UK marketing budgets have come to a standstill for the first time in 14 quarters, according to the latest Bellwether Report published by the Institute of Practitioners in Advertising (IPA). The report, which surveys marketing professionals across various sectors, reveals that the growing uncertainty surrounding the upcoming Autumn Budget has led many companies to pause their marketing activities.
For the third quarter of 2024, a net balance of 0% was reported, meaning that the number of companies increasing their marketing budgets equalled those making cuts. This marks a significant shift from the previous quarter, which saw a net balance of +15.9%, indicating strong budget growth. The report suggests that many firms are adopting a “wait-and-see” approach as they assess the potential impact of government policy changes on their businesses.
Despite the overall stagnation, some areas of marketing spend continue to show signs of growth. Main media advertising, particularly video campaigns, saw an increase for the second consecutive quarter, with a net balance of +4.3%—the highest growth in over a year. Video marketing, in particular, drove this increase, with a net balance of +11.7%, reflecting its appeal to marketers despite the broader economic uncertainties.
However, other sub-categories within main media advertising did not fare as well. Out-of-home advertising saw the sharpest decline, with a net balance of -15.7%, while audio advertising also experienced a downturn, with a net balance of -10.0%.
Although this quarter’s results may seem like a setback, industry experts believe the pause in marketing expenditure could be temporary. Paul Bainsfair, Director General of the IPA, commented: “While many companies have pressed pause, they haven’t cut their budgets altogether. As clarity emerges around the Autumn Budget, we could see marketing activity pick up again.”
Looking forward, the Bellwether report offers some positive news, with adspend forecasts being revised upwards for 2024 and 2025. S&P Global Market Intelligence, which conducted the survey, now predicts that adspend will grow by 0.6% in real terms next year and by 1.3% in 2025.
The report also highlights the challenges that UK businesses face, particularly in light of ongoing political and economic uncertainty. Financial prospects for individual companies turned negative for the first time in seven quarters, with a net balance of -2.2% of marketing professionals reporting a less optimistic outlook for their companies.
Joe Hayes, Principal Economist at S&P Global Market Intelligence, pointed to fears of new taxation policies as a major reason for the slowdown in marketing activity: “Uncertainty surrounding the Autumn Budget, and the possibility of unfavourable tax changes, has caused companies to adopt a more cautious approach.”
Future outlook
Despite the short-term challenges, the long-term outlook for UK marketing remains promising. Growth areas such as public relations, which saw a record-high net balance of +11.0%, and direct marketing, which continued its robust performance with a net balance of +9.7%, are expected to drive marketing expenditure in the coming years.
However, with the UK still navigating high inflation, elevated borrowing costs, and geopolitical tensions, businesses remain cautious. As the political landscape stabilises following the Budget, many will be watching closely to determine the future of their marketing investments.
The next Bellwether report is expected to provide further clarity when it is released in January 2025.
