Marketing budgets stall ahead of autumn budget

Total marketing budgets failed to grow for the first time in three and a half years, according to the survey, which tracks UK marketers’ intention to spend and confidence levels on a quarterly basis.

The respective net balance of UK companies revising their marketing budgets up ( 21.6%) compared with revising them down ( 21.6%) dropped from +15.9% in the second quarter to 0.0% in the third quarter, according to the research.

Marketers’ spending intentions for market research also stalled, with 74% of participants recording no change in their research budgets. However, the proportion of marketers reporting downward revisions ( 13.7%) was slightly greater than those seeing growth ( 12.2%), leading to a negative net balance (-1.5%) – the first since the fourth quarter of 2023. 

The Bellwether report initially projected lower expenditure for research across the 2024/25 financial year, but the latest downgrade was less severe than predicted. 

In terms of overall sentiment, the Q3 survey found that 23.9% of participants expressed a negative outlook regarding their own company’s financial prospects, compared with 21.7% who were positive. Additionally, marketers were more negative about the outlook for their industry overall, with a net balance of -16.2%, the lowest recorded for this measure since the final quarter of 2022.

Paul Bainsfair, IPA director general, said: “Negative hype surrounding the impending budget has no doubt created choppy waters for UK companies and their marketers to navigate. 

“Looking to the positives, this quarter’s results reveal that companies aren’t cutting their marketing budgets; they are pressing pause until they know more about the government’s economic plans. It is worth noting that our adspend forecast has been revised up for 2024 and 2025 because the economic data has been so strong so far this year, and that main media growth strengthened to a one-year high while sales promotion budget growth slowed – both of which are signals of bullishness.”

The IPA Bellwether Report is based on a questionnaire survey of around 300 UK-based companies that provide regular quarterly information on trends in their marketing activities. Panellists are primarily marketing directors or similar and are recruited from the UK’s top 1,000 companies. Questionnaires are dispatched to companies in the final three weeks of each calendar quarter. 

Joe Hayes, principal economist at S&P Global Market Intelligence and author of the report, said: “After some bumper quarters for UK marketing spend, the Q3 Bellwether report suggests that companies have dialled back their advertising activity levels. The result is disappointing and ends a strong sequence of growth, although perhaps it is more of a temporary step back as opposed to the start of a downward trend.

“One reason why this might be the case is the autumn budget, which is subject to much uncertainty about what new policies the government will announce. Fears of unfavourable taxation changes were frequently cited by panellists. Indeed, throughout the Bellwether survey’s long history, there have been several general elections, and history tells us that political uncertainty often weighs on decision-makers.”

Commenting on the findings, Lucy Bristowe, chief executive, UK & Western Europe at Kantar Media, said: “It’s been a year of cautious optimism for consumer sentiment and these figures put the emphasis back on ‘caution’ for UK marketers as we come to the end of 2024. Advertisers might not be slashing budgets, but they are holding tight for more certainty – and that’s no surprise with the autumn statement and a US election on the horizon.

“Although many consumers are still feeling the pinch, brands know they cannot stand still or risk getting left behind. Continuing to explore new ways to connect with consumer targets will reap rewards in the long-term, which is why they’re right to box clever with trusted tactics to identify, target and measure their audience effectively. The trick is to stay in the game while these political headwinds blow over. It’s about making the budget work harder by prioritising precise segmentations and people-based measurement to keep pace with evolving consumer behaviours.”