Slight Rise in UK Marketing Spend and Sentiment

UK marketers remain cautious despite a slight upturn in the fourth quarter of 2024, according to the regular Bellwether survey by the IPA. However MR moved into positive territory, with more respondents now reporting budget increase than decrease.

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. This wave suggests spend has crept up again after a pause in Q3 of last year due to uncertainty around the first Labour Budget. More than a fifth (21.7%) of panellists reported an increase in their total marketing budgets during the fourth quarter, with 19.9% making cuts, for a net score of +1.9%. It's the 14th quarter in the last 15 when ad spend has - by this measure - moved upwards, but the net score is also the second-lowest figure recorded since the beginning of 2021. The latter, according to the report, reflects both ongoing global geopolitical and economic uncertainties and fresh costing challenges for UK firms following rises in employers' National Insurance contributions.

Events (+12.3%), PR (+6.8%) and Direct Marketing (+5.6%) led the way - the last two growing more slowly than in Q3 - while Sales Promotions (+4.1%) and Market Research (+3.1%) also did well and improved their scores - MR was in negative territory last time out at -1.5%. The two remaining sectors both had negative net scores, crucially Main Media moving from +4.3% to -4.3%, and the 'Other' category reducing its deficit to -4.2%.

A net balance of +25.6% of companies anticipate an upward revision of their total marketing budgets in the 2025/26 financial year, with increased spend expected for all seven sub-categories. The figure for MR budgets specifically is just 3.2%. Looking at more general financial prospects, respondents were 'less gloomy' than in the previous quarter.

Results generally are a far cry from Q2 of last year, when marketing budgets grew at their fastest rate for a decade.

Paul Bainsfair, IPA Director General said the uptick in spending despite global headwinds was encouraging, but noted that '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'. Joe Hayes, Principal Economist at S&P Global Market Intelligence and author of the Report stated: 'The pause in UK marketing budget growth seen in the third quarter, was very much that, a pause. It's encouraging to see there was a resumption of growth at the end of 2024... That said, the post-Autumn Budget rebound was a shallow one, indicating that companies trod carefully as they assess the impact that some of the announced policies would have on their bottom lines'.

Web site: www.ipa.co.uk .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.