Marketing budgets flatlined during Q4 as businesses exercised caution in the wake of ongoing economic uncertainty – especially over Donald Trump’s obsessively protectionist US stance and the predicted but ultimately misplaced Autumn Budget gloom – with the majority of companies neither cutting nor increasing their spend.
That is according to the latest IPA Bellwether Report for the final quarter of 2025, which reveals that even direct marketing spend – which had been revised up every previous quarter since January 2023 – was pinned back.
In fact, most Bellwether respondents (57.4%) left their budgets unchanged over the course of the quarter, while the remaining panellists were evenly split, between those reporting an increase and the those implementing cuts.
According to anecdotal evidence from Bellwether respondents, cost pressures, muted economic activity and budget constraints led to a re-evaluation of marketing spend allocations. Additionally, the Autumn Budget was noted as a headwind in the final quarter.
The report also advises that this is compounded by escalating geopolitical tensions, global and domestic policy uncertainty, US tariffs and fears of an AI-fuelled stock market bubble. Where budgets were expanded, however, businesses sought to strengthen their online presence and reach wider audiences.
The breakdown of the seven monitored categories showed that budgets were raised for PR and events. The net balance for PR rose from +2.5% to +3.5 in Q4. However, the net balance of firms raising the spend for events fell steeply from +10.9% to +1.4%.
Main media and sales promotions budgets both recorded no change to their budgets in the final quarter of 2025 (0%).
A detailed breakdown of the main media category painted a distinctly downward-skewed picture in Q4, with four out of the five tracked sub-components registering reductions in spending.
The most pronounced decline was seen in out-of-home marketing, where the net balance fell to -17.6%, down from -15.2% in Q3. Audio emerged as the second-worst performer, with a net balance of -10.2% of panellists reporting a decrease (an improvement from -13.0% in the previous quarter, however). Published brands and video also saw reductions, with net balances shifting from -6.2% and +6.7% in Q3 to -6.5% and -5.0% in Q4, respectively. Other online was the only sub-component to record a rise in budgets in Q4, with the net balance rising notably from +2.1% to +13.2%.
The remaining three areas, market res.earch, direct marketing and “other”, all recorded reductions to marketing budgets in the closing quarter of 2025. The net balance came in at -4.0%, -4.3% and -12.8%, from -6.8%, +9.7% and -12.1% in the quarter prior, respectively. The “other” category recorded the steepest decline in marketing spend.
Looking to the year ahead, initial budget setting shows that a net balance of just +1.7% of firms predict an increase in total marketing spend across the 2026/27 financial period.
This marked one of the weakest preliminary outlooks in the Bellwether survey history, which started at the turn of the Millennium. Many respondents pointed to challenges raising the case for greater discretionary expenditure, particularly in an uncertain and downbeat economic environment. Pressure to generate a greater return on investment also led some companies to allocate a lower budget for the forthcoming financial year.
Growth in marketing budgets hinged on events, data split by the seven monitored categories revealed. Here, a provisional net balance of +6.6% of panellists estimate increased spending for the upcoming financial year. That said, this is weak by comparison to the post-pandemic trend.
In addition, all other areas saw negative net balances. Market research is predicted to see the largest fall in budgets (-17.4%). Panellists are also notably pessimistic about the ‘other’ marketing category (-10.1%). Sales promotions (-5.5%), direct marketing (-5.1%), main media (-3.1%) and PR (-1.9%) are all expected to be scaled back.
Worryingly, Bellwether survey data for the final quarter of 2025 also pointed to renewed pessimism among panellists regarding their individual company prospects and a more downbeat outlook at the broader industry level.
Following a solitary quarter of optimism in Q3, when the net balance recorded +2.9%, panellists in Q4 2025 signalled a marked degree of pessimism towards their financial prospects for the coming three months. The net balance came in at -19.0%, indicating the highest level of negativity in 13 quarters. Underlying data revealed that 36.2% of respondents felt less optimistic about their financial prospects, more than double (17.2%) the proportion who were more confident.
In addition, the picture at the broad industry level showed heightened concern among businesses. Some 41.1% of firms were pessimistic towards industry-wide financial prospects, compared to only 11.0% that were optimistic. This resulted in a net balance reading of -30.1% (-24.0% in Q3), the lowest in three quarters.
The UK’s economic outlook for 2026 has dimmed, with S&P Global Market Intelligence revising its GDP growth forecast from 1.1% to 0.8%. The downward revision points to expectations of a more subdued performance. The anticipated sluggishness stems from lacklustre consumer spending, while persistent global trade uncertainties and heightened geopolitical tensions are set to dampen growth and erode business confidence and investment.
But, as they say, things can only get better and expectations of multiple Bank of England rate cuts in 2026 could offer relief to households and businesses. Consumer spending is to strengthen modestly by the end of 2026, in line with slowing but continued growth in real incomes, lower inflation and retreating borrowing costs. In turn, GDP growth is forecast to rebound in 2027.
As for adspend, a projected rise of 1.5% is forecast for 2026, up from earlier estimates of 1.2%. The adspend growth rate is forecast to hold steady at 2.3% from 2027 onwards, reflecting tailwinds from more supportive economic conditions.
IPA director general Paul Bainsfair said: “This quarter’s flatlining of marketing spend reflects a wider confidence problem. Global instability continues to unsettle markets, while domestically there appears to be limited faith in the Government’s grip on the economy. Until that changes, caution is understandable.
“What we can say with confidence, however, is that those organisations which continue to invest in advertising, especially in a quieter market, stand to gain greater visibility and, over time, increased market share. This is most effective when investment is sustained and focused on long-term brand-building channels.”
S&P Global Market Intelligence economist Maryam Baluch, who is author of the Bellwether Report, added: “As we move into 2026, the economic climate remains challenging, with marketers under pressure to deliver ROI as firms scrutinise spending decisions more harshly given the competitive market landscape and subdued macroeconomic outlook.
“That said, budgetary stasis points to some resilience, with cutbacks avoided. An anticipated easing of inflationary pressures and reduced borrowing costs in 2026 could spring business investment back to life this year.”
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