Direct marketing continued its impressive performance in Q3 2025, according to the latest IPA Bellwether Report, with brand owners increasingly reallocating their budgets to methods which enable them to be more targeted, focusing on lead generation and customer engagement.
In fact, a net balance of +9.7% (from +9.1% in Q2) of Bellwether panellists reported a rise in direct marketing budgets, a sequence stretching back 11 quarters to January 2023.
Meanwhile, events, saw a net balance rise of +10.9% (+3.9% in Q2), with PR the final growth segment, with a net balance of +2.5% in Q3 (+2.7% in Q2).
In fact, these three segments alone led to a healthy 22.3% of panellists reporting an increase in their overall marketing spend in the third quarter of the year, while those indicating a reduction was lower at 18.7%.
This resulted in a net balance of +3.6%, a slight decline from +5.5% recorded in the previous quarter, and well below the +18.4% net balance of companies that anticipated growth for the 2025/26 financial year, Nevertheless, this positive figure marked back-to-back quarters of total marketing budget expansion and was a notable contrast to Q1’s -4.8% net balance.
For a second consecutive quarter, main media budgets saw no change, with the net balance coming in again at 0.0%. There was an uneven picture at the individual category level, however.
While video and other online categories saw marketing budgets rise on the quarter (net balances at +6.7% and +2.1% in Q3, from 0.0% and +2.2% in Q2, respectively), the remaining three tracked areas – published brands, audio and out-of-home – recorded further reductions, with net balances (-6.2%, -13.0% and -15.2% respectively) falling in all instances (from -4.8%, -6.3% and -8.9%, respectively).
Meanwhile, sales promotions budgets were reduced for the first time in two years, with the net balance falling to -0.9%, from +9.4% in Q2.
Market research and the “other” category remained in the bottom two of the rankings. A net balance of -6.8% firms cut market research budgets, only slightly less pronounced than the -7.0% net balance in Q2. The “other” segment, which covers marketing activities not already accounted for, saw its net balance fall from -8.7% in Q2 to -12.1% in Q3.
Even so, Q3 data revealed that Bellwether respondents felt more optimistic towards their own-company financial prospects compared to the second quarter. While on balance, the proportion of firms feeling upbeat was only minimal, it was the first time since Q2 2024 that the net balance posted in positive territory.
Over a quarter (25.7%) of companies felt more optimistic about their financial outlook, slightly surpassing the 22.8% of respondents expecting a deterioration. This resulted in the net balance rising to +2.9%, from -3.0% in the quarter prior. While positive, company-own expectations were conservative by historical standards.
Meanwhile, firms remained downbeat towards industry-wide financial prospects. Although the net balance rose to a three-quarter high of -24.0% in Q3, from -26.2% in Q2, it still indicated a heightened level pessimism regarding the financial outlook of their industry more broadly.
More than a third of respondents (33.9%) foresee an industry-wide decline, whereas only 9.9% expressed optimism.
S&P Global Market Intelligence has revised its 2025 GDP growth forecast up from 0.8% in the last Bellwether survey to 1.3%. GDP figures in the first half of the year, particularly Q2, have led to the upward revision. The economic growth forecast for next year has also been lifted to 1.1%, from 0.8%.
Nevertheless, these projections remain fairly subdued overall, reflecting constraints on the economy arising from both recent and expected taxation changes, US tariff policy and subsequent headwinds for the UK industrial sector, in addition to a weak underlying trend in consumer spending.
In terms of adspend, the 2025 Bellwether forecast remains unchanged at 0.6%, well below the predicted long-term trend rate of around 2%. Sluggish growth expectations are in part a reflection of the challenging UK business climate, with companies constrained by high payroll expenses, domestic policy and geopolitical uncertainty, inflationary pressures and elevated borrowing costs.
Many of these challenges are expected to persist into 2026, which has led to Bellwether downwardly revising its adspend forecast for next year to 1.2%, from 1.6% previously.
Positively, S&P Global Market Intelligence’s GDP growth forecasts for 2027 and 2028 are slightly stronger than those for the previous years. Expectations of softer inflation in the UK should also support better increases in adspend in real terms. Adspend growth is forecast at 2.1% in 2027 and 2028, unchanged from the Q2 Bellwether survey.
IPA director general Paul Bainsfair said: “Q3 results in recent years have shown a note of caution, perhaps unsurprisingly, given their timing just ahead of the Autumn Budget. That said, it’s encouraging to see the net balance remain in positive territory. Even in a tough economic climate, businesses clearly continue to recognise the value of advertising.
“What’s particularly interesting is that new analysis of IPA data reinforces the strong link between budget and business growth. The message is simple: to drive meaningful results, advertisers need to think big. Big marketing budgets, broad reach and high exposure. Scale really does matter, which is why investing in big, brand-building media remains so important.”
S&P Global Market Intelligence economist Maryam Baluch, who is author of the Bellwether Report, added: “UK marketing budgets rose further in the penultimate quarter of the year, providing further encouraging news after a soft beginning of the year.
“Most notably, the data reveals renewed optimism regarding financial prospects at the company level, with respondents expressing positivity for the first time in five quarters. Despite ongoing economic challenges, this shows that businesses have adapted by seeking out new opportunities for growth.”
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