In a surprising turn of events, UK companies have scaled back their marketing budgets for the first time in four years, according to the latest Q1 2025 IPA Bellwether Report. 

Against a backdrop of heightened geopolitical tensions and mounting economic pressures, marketing leaders are adopting a cautious stance – opting for short-term gains over long-term brand building.

A Sharp Shift: First Decline Since 2020

The report, covering the period from 1 January to 31 March 2025, reveals a net balance of -4.8% of firms revising their total marketing budgets downward. 

Just under a quarter (24.2%) of businesses reduced spend, compared to 19.4% that increased it. This marks a significant reversal from the previous quarter’s net balance of +1.9%, which had signalled cautious growth.

The change in sentiment appears largely driven by global uncertainty, particularly the erratic political landscape under President Trump, which has reportedly contributed to a “wait and see” mentality among United Kingdom marketers.

Budget Cuts Across Core Channels

The biggest declines were seen in the main media category, with a net balance of -6.7%, further down from -4.3% in Q4 2024. The drop was felt across all key formats:

  • Out-of-home advertising plummeted to -18.9% (from -12.8%)
  • Audio dipped to -10.8% (up slightly from -17.8%)
  • Published brands fell to -8.3%
  • Video advertising eased slightly to -1.0%

Spend on market research also dropped significantly, falling to -10.5% from +3.1%, while the “other” marketing category – covering all paid-for activity not elsewhere classified – saw the steepest drop of all, down to -11.7%, a 16-quarter low.

A Tactical Turn: Sales Promotions Surge

In contrast, sales promotions surged with a net balance of +8.0%, nearly doubling from +4.1% in the previous quarter. This marks the strongest uplift in nearly two years, reflecting a strategic pivot to short-term tactics as brands look to maintain revenue amidst uncertainty.

According to the Director General of the IPA, they are seeing a familiar pattern emerge in these challenging times – cuts to brand-building media and a spike in short-term promotions. 

While it may ease pressure now, it’s not a sustainable route to long-term brand health.

Pockets of Optimism: Direct Marketing and Events

Despite the downturn, not all areas experienced cuts. Direct marketing stood out, with budgets revised upward to a net balance of +9.0% (up from +5.6%). This was attributed in part to the growing role of Artificial Intelligence in enhancing personalisation and efficiency.

Events marketing also saw a modest uplift at +5.4%, although down from the previous quarter’s +12.3%. Meanwhile, PR budgets increased slightly to +3.4%, though this too represented a slowdown in growth.

Looking Ahead: Green Shoots for 2025/26

Despite the pullback in Q1, marketers remain cautiously optimistic for the rest of the 2025/26 financial year. A net balance of +18.4% expect total marketing budgets to rise, with events (16.6%) and direct marketing (12.9%) emerging as the most promising channels.

All major categories – except for sales promotions, which are expected to plateau – are projected to grow. 

However, expectations for main media spend remain muted at just +2.0%, the second-lowest in Bellwether history, suggesting ongoing hesitancy around large-scale brand campaigns.

Confidence Falters at Company and Industry Levels

The decline in marketing investment coincides with a broader lack of confidence in financial performance. 

A net balance of -12.9% of firms felt less optimistic about their own financial outlook, down sharply from -1.2% the previous quarter. This is the most pessimistic result since Q4 2022.

At the industry level, sentiment plunged to a -37.4% net balance, marking a 10-quarter low. Nearly half of survey participants (45%) expressed a bleaker outlook than three months prior, while only 7.6% reported more positive expectations.

Conclusion: A Balancing Act Between Caution and Commitment

The Q1 2025 IPA Bellwether Report paints a clear picture of a marketing industry caught in the crosswinds of global instability and domestic cost pressures. 

Marketers are leaning into short-term levers like sales promotions and direct marketing while retreating from traditional brand-building channels. Yet, there is light on the horizon. Optimism for the latter part of the financial year suggests a willingness to reinvest – once the economic fog begins to lift.

While tactical decisions may dominate today’s strategies, the long-term success stories will likely come from those who manage to balance prudence with consistent brand commitment.