Marketing spend is on the rise again, after UK companies hit the pause button in reaction to the Autumn Budget.
Today’s IPA Bellwether Report looking at Q4 of 2024 saw an unexpected item in the marketing area, with Direct Marketing expected to get a major boost this year. This is led by developments in AI, which have helped to improve its efficiency.
However, this isn’t a bullish return to growth, instead it’s a cautious uplift, after flatlining in Q3.
The report gathers marketing information from around 300 UK companies to gauge overall spend.
In the fourth quarter over a 5th (21.7%) reported an increase in their total marketing budgets. That’s against 19.9% who made cuts. That results in a net balance of +1.9% – up from 0% in the previous quarter.
It was the second lowest upward revision since 2001.
Interesting, despite ongoing geopolitical and economic uncertainties ahead and the Autumn Budget’s National Insurance increases, many companies are optimistic about 2025/26.
“The latest IPA Bellwether results are a mixed bag for agencies in the North West,” stated Sue Benson, Managing Director, The Behaviours Agency and IPA City Head for Manchester & 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.”
By marketing category
- Events was the best performer in Q4, achieving +12.3% net balance, up from +9.9%.
- PR was second with a net balance of +6.8%, but this is a fall from +11.0% in Q3.
- Direct marketing +5.6%, down from +9.7 – more on this later.
- Sales promotions +4.1%, up from +3.2.
- Market research +3.1%, up from -1.5%.
That was the good news, however, Main Media was down again and actually hit negative figures – net balance of -4.3%, down from +4.3%.
“Other” was also negative, but an improvement compared to the previous quarter -4.2, up from -9.7%.
Other includes:
- Audio (-17.4%, from -10.0%);
- Out of home -12.8%, from -15.7%
- Video (-10.7%, from +11.7%
- Published brands -10.2%, from -4.4%
- Online segment +2.2%, from -1.4%.
Looking ahead
2025/26 is a lot more positive according to the Bellwether survey, with a net balance of +25.6% of companies saying they expected to increase their marketing budget.
This was across all marketing categories, although Direct Marketing is getting the most love, with a net balance of +15.6% of panellists provisionally estimating higher spending here.
Jim Rudall, Head of EMEA, Intuit Mailchimp said today’s results were “encouraging” and pointed to pre-Christmas Direct Marketing, led in part by the North of England:
“It is encouraging to see renewed marketing budget growth across the UK in Q4, perhaps indicative of just how important it was for marketers to capitalise on the quarter as a holiday shopping period. The Black Friday Cyber Monday (BFCM) weekend was popular for marketing efforts across UK businesses, particularly around audience engagement strategies. Our data revealed that London led the UK in email send volume during the Cyber Weekend – followed by Stockport, Manchester, Leeds, and Liverpool.
“Also of note is the rise in investment towards Direct marketing, likely driven in part by AI’s ability to enable hyper-personalisation. It has never been more important to deliver a personalised message in order to stand out amongst the competition, and AI certainly has a role to play in unlocking this at scale. Our recent report revealed marketers are no strangers to automation, with 85% of marketers already integrating, or planning to integrate, AI tools into their operation.
“Personalised messaging can also be optimised with channels such as SMS, which offers unparalleled immediacy. Top marketers differentiate themselves by integrating email with SMS to ensure consistent, multichannel engagement with customers. Looking ahead, the marketers who harness tools such as AI and SMS will be best positioned to drive engagement and unlock maximum ROI on their marketing spend.”
Events marketing had the second-strongest outlook, with a net balance of +15.5%.
Also better news for PR at +8.3% and Main media (+6.3%) and Market research (+3.2%).
“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,” explained Paul Bainsfair, IPA Director General.
“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.”
While most respondents were downbeat about their own business outlook, it is marginally better than the previous quarter (-1.2% compared to -2.2%).
That said, their assessment of the industry as a whole was pretty bleak. -20.1% of panellists foresee a deterioration in financial prospects at the industry level, representing the highest degree of pessimism since Q4 2022.
34.9% of panellists anticipate a worsening industry outlook, while 14.8% expect improvements.
“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,” said Gill Jarvie, Client Services Director, Republic of Media and IPA Chair for Scotland.
Alex Uprichard, Managing Director, IMA and IPA City Head for Leeds, Yorkshire and Humberside added:
“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.”
Adspend
The global political situation has impacted adspend forecasts, particularly with predictions that US imports of goods will be subject to tariffs.
That added to higher labour taxes from April as changes to employers’ National Insurance contributions come into play; plus high interest rates and ongoing cost-of-living pressures, it means UK adspend growth is expected to be “modest.”
S&P Global Market Intelligence’s prediction for UK adspend growth was nevertheless unchanged for 2025 at 1.3%.