The quest for personalised campaigns has seen direct marketing continue its impressive growth streak at the expense of main media advertising – a boom which is likely to continue well into this year – according to the latest IPA Bellwether Report, although, overall, the ongoing economic turbulence continues to wreak havoc.
After the uncertainty surrounding the Autumn Budget led firms to hit the pause button in the third quarter, the report highlighting renewed marketing budget growth across the UK in the final three months of 2024.
Over a fifth (21.7%) of panellists reported an increase in their total marketing budgets during Q4, which was higher than the almost 19.9% who made cuts, resulting in a net balance of +1.9% (up from 0.0% in Q3). This meant that upward revisions to advertising spend have been registered in 14 out of the last 15 quarters.
While the latest net balance was positive overall and marked an improvement from the previous quarter, it was the second-lowest figure recorded since the beginning of 2021 and pointed to a still-cautious approach among businesses towards spending.
However, there was a strong sense of optimism towards the 2025/26 marketing outlook, with many companies expecting budget increases despite ongoing global geopolitical and economic uncertainties and fresh costing challenges for UK firms following the announced changes in the Autumn Budget to employers’ National Insurance contributions.
Growth or decline by category in Q4 2024
Of the seven monitored sub-categories, Events emerged as the top-performer in the final quarter, achieving a robust net balance of +12.3% (up from +9.9% in Q3). PR came in at second with a net balance of +6.8% of firms growing their budgets (down from +11.0% in Q3).
Direct marketing (net balance of +5.6%, down from +9.7) continues to outperform most channels, while sales promotions (+4.1%, up from +3.2), and market research (+3.1%, up from -1.5%) also saw increases.
However, main media advertising – predominantly TV – saw a fresh reduction in Q4 (net balance of -4.3%, down from +4.3%), as did the category tracking “any other form of paid-for marketing activity not already accounted for” (-4.2, up from -9.7%).
The detailed breakdown of the main media segment indicated that the drags were broad, with audio (net balance of -17.4%, from -10.0%), out of home (-12.8%, from -15.7%), video (-10.7%, from +11.7%) and published brands (-10.2%, from -4.4%) posting contractions. These more-than-offset growth to the “other online” segment (+2.2%, from -1.4%).
Budget plans for 2025/2026
The latest Bellwether survey indicated a promising outlook for marketing expenditure in the 2025/26 financial year as a net balance of +25.6% of companies anticipate an upward revision of their total marketing budgets.
The preliminary data showed that marketing executives anticipate increased spending for all the seven monitored categories, although the results provided insight into which areas firms will be centring their plans around.
Direct marketing is expected to be the strongest area of growth, with a net balance of +15.6% of panellists provisionally estimating higher spending here. Events marketing had the second-strongest outlook, with a robust net balance of +15.5%.
Firms were confident of being able to spend more on PR, with a net balance of +8.3% predicting budget growth here. Initial budget setting for main media and market research were more modest, with net balances of +6.3% and +3.2%, respectively.
Sales promotions was an area which received the least amount of attention in firms’ preliminary budget setting, with a net balance of just 1.0% expecting to spend more here in the 2025/26 financial year.
Firms less pessimistic towards company prospects
Following the gloominess seen in the Q3 survey, UK companies continued to express downbeat sentiment towards their own business outlook in the latest quarter. Nevertheless, a net balance of -1.2% revealed only a slight degree of pessimism and a slight improvement from -2.2% previously.
In contrast, firms’ assessment of their industry as a whole was bleaker than in the previous quarter. A net balance of -20.1% of panellists foresee a deterioration in financial prospects at the industry level, representing the highest degree of pessimism since the Q4 2022. The underlying data revealed that 34.9% of panellists anticipate a worsening industry outlook, while 14.8% expect improvements.
Adspend forecasts revised up for 2026
Since the previous Bellwether survey, S&P Global Market Intelligence has narrowly reduced its annual UK GDP growth forecast for 2025 to 1.0%, from 1.3%. Expectations that US imports of goods will be subject to tariffs was a key reason for this reduction, with the US being the UK’s largest single export market.
This is a considerable headwind to the UK manufacturing industry, which is already set to be challenged by higher labour taxes from April as changes to employers’ National Insurance contributions come into play.
In tandem with still-high interest rates and ongoing cost-of-living pressures, which continue to weigh on consumer confidence, overall adspend growth is also forecast to be modest in 2025. S&P Global Market Intelligence’s prediction for UK adspend growth was nevertheless unchanged for 2025 at 1.3%.
For 2026 onwards, GDP growth forecasts are little-changed from the previous Bellwether report, with small upward revisions in each case. As for adspend, growth is set to recover to a more robust pace from 2026, with the forecast being lifted to 1.8% for this year, from the 1.6% previously estimated. Increases of 2.0% are pencilled in for 2027 and 2028, which are in line with trend-rate growth for adspend.
IPA director general Paul Bainsfair said: “Given the significant economic and geopolitical challenges that UK companies are facing, this latest IPA Bellwether Report paints an understandably cautious picture. However, it is encouraging to see that, despite these headwinds, UK companies are increasing their overall marketing budgets.
“Digging into the detail, 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. All of which reflects companies’ concerns on profitability following the Budget.
“Meanwhile, the rise in investment towards direct marketing – driven by technological advancements and AI’s ability to enable hyper-personalisation – is an interesting development.
“Looking ahead, it’s promising that both UK companies’ provisional budget plans for 2025/26 and S&P Global’s ad spend forecasts are trending upward. Advertising remains a vital tool for brand growth, economic development, fostering competition, and driving innovation. As such, companies shouldn’t overlook the importance of sustained investment.”
S&P Global Market Intelligence principal economist Joe Hayes, who is also author of the IPA Bellwether Report, added: “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, meaning 14 of the past 15 quarters have seen increases.
“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.”
Related stories
Bellwether reaction: Learn how to protect against frost
Direct marketing glows as adspend is hit by big freeze
Bellwether Q2: Can election bounce bring blue skies?
Direct marketing up again in ‘vim and vigour’ Bellwether
Market grows 60 times faster than GDP to hit £36.6bn
IAB/PwC Digital Adspend reaction: Channels to watch
Digital surges 11% to £29.6bn as new channels shine
Bellwether reaction: ‘Green shoots will need nurturing’
Direct marketing shines again as spring brings recovery
Be the first to comment on "Direct marketing booms as tech drives personalisation"