Uncertainty around Trump’s controversial tariffs, combined with the on-going cost of living crisis, left UK companies adopting a cautious approach as they reduced their total marketing budgets in the opening quarter of 2025.
According to the latest IPA Bellwether Report published today, it marks the first decrease in four years as 24.2 per cent of respondents revised their marketing budgets in Q1 of 2025. This meant a net balance of -4.8% of firms adjusted their marketing budgets, a shift from the last quarter of 2024 which recorded growth with a net balance of +1.9%.
The report gathers marketing information from around 300 UK companies to gauge overall spend. But it’s important to note that the survey was conducted before Trump’s tariffs were announced on 2 April. Back in the UK, there was also a National Minimum Wage rise and the amount of National Insurance paid by employers increased in April.
READ MORE: Could Trump tariffs hit the UK? What it means for the North and impact on digital and tech sectors
But the 2025/26 financial period looked positive to those surveyed with just over 36% of respondents expecting an increase in their total marketing budgets, with a net balance of 18.4% feeling optimistic about their advertising spending budgets for the coming year.
“In the face of President Trump frequently overturning political and economic norms, it’s understandable that more UK businesses have adopted a cautious, ‘wait and see’ approach to marketing spend this quarter. Even before the introduction of US tariffs on 2 April (thankfully now paused), the anticipation alone – combined with rising costs from National Insurance increases and the minimum wage hikes – was already influencing budget decisions,” explained Paul Bainsfair, IPA Director General.
He added: “We’re seeing a familiar pattern emerge in these challenging times: increased investment in short-term sales promotions and cuts to main media budgets. While these adjustments may offer immediate relief, they are not a sustainable path to long-term brand growth. That’s why it’s encouraging to see that, when looking ahead to annual marketing budget plans, many businesses are preparing to reinvest in main media, demonstrating a continued belief in the importance of brand building, even in uncertain times.”
By marketing category
“It is also noteworthy that revisions to direct marketing budgets remain firmly in positive territory, reinforcing last quarter’s insight that AI is playing a growing role in enhancing both the personalisation and efficiency of this medium for UK companies,” said Bainsfar.
- Direct marketing was the best performer in Q1 with a +9% net balance, up from +5.6% in the last quarter.
- Events followed next, with a net balance of +5.4% but this was down from +12.3%.
- PR recorded +3.4% net balance, from +6.8%.
- Sales promotions had the strongest increase in two years, with a net balance of +8.0%, up from +4.1%.
- Market research dropped, with a net balance of -10.5%, down from +3.1%.
The main media category, which includes video and audio, fell to a net balance of -6.7%, down from -4.3% in the last quarter of 2024. But the category most significantly impacted was the “other” category, which includes any paid-for marketing not specified in the survey, which fell to a low of -11.7%, down from -4.2%.
The “other” category includes:
- Out of Home -18.9%, from -12.8% in the last quarter of 2024.
- Audio -10.8%, from -17.8%
- Published brands -8.3%, from -10.2%
- Video -1.0%, from -10.7%
- Online advertising saw a slight increase in marketing budgets, up +0.7% from +2.2%
Looking ahead and reaction
For the 2025/26 financial period, data from IPA’s report reveals marketing budgets for all monitored categories, with the exception of sales promotions, are expected to increase.
The highest level of optimism was recorded for events, which registered a net balance of +16.6%, followed by direct marketing at +12.9%.
However it the report highlighted that 31% of respondents felt less optimistic about their own company’s financial outlook in Q1 compared to the previous quarter, while 18.1% reported a positive outlook.
Despite a complex economic climate, adspend forecasts remain unchanged for 2025 and 2026.
“I’m not entirely surprised by the Q1 2025 IPA Bellwether Report,” stated Sue Benson, Managing Director, The Behaviours Agency and IPA City Head for Manchester & North West. “The headline decline in spend is something we’re experiencing across the board and the uplift in the response channels is the current natural strategy to drive activation. Diminished financial confidence underscores the need for agility and resilience. Navigating this landscape requires a keen focus on delivering demonstrable value and fostering deeper consumer connections.”
