance of +1.7% of firms predict an increase in total marketing spend across the 2026/27 financial period. This marked one of the weakest preliminary outlooks in the Bellwether survey history, which started at the turn of the millennium. Respondents often pointed to challenges raising the case for greater discretionary expenditure, particularly in an uncertain and downbeat economic environment. Pressure to generate a greater return on investment also led some companies to allocate a lower budget for the forthcoming financial year.

Growth in marketing budgets hinged on events, data split by the seven monitored categories revealed. Here, a provisional net balance of +6.6% of panellists estimate increased spending for the upcoming financial year. That said, this is weak by comparison to the post-pandemic trend.

In addition, all other areas saw negative net balances. Market research is predicted to see the largest fall in budgets (-17.4%). Panellists are also notably pessimistic about the 'other' marketing category (-10.1%). Sales promotions (-5.5%), direct marketing (-5.1%), main media (-3.1%) and PR (-1.9%) are all expected to be scaled back.

Company-own financial prospects turn downbeat

Bellwether survey data for the final quarter of 2025 pointed to renewed pessimism among panellists regarding their individual company prospects and a more downbeat outlook at the broader industry level.

Following a solitary quarter of optimism in Q3, when the net balance recorded +2.9%, panellists in Q4 2025 signalled a marked degree of pessimism towards their financial prospects for the coming three months. The net balance came in at -19.0%, indicating the highest level of negativity in 13 quarters. Underlying data revealed that 36.2% of respondents felt less optimistic about their financial prospects, more than double (17.2%) the proportion who were more confident.

In addition, the picture at the broad industry level showed heightened concern amongst businesses. 41.1% of firms were pessimistic towards industry-wide financial prospects, compared to only 11.0% that were optimistic. This resulted in a net balance reading of -30.1% (-24.0% in Q3), the lowest in three quarters.

Adspend forecasts rise modestly in 2026 despite challenges

The UK’s economic outlook for 2026 has dimmed, with S&P Global Market Intelligence revising its GDP growth forecast from 1.1% to 0.8%. The downward revision points to expectations of a more subdued performance. The anticipated sluggishness stems from lacklustre consumer spending, while persistent global trade uncertainties and heightened geopolitical tensions are set to dampen growth and erode business confidence and investment.

Nevertheless, expectations of multiple Bank of England rate cuts in 2026 could offer additional relief to households and businesses. Consumer spending is to strengthen modestly by the end of 2026, in line with slowing but continued growth in real incomes, lower inflation and retreating borrowing costs. In turn, GDP growth is forecast to rebound in 2027.

As for adspend, a projected rise of 1.5% is forecast for 2026, up from earlier estimates of 1.2%. The adspend growth rate is forecast to hold steady at 2.3% from 2027 onwards, reflecting tailwinds from more supportive economic conditions.

Commenting on the Q4 2025 Report:

Paul Bainsfair, IPA Director General:

“This quarter’s flatlining of marketing spend reflects a wider confidence problem. Global instability continues to unsettle markets, while domestically there appears to be limited faith in the Government’s grip on the economy. Until that changes, caution is understandable.

“What we can say with confidence, however, is that those organisations which continue to invest in advertising, especially in a quieter market, stand to gain greater visibility and, over time, increased market share. This is most effective when investment is sustained and focused on long-term brand-building channels.”

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

"2025 closed on neutral footing, with marketing budgets holding firm throughout the quarter as businesses exercised caution around major events such as the Autumn Budget. As we move into 2026, the economic climate remains challenging, with marketeers under pressure to deliver ROI as firms scrutinise spending decisions more harshly given the competitive market landscape and subdued macroeconomic outlook. That said, budgetary stasis points to some resilience, with cutbacks avoided."

Mark Howley, COO at Publicis Media and Chair of the IPA Media Futures Group:

“I think the sentiment of the report reflects today’s uncertainty, volatility, and a poor visibility of the 12 months ahead. But this may prove to be a little downbeat for main media and advertising growth. Many companies now operate and budget globally and are centred out of the USA, and fundamentally the States has moved from sluggish GDP growth and even decline in Q1 2025 to quite strong growth: 4% estimated for second half of 2025. A strong US economy emerging (or continuing) in 2026, I think, may drive more optimism and growth than perhaps the current survey is reflecting.”

Amy Garrett, UK President, Weber Shandwick:

“The latest IPA Bellwether Report shows that while overall marketing budgets stayed flat in Q4 2025, it’s encouraging to see PR and events spending continuing to grow. This highlights the value of these channels in helping brands remain visible and connected, even in uncertain times. For our clients, this means leaning into PR to build trust, maintain relevance and drive meaningful engagement with key audiences."

Amy Lawrence, Head of Digital, EMEA, Publicis Imagine & Chair of the IPA Digital Marketing Group:

“There have been significant changes in the main media budget forecasts since the previous Bellwether report. Whilst the overall outlook shows a slight decline, there are notable swings within channels, most prominently Video (from +6.7% to -5.1%) and Other Online (from +2.1% to +13.2%). Although caution is required when interpreting these broad categories, the sharp increase in Other Online spend points to a wider shift towards performance-focused investment and short-term ROI amid ongoing economic uncertainty. With potential rate cuts on the horizon, a degree of rebalancing may emerge in the next wave of results.”

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

"The latest IPA Bellwether Report shows Market Research budgets trimmed for the fourth quarter in a row, with a net balance of -4.0% in Q4 2025 although the degree of cuts eased a little towards the end of the year. Looking ahead, the outlook for 2026/27 hints at more belt-tightening with market research expected to see the biggest budget reductions across categories (net balance -17.4%). While not the cheeriest news, it’s clear businesses are placing extra scrutiny on their Market research investment."

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

“It’s nice to start the year on a positive note. At least the latest Bellwether Report does indicate some green shoots in the form of anticipated easing of inflationary pressures, alongside reduced borrowing costs, seeing business investment springing back in 2026. Also, there’s recognition that marketing budgets did hold firm despite such significant levels of uncertainty in the latest quarter. However, there’s no hiding from this being one of the weakest preliminary outlooks in Bellwether history, with no growth anticipated in main media advertising. Perhaps that’s no surprise given the continued lack of confidence amongst both businesses and consumers, combined with cost-of-living pressures."

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

“2025 closed on a note of 'budgetary stasis,' but look beneath the surface, and you’ll see classic human behaviour at play. While total spend sat at a neutral 0.0%, the jump in PR and "other online" reveals a frantic search for trust and targeted relevance.

“Despite this resilience, the sharp dip in company financial optimism is a real worry - it’s that familiar "wait and see" nervousness. At The Behaviours Agency, we know that in these cautious moments, brand memorability is your best hedge. It’s not always about spending more; it’s about being unignorable when consumers eventually pull the trigger.”

Penny Took, CEO, Mediaplus Connect and IPA City Head for Birmingham and the Midlands:

"Predictions for 2026 based on Q4 2025 suggest a challenging year ahead for both agencies and marketeers, with few sectors unaffected by a pessimistic economic outlook, impacting both marketing decisions and a depressed recruitment environment. But there are some positive signs. Adspend growth in total is expected to rise by 1.5% in 2026. Historically low, but ahead of 2025. AI adoption and realisation is now a fact of life, and it is a prerequisite that we bring best practice to all elements of the media and creative process. Even more importantly, when clients are looking to get the best value from their marketing budgets. Taking the opportunity to provide greater connectivity across advertising services for clients will also provide budget-conscious marketeers with routes to deliver more effective campaigns. A challenging but exciting year ahead!”

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

“UK marketing budgets held steady in Q4 2025, ending the year with a flat net balance of 0.0% following two quarters of growth. Events and PR saw modest increases, but other areas like direct marketing, market research and main media faced cuts. Financial sentiment dipped, with company optimism falling to a 13-quarter low, so still going to be tough. While early forecasts suggest only slight marketing budget growth in 2026/27, “other online” advertising stands out with the strongest gains. Amid economic caution, inflationary pressures and hiring hesitancy, agencies have a vital role to play offering clarity, creativity and confidence to help brands navigate what comes next.”

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

“It’s clear from the report that the last three months of 2025 were met with caution and uncertainty, resulting in the year ending on a neutral note, down from +3.6% in Q3. The list of external pressures is mounting and having a clear impact on the outlook for the year ahead. Although 2026/27 sees a very modest expected increase in total marketing spend, it does mark one of the weakest outlooks in the survey's history."

Simon Bollon, Founder and Managing Director, Boutique and IPA City Head for Leeds & Yorkshire:

"Q4 2025 was a difficult period for agencies, with economic and political uncertainty causing an overall flattening of budgets. Whilst this caution is reflected in flat overall marketing budgets, that stasis also points to a degree of resilience, with widespread cuts largely avoided.

"Events and PR led investment saw positive performance as brands sought more human, connection-led engagement, and that's a trend I'd expect to carry forward into 2026. While global uncertainty persists, improving UK stability will hopefully support a gradual return to confidence and budget setting. What's also clear is that in tighter conditions, boards are demanding clearer proof of ROI, increasing scrutiny on effectiveness, which will surprise none of us. For agency leaders, resilience and the ability to balance caution with momentum remain a defining capability in navigating this period."