Market research budgets rose in Q2, finds IPA Bellwether

The Bellwether found that the increase in market research budgets was up from the first three months of the year, when net growth in budgets was 1.4%, in contrast with a longer-term average balance of -6%.

The second quarter data showed that 12.7% of Bellwether panellists raised their current budgets, outweighing the 9.5% that saw them reduce during the same period

The growth in budgets for market research was also a surprise when compared with predicted budget cuts for the 2024/25 financial year, with a predicted net balance of -4.4% of firms forecasting a decline in budgets.

Bill Doris, vice-president analytics, Europe, Middle East and Africa at EssenceMediacom and IPA Media Research Advisory Group chair, said: “This is a refreshing change from the previous quarters. Even with some political uncertainties, UK companies have been feeling upbeat thanks to a stronger economy, lower inflation, and the hope of interest rate cuts.

“While market research isn't seeing the biggest budget increases compared to other areas, it’s clear that businesses value the insight it provides. Fingers crossed this positive trend continues.”

The Bellwether found a strong rise in total marketing budgets in the second quarter, reaching an net balance of 15.9%, up from 9.4% in the first quarter of the year.

The IPA said the increase was the highest level since the first quarter of 2014 (when it measured 20.4%), and is the second highest upward revision in the survey’s almost 25-year history.

Additionally, the net balance has been in positive territory in each of the past 13 quarters, signalling a sustained period of growth in UK marketing spend, with only 14% of respondents reporting budget cuts in the second quarter, half the proportion recording expenditure growth ( 29.9%).

Events continued to be the best-performing mode of marketing from a budgeting perspective, with a net balance of 17.2%, albeit slightly from 23.1% in the previous quarter.

Main media budgets, which include spending allocated for big-ticket advertising campaigns broadcasted on television and radio, returned to growth after a marginal reduction in the first three months of 2024.

The Bellwether predicted some caution from businesses for the rest of the year, and S&P Global Market Intelligence anticipated advertising spend to flatline in real terms in 2024 when compared with last year. 

For 2025 onwards, the outlooks for both the UK economy and adspend were much more upbeat, with interest rates expected to fall, while inflation is also set to cool further. S&P Global Market Intelligence anticipated adspend growth of 1.2%, 1.7% and 1.9% for 2025, 2026 and 2027, respectively.

Paul Bainsfair, IPA director general, said: “In line with the brightening economy, decreasing levels of inflation and a new government, this quarter’s Bellwether Report reveals real vim and vigour regarding UK companies’ marketing spend intentions. As we know, advertising is a lever for growth for companies and so it is great to see them capitalising on these developments.

“While we welcome this positivity, it is worth noting that while inflation levels have come down, this hasn’t yet translated into prices, and as such strains on many household finances prevail. Companies would benefit from being cognisant of this in terms of their communications approach and messaging to their consumers. I suspect that those brands that can bestow their sense of value, trust and reward will fare well here.”

Joe Hayes, principal economist at S&P Global Market Intelligence and author of the Bellwether Report, added: “While a general election carries the potential to generate a lot of uncertainty and decision-making paralysis in its lead up, it seems that UK companies in the Bellwether survey largely shrugged it off as a factor to consider when assessing their marketing budgets in the second quarter as growth jumped to a 10-year high.

“A strong performance by the UK economy so far this year, in tandem with falling inflation and the expectation of an imminent interest rate reduction by the Bank of England, has helped lift confidence, providing more fertile grounds for companies who wish to invest into their brands and position themselves for long-term growth.”

Reaction

Lucy Bristowe, CEO, UK & Western Europe, Kantar Media
The outlook is brightening for UK marketers. With greater certainty in domestic politics and inflation falling, the stage is set for brands to plan for growth. However, we need to keep things in perspective. TGI data from Kantar Media shows that a large proportion of the public are still struggling financially.  In particular, those we identify in TGI Lifestage categories with dependents (e.g. ‘playschool parents’) or those renewing mortgage deals at higher rates. 

Marketers need to understand where their audience is feeling the pinch so they can design and deliver more targeted campaigns.  That is why we’re seeing investments nudge up in market research.  If marketers can use research and data to identify audiences and target their campaigns effectively, no doubt they will justify this optimism.

Alex Uprichard, managing director, IMA-HOME, and IPA city head for Leeds, Yorkshire and Humberside
Who wouldn’t be positive about the news that UK businesses expanding their marketing budgets has risen by the highest level in a decade to 15.9% in Q2? There was every chance political uncertainty would stagnate investment decisions, but the winds of change have clearly driven more optimistic budgeting. The continued growth of events budgets indicates that real world experience is driving strong results for Bellwether companies. We’re witnessing it first hand as an agency, creating retail activations day-in-day-out for existing and new clients.

Main advertising budgets experiencing growth is another positive indicator as we look towards planning season. We’re moving from reactionary short termism as the economic landscape starts to stabilise and are more able to work with our clients on long term objectives, which not only future proofs brands but the industry at large. So let’s keep going in this direction.

Alex Cheeseman, head of enterprise UK, Outbrain
There’s something in the air – optimism. UK businesses are stoking their marketing fires, with budgets seeing their biggest boost since 2014. The latest IPA Bellwether Report confirms it: marketing budgets are back. But how do brands make the most of this windfall in a world where trust is in short supply? After years of economic gloom, UK companies are finally seeing the light. Marketing budgets are up, with events and direct marketing leading the charge. People crave face-to-face interactions, and businesses are ready to engage. But even as inflation eases, many households still feel the pinch.

Brands have a greater obligation (and now a greater opportunity) to know and understand the cultural currents that propel their customers. Brands need to blend optimism with empathy in their messaging. This is where news journalism shines. In a world cluttered with ads, news media stands tall as a beacon of credibility. People trust the news more than their next-door neighbours. As the UK economy climbs, the future of marketing is bright, with news journalism lighting the way.

Consumers want more than products; they want brands that stand for something. Brands that weave authenticity into their narratives and communicate value will thrive. The IPA Bellwether Report is a call to action. Brands that seize this moment will not only survive but thrive, building trust and engagement.

Fergus McCallum, CEO, TBWA\MCR
People I talk to across the business and advertising communities do seem to be feeling generally more optimistic. The IPA Bellwether report reaffirms this, with UK marketing budget growth hitting a decade high in Q2.

The Labour government will of course bring change. But it has been inevitable for a long time, and I believe the business sector is better at dealing with change rather than uncertainty.

So, no matter what your political persuasion, a government with a clear mandate to govern brings a stability that has been sorely missing. And realistically, the government also needs a thriving business sector to deliver its manifesto for working people. That can only be good for our clients, our people and ultimately the advertising sector as a whole. Bring it on.

Justine O'Neill, senior director, Analytic Partners
With sales promotions experiencing their longest spell of growth since 2018 and a concurrent uptick in main media marketing spending, brands should benefit from growth that is both sustainable and impactful.

Finding the appropriate balance will stand brands in good stead by providing value to consumers who are still struggling with the cost-of-living crisis and cementing trust which will pay it forward when it comes to long term brand loyalty.

This astute and nuanced balancing act between targeted price promotions and long-term brand health should help CMOs drive impact as they gear up for the golden quarter where there is everything to play for at the busiest consumer spending time of the year.