UK companies are staying resolute in their commitment to marketing spend, revising their budgets up to the second highest level in two years in Q2 2026 – with events, direct marketing and video leading the way – despite economic and inflationary pressures remaining at large.
So says the latest IPA Bellwether Report, which reveals that, after a strong start to the year, 23.8% of respondents reported an increase to their marketing spend, in comparison with 16.9% who recorded cuts.
The resulting net balance of +6.9%, slightly below Q1’s +7.3%, pointed to a historically strong expansion in budgets. Meanwhile, approximately 59.4% of respondents left their marketing budgets unchanged in Q2.
As in the opening quarter, events was the leading category for greater marketing investment, with a net balance of +11.0% registering growth, albeit down from +14.7% in Q1. This was followed by direct marketing that registered a modestly positive net balance of +3.0%, down slightly from +3.6% at the start of the year.
Main media advertising and PR also recorded modest growth in budgets at +1.5% and +1.4%. However, net balances retreated notably in the latest quarter, down from +4.5% and +6.0%, respectively.
A breakdown of the main media segment showed that video was the only one of the five tracked sub-areas to record growth in Q2, with its net balance rising from +5.7% to a seven-quarter high of +8.2%.
Meanwhile, budgets for audio stabilised (net balance of 0.0%) after 12 consecutive quarters of decline. The remaining three sub-segments all saw reductions in spending.
Published brands recorded the sharpest contraction, with the net balance broadly unchanged at -8.3%, from -8.5% in Q1. Other online was the second-biggest drag on overall main media spending, as respondents cut budgets for the first time in seven quarters. The net balance fell to -5.1%, marking a reversal of the +5.7% reading seen in Q1. Out of home saw only a modest decline with the net balance having risen notably from -11.3% in Q1 to -2.5% in Q2.
Sales promotions also saw an uptick in budget availability during Q2. However, the net balance of +0.9%, down from +2.7% in Q1, pointed to only a mild increase.
Conversely, marketing executives trimmed budgets for both market research and “other” activities, the latter covering all remaining paid-for marketing activity, during Q2. The net balance for market research improved to -4.1%, from -8.5% in Q1, indicating a moderated but still strong reduction. By contrast, the other category weakened further, with its net balance falling to -10.8%, from -8.9% in Q1.
Worryingly, sentiment among Bellwether panellists regarding company-own and industry-wide financial prospects took a turn for the worse during the latest survey period.
After showing a recovery in the previous survey period, the net balance of respondents predicting better financial prospects at their own business slipped to -9.6% in Q2, from +0.6%. The net balance has now posted below the neutral threshold of zero for a second time in the last three survey periods.
Underlying data show that nearly a third of respondents (32.3%) felt less upbeat about their financial outlook than they did three months ago, more than offsetting the 22.8% of firms that were optimistic.
After rising to a five-quarter high in Q1 with a reading of -21.0%, the net balance of firms anticipating better financial prospects for their industry as a whole fell to -25.1% in Q2. This therefore indicated greater pessimism among Bellwether panellists at the market level. In particular, 36.5% of panellists expect a deterioration in industry-wide conditions, more than three times the share that anticipate improvement (11.4%).
Even so, S&P Global Market Intelligence’s forecasts for UK GDP growth in 2026 is broadly unchanged at 0.6%, from 0.5% previously. While the war in the Middle East and its knock-on effects were factored into the previous forecast, developments since have limited the capacity to be more optimistic.
Higher energy prices and inflation more broadly is damaging to household real incomes, while uncertainty and tighter financial conditions will weigh on business investment.
Growth is predicted to improve in 2027, although the forecast is less positive than it was in the Q1 Bellwether Report (0.8%, down from 1.4%). As pressures from energy prices retreat, disposable incomes should rise, supporting better consumer spending prospects.
For adspend, S&P Global projections remain positive, with growth in real terms expected in 2026 despite purchasing power being hit by higher inflation. The forecast is for adspend to grow by 2.1% in 2026, before rising 2.3% and 2.4% in 2027 and 2028 respectively.
IPA director general Paul Bainsfair said: “The overriding message from this quarter’s report is that UK companies continue to recognise the value of advertising. Encouragingly, we also see signs that businesses understand the importance of investing in long-term brand building; within the main media category, investment in video advertising has been revised up to its highest level in almost two years, while spending on other online activity – a shorter-term activation medium – has been cut for the first time in seven quarters.
“Despite these positive markers, it is understandable that companies’ financial confidence levels have taken a hit this quarter. Amid geopolitical turmoil, wars, ongoing heightened inflation, supply-chain disruption, not to mention political upheaval closer to home, it makes for an undeniably tough and uncertain environment in which to operate.
“In light of such challenges, it is therefore more important than ever that companies play the long game and continue to invest in brand-building media that is proven to be better placed to drive sustainable business growth.”
S&P Global Market Intelligence economist Maryam Baluch, who is author of the Bellwether Report added: “Panellists have demonstrated notable resilience against a backdrop of persistent economic uncertainty. By continuing to bolster marketing spend – particularly as high inflation threatens to weigh on consumer demand – respondents are indicating a commitment to investment and brand-building activities that underpin growth.
“The fact there hasn’t been a considerable scaling back of activity in response to the economic shock arising from the Middle East war suggests firms are taking a strategic, longer-term view rather than getting bogged down in short-termism.”
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