The latest IPA Bellwether report reveals a significant shift in UK marketing budgets for Q1 2025. For the first time in four years, overall marketing budgets experienced a decline, with a net balance of -4.8% of firms cutting spending. This contrasts sharply with the previous quarter's almost +2% net balance, indicating a considerable change in marketing strategies and priorities. The decrease suggests a reallocation of resources driven by declining sales and reduced revenue, prompting a more cautious approach among many companies navigating economic and political uncertainties.
The Impact of Economic and Political Uncertainty
The report highlights the influence of external factors on marketers' budgetary decisions. The anticipated US tariffs, coupled with UK national insurance increases and minimum wage hikes, played a significant role in influencing the Q1 2025 downturn. This reflects a broader trend of businesses exercising fiscal prudence in the face of economic headwinds. The uncertainty surrounding global trade and potential economic slowdowns naturally leads to tighter control over spending across various sectors, including marketing.
Many companies are adopting a more data-driven and results-oriented approach to justify marketing expenditure. This means that less emphasis may be placed on broad brand-building campaigns that don't directly translate to tangible sales figures. Instead, marketing teams are increasingly focused on demonstrating a clear return on investment (ROI) for each campaign. This shift necessitates the use of robust analytics and reporting to track the success of various marketing initiatives.
Analyzing the Decline: Sector-Specific Trends
While the overall picture shows a budget decrease, not all marketing categories experienced a downturn. Certain sectors demonstrated resilience and even growth, offering valuable insights into the evolving priorities of UK marketers.
Direct Marketing: This sector emerged as a standout performer, recording a net balance of +9%—a substantial increase from the previous quarter's +5.6%. This growth underlines the effectiveness of targeted, personalized campaigns in engaging customers directly and driving measurable results. The ability to track conversions and attribute success directly to direct marketing efforts makes it an attractive option for companies looking for a clear ROI. Examples include personalized email marketing, direct mail campaigns with targeted offers, and SMS marketing with exclusive promotions.
Sales Promotions: Similarly, sales promotions budgets saw strong growth, reaching a net balance of +8%—their highest in almost two years. This signifies the continued importance of incentivizing purchases and boosting sales through offers and discounts. Successful sales promotion campaigns often involve collaborations with retailers, strategic product placement, and targeted advertising to reach the right customer segments at the right time. Examples include contests, loyalty programs, and limited-time offers.
Events and PR: Both events and PR experienced budget increases, with net balances of +5.4% and +3.4%, respectively. However, the growth was less pronounced than in the previous quarter. This suggests that while marketers still value the benefits of in-person events and public relations activities for brand building and relationship management, they are perhaps adopting a more selective approach, prioritizing only high-impact events with a guaranteed ROI. The selection of events and PR strategies is likely dictated by data analysis regarding potential audience reach and engagement levels.
Main Media Advertising: The decline in overall marketing budgets directly impacted main media advertising, with a slight decrease recorded in the report. This underscores the need for marketers to adopt a more strategic and nuanced approach to traditional advertising channels, selecting those that best align with their target audience and deliver maximum impact within their allocated budgets. Many advertisers are moving towards more targeted advertising strategies using advanced analytics and data-driven campaign optimization.
The Future Outlook: A Positive Trajectory
Despite the Q1 2025 decline, the report indicates a positive outlook for the future. A significant 36% of marketing executives expect to increase their funding for the 2025/2026 financial period. This optimism reflects a belief in the long-term value of marketing investments and a strategic recalibration rather than a complete retreat.
The planned budget increases highlight specific areas of focus for marketers:
Events: The events category is poised for significant growth, with a net balance of +16.6% of companies planning increased spending for 2025/2026. This suggests a renewed focus on in-person experiences and relationship building, leveraging events to connect with customers and prospects on a personal level. The emphasis will likely be placed on high-quality, targeted events that guarantee substantial ROI.
Direct Marketing: Direct marketing continues to be a priority, with a net balance of +12.9% planning increased spending. This further underscores the effectiveness of personalized, measurable campaigns in driving sales and building customer loyalty.
Main Media Advertising: While experiencing a slight decrease in Q1 2025, main media advertising is expected to see a modest increase, with a net balance of +2% of companies planning increased spend. This indicates that, while budgets are tightening, traditional advertising channels still hold a place in many marketers' strategies. However, this allocation will likely be much more strategic and precise, relying on advanced analytics and targeting to maximize return.
Expert Insights: Navigating the Changing Landscape
To gain further perspective, we sought insights from various marketing industry experts on their interpretation of the report's findings and their recommendations for marketers. Their responses reveal a range of opinions and strategies for navigating the current challenges and capitalizing on emerging opportunities.
Toccara Baker, VP Field & Brand Marketing, TripleLift
Baker emphasizes the need for agility, data-driven decision-making, and bold creativity in connecting brands with audiences. She highlights the potential of AI and new technologies, while stressing the importance of creativity in cutting through the noise and building meaningful engagement. The use of more engaging formats, such as video, is also crucial for capturing attention in a cluttered environment. Her comments suggest a strategic shift towards channels that deliver measurable ROI while fostering deeper customer relationships.
Kim Berkin, Managing Director, Charlie Oscar
Berkin's perspective focuses on the value proposition for agencies, urging them to prioritize demonstrable value for clients. She highlights the redirection, rather than abandonment, of marketing spending towards digital channels that blend performance with brand building. The emphasis on accountability and measurable outcomes stresses the need to move beyond vanity metrics and embrace more comprehensive measurement methodologies like marketing-mix modeling (MMM). Berkin's comments emphasize the importance of aligning agency services with clients' business problems to ensure sustained growth.
Dean Nagib, Commercial Director, Azerion UK
Nagib emphasizes the importance of data-driven, performance-led strategies underpinned by robust technology. He points to the resilience in budget allocations for digital and direct marketing, mirroring the growing demand for personalized, real-time engagement. The need to balance performance with long-term brand building is also highlighted, despite the challenges faced by main media advertising. Nagib's comments underscore the value of omnichannel platforms that enable smarter decision-making across various advertising channels.
Fiona Salmon, Managing Director, Mantis
Salmon points to the decline in spending on publishers, while emphasizing the opportunity for premium publishers to stand out in saturated, low-attention channels. She advocates for a shift from viewability to attention metrics as a benchmark for campaign success, highlighting the value of advertising alongside engaging, long-form content that captures attention for extended periods. Salmon's perspective suggests that once publishers demonstrate the true value of their inventory, they can secure a lasting place in media plans.
Babs Kehinde, Senior Director, Commerce Media EMEA, PubMatic
Kehinde highlights the rise of retail media as brands seek more accountable, outcome-driven channels. The increased demand for retail media networks is attributed to their precision, scale, and measurable performance. The ability to connect with shoppers closer to the point of purchase, powered by first-party data and contextual relevance, makes retail media an attractive option for brands aiming for a clear ROI. Kehinde's comments underscore the importance of aligning marketing strategies with the specific needs and behaviors of target audiences.
Victoria Usher, CEO and Founder, GingerMay
Usher emphasizes the impact of economic pressures on brand loyalty, highlighting the need for companies to focus on both what they sell and how they are perceived. The boost in perception-building channels, such as events and PR, is attributed to their ability to foster dialogue and enable brands to own their messaging. Usher's comments suggest that in a saturated media landscape, quality communication and brand storytelling are more crucial than sheer quantity.
Vinod Kashyap, Chief Product Officer, Digital Envoy
Kashyap observes that despite economic volatility, advertising budgets for video remain relatively unchanged, while direct marketing budgets increased. He attributes this to brands' desire to own their customer data and use AI for efficient targeting. The importance of owning audience data, particularly for CTV advertising, is emphasized, highlighting the need for IP address geolocation stability to link marketing activity to measurable returns. Kashyap's perspective underscores the increasing role of AI and first-party data in shaping marketing strategies.
Lawrence Horne, UK Country Director, Ogury
Horne addresses the challenge of maintaining brand awareness while optimizing budgets for mid and upper-funnel campaigns. He advocates for the use of AI to overcome cost and resource barriers. Natural language interfaces, machine learning, and generative AI are highlighted as tools for creating large volumes of effective ads and content in less time and at a lower cost. Horne's comments suggest that automation is key to ensuring that ambitious media plans remain feasible even with tighter budgets.
Alexia Nakad, VP of Brands, UK and MENA, LiveRamp
Nakad stresses the importance of a strategic, data-driven approach that provides a comprehensive and measurable view of the customer journey. This involves optimizing media across the customer journey and understanding ROAS and iROAS to drive customer growth. She emphasizes the need for data collaboration and the use of technologies like data clean rooms to connect with various data owners. Nakad's perspective underscores the necessity of forming partnerships and utilizing technology to gain a holistic view of customer behavior.
Phil Acton, Country Manager UK, Adform
Acton highlights the challenges of rising operational costs and economic pressures, emphasizing the need for greater impact with leaner budgets. He advises against delaying technology investments, suggesting that it can reduce advertising effectiveness in the long run. The importance of achieving clear attribution in a fragmented media landscape is highlighted, advocating for the use of AI to integrate disparate data and optimize spending. Acton's comments underscore the role of AI in achieving media efficiency and maximizing ROI.
Guy Jackson, Chief Commercial Officer, RAAS LAB
Jackson emphasizes the need for precise ad delivery, enhanced engagement, and better returns in a climate of rising operational costs and economic pressures. He highlights the role of AI in analyzing data at the impression level to ensure that the right user is reached with hyper-relevant messaging. Jackson's comments advocate for investing in AI-led creativity to distinguish brands and unlock improved outcomes.
Nick Reid, SVP & Managing Director EMEA, DoubleVerify
Reid confirms the sustained high demand for AI solutions in advertising, highlighting custom bidding algorithms as key to optimizing media strategies. The processing of signals such as first-party data and offline sales insights is emphasized as crucial for ensuring that ad spend supports brand-specific outcomes. Reid's perspective underscores the increasing role of AI in enhancing media performance and achieving meaningful business results.
Ed Wale, VP, International, LG Ad Solutions
Wale notes a shift towards channels offering precision, performance, and proof, highlighting CTV as a key example. He emphasizes that AI is no longer hype but is driving smarter strategies and real results. The planned increase in spending by over a third of brands in 2025/26 is interpreted as a recalibration rather than a retreat. Wale's perspective underscores the importance of adapting to evolving market conditions and leveraging technology to achieve better outcomes.
Conclusion: Adapting and Evolving in a Dynamic Market
The IPA Bellwether report for Q1 2025 paints a picture of both immediate challenges and long-term optimism within the UK marketing landscape. The decline in overall marketing budgets marks a significant shift, demanding a more strategic and data-driven approach from marketers. However, the positive outlook for 2025/2026, coupled with the growth in specific sectors like direct marketing and events, suggests a recalibration rather than a retreat. The increasing adoption of AI and data-driven technologies is evident across expert opinions, highlighting their crucial role in navigating the changing market dynamics and achieving measurable results. The future of UK marketing lies in embracing agility, focusing on performance-led strategies, and leveraging technology to optimize spending and deliver exceptional results.