UK Marketers More Optimistic about Budgets, but MR Lags

UK marketing budgets rebounded in the second quarter of the year, according to the IPA's Bellwether report - but MR was one of the few sectors left behind in the general revival.

The IPA is the professional body representing advertising, media and marcoms agencies based in the UK, and has around 270 agency brand members. The Bellwether has run since 2000 and is currently based on a questionnaire survey of around 300 UK-based companies from the top 1,000, sampled to reflect 'actual marketing trends in the whole economy'. Respondents are primarily marketing directors or similar and questionnaires are sent out in the final three weeks of each calendar quarter.

The survey establishes net scores based on the proportion of respondents predicting a rise in spend in each area / sector, minus the number predicting a decline in spend. In the first quarter of 2025 overall budgets fell for the first time in four years, but Q2 saw a 'robust rebound', according to the IPA's report, '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.'

A net balance of +5.5% of panellists reported a rise in their total marketing budgets, vs -4.8% in Q1. Sales Promotions and Direct Marketing led the recovery with net balances rising from +8.0% to +9.4%, and from +9.0% to +9.1% respectively. After signalling a reduction in the previous two quarters, budgets for the crucial main media category remained unchanged on the quarter at 0.0% (previously -6.7%).

The report notes that 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. However, this was a slight improvement on Q1 when the figures were -10.5% and -11.7%.

Respondents 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. Views of the prospects for companies were almost as likely to be optimistic as pessimistic (21.9% vs 24.9%) - a strong improvement on Q1; while the prospects for the industry as a whole were considered worse than for respondents' own companies, edging up from the previous quarter's recent low of -37.4% to -26.2% in Q2.

Paul Bainsfair, IPA Director General welcomed the overall upward revisions for Q2, but said on closer inspection it could be seen that the improvement was 'largely driven by tactical approaches.' He stated: '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 Report said the improvement 'reflects businesses' renewed commitment to growing their brands, even amid ongoing economic challenges.'

Web site: www.ipa.co.uk .