Marketing budgets on the rise as brands hold their nerve

UK companies appear to have shrugged off concerns over the war in the Middle East to revise their marketing budgets up to the highest level in almost two years, increasing investment in customer engagement and brand building, even as the wider economy remains subdued.

That is according to the Q1 2026 IPA Bellwether Report which reveals a more positive start to the year compared to the decidedly downbeat last quarter of 2025, when budgets flatlined.

The Q1 report, which was in field between March 2 and 24, reveals that a net balance of +7.3% of respondents revised their total marketing spend upwards in Q1, with 26.8% of panellists reporting an increase in marketing spend against 19.5% of the survey panel that recorded a reduction. This is up noticeably from a flatline net balance of 0.0% in Q4 2025.

Events emerged as the leading category for greater marketing investment, outperforming all other segments by a significant margin. In Q1, events recorded a net balance of +14.7%, a substantial increase from last quarter’s +1.4%.

Bellwether panellists also ramped up spending on PR. The respective net balance rose to +6.0% (up from +3.5% in Q4 2025), marking the highest figure in five quarters, while direct marketing and sales promotions both saw expenditure increases, with net balances rising from -4.3% to +3.6% and 0.0% to +2.7%, respectively.

There was also a renewed rise in budgets for main media advertising in Q1, following no change in each of the prior three quarters.

The net balance climbed to +4.5%, marking its strongest upward revision since Q3 2023. Breaking out this main media category revealed that budgets were increased in two of the five tracked categories: other online advertising and video, with both posting a net balance of +5.7%.

However, while the net balance for other online advertising fell from the last quarter (+13.2%), the net balance for video marketing spend rebounded from -5.0% in the previous quarter.

Elsewhere, marketing budgets for audio, published brands, and out-of-home marketing continued to decline, with net balances of -3.4%, -8.5%, and -11.3%, respectively. Compared to the previous quarter, audio marketing budgets dropped less sharply (Q4: -10.2%) alongside out-of-home spending (Q4: -17.6%), but budgets for published brands saw a steeper decline (Q4: -6.5%).

Reductions in marketing spend were confined to market research and other marketing expenditure. The net balance for market research fell from -4.0% to a four-quarter low of -8.5%. Meanwhile, the net balance for ‘Other’ marketing improved from -12.8% to -8.9%.

When it comes to budget plans for the 2026/27 financial year, marketing executives are slightly more optimistic towards spending prospects than initial data indicated, with the net balance revised up from +1.7% in Q4 2025 to +3.0% in the opening quarter of the year. Underlying figures show that around 28.7% of companies expect their marketing budgets to increase over the coming year, more than the 25.6% anticipating reductions.

Meanwhile, 28.6% of respondents reported greater optimism about their company’s financial outlook compared to three months ago, marginally outpacing the 28.0% who expressed pessimism. This resulted in a net balance of +0.6%. While only marginally positive, this figure represents a significant improvement from Q4 2025’s recent low of -19.0%.

At the broader industry level, sentiment remained downbeat, a trend persisting since the final quarter of 2021. Around 35.3% of marketing executives reported a pessimistic view of industry prospects, more than double the 14.4% who felt more optimistic. The resulting net balance of -21.0% (up from -30.1% in Q4) was well below the series average, yet it marks a five-quarter high, signalling that while industry-wide confidence is still fragile, the mood has improved.

UK growth forecasts were cut at the end of the first quarter, with S&P Global Market Intelligence projecting GDP to expand by 0.5% on an annual basis in 2026, lower than the 0.8% expansion anticipated in the previous quarter.

The downward revision was largely due to the impact of the war in the Middle East. Consumer spending growth forecasts were also revised lower to 0.6% (0.8% previously), and more concerningly business investment is set to stagnate. The outlook for 2026 has become increasingly uncertain due to ongoing geopolitical uncertainty, but a recovery is expected in 2027 (1.4% GDP growth) and into 2028 (1.6% GDP growth). Nevertheless, forecasts for the coming years have also been revised down compared to the start of 2026.

In contrast, the outlook for advertising spend has strengthened notably. According to the latest S&P Global adspend forecast, growth for 2026 has been upwardly revised to 2.5%, compared to the previous forecast of 1.5%. This upgrade reflects increased optimism among marketers and a willingness to invest in customer engagement and brand building, even as the wider economy remains subdued. Momentum is expected to build further in subsequent years, with adspend growth projected to hit 2.7% in 2027 and 2.9% in 2028.

IPA director general Paul Bainsfair said: “These latest Bellwether results defy wider geopolitical uncertainty and signal a bullish start to the year for UK marketing investment. Looking at the detail, it is pleasing to see that budgets for main media are up.

“The evidence is being heeded, even in tougher conditions, cutting back on advertising risks long-term damage. It is therefore welcome news that UK companies are holding their nerve and investing to stay front of consumers’ minds, strengthen their brands and drive future growth.”

S&P Global Market Intelligence economist Maryam Baluch, who is author of the report, added: “After stagnating at the end of 2025, total marketing budgets returned to growth in Q1, marking a positive start to the year. This rebound occurred despite a surge in price pressures, driven by rising energy costs, which have cast a shadow of caution and concern over the broader economy.

“Nevertheless, marketing executives have demonstrated resilience, concentrating efforts on revenue-generating sectors and prioritising targeted, client-driven campaigns – including more events – to better position their organisations amid ongoing headwinds and uncertainty.

“Budgets for the 2026/27 financial year have also been revised up, underlining a cautious mood of optimism and strategic intent within the industry. This upward adjustment reflects not only upbeat forecasts around future market conditions, but also a recognition of the need to invest in growth opportunities and maintain competitive advantage as challenges persist.”

Marketing budgets on the rise as brands hold their nerve

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