As data from UK retailers emerges to indicate disappointing Christmas sales, reports on the advertising front suggests the final quarter of 2025 delivered a mixed bag for marketing spend. While forecasts from the Advertising Association (AA) and WARC projected rising UK ad spend to reach £12 billion during Q4, the latest IPA Bellwether report reveals that UK marketing budgets flatlined during the quarter. The net balance, derived from subtracting the proportion of marketers who reported a decrease in spend from those whose budgets increased, came in at 0.0 percent, suggesting that the year ended on a neutral note.
This “budgetary stasis” is unusual for the Golden Quarter, but the flat rate signals that marketers maintained their level of spending, following two consecutive quarters of upward revisions to their marketing budgets. Respondents noted that cost pressures, muted economic activity and budget constraints prompted budget re-evaluation, while the Autumn Budget was cited as a headwind in the final quarter. And wider factors such as escalating geopolitical tensions, US tariffs and fears of an AI-fuelled stock market bubble also unsettled marketing activity, according to the IPA.
“This quarter’s flatlining of marketing spend reflects a wider confidence problem,” said Paul Bainsfair, IPA Director General. “Global instability continues to unsettle markets, while domestically there appears to be limited faith in the Government’s grip on the economy. Until that changes, caution is understandable. What we can say with confidence, however, is that those organisations which continue to invest in advertising, especially in a quieter market, stand to gain greater visibility and, over time, increased market share. This is most effective when investment is sustained and focused on long-term brand-building channels.”
The pivot to performance
The survey results found that budgets were raised for PR (+3.5 percent) and events (+1.4 percent) in Q4, while the “other online” category also saw an impressive net balance of budget increases (+13.2 percent). The IPA saw this as evidence of businesses seeking to “strengthen their online presence and reach wider audiences.”
But main media budgets were unchanged on average (0.0 percent), with declines recorded in out-of-home marketing (-17.6 percent), audio (-10.2 percent) and published brands (-6.5 percent). Video meanwhile saw budget reductions with a net balance of -5.0 percent, but the drop follows budget expansion of +6.7 percent in Q3.
Amy Lawrence, Head of Digital, EMEA, Publicis Imagine & Chair of the IPA Digital Marketing Group, observed that the decline in more brand-focused media channels, coupled with the rise in other online activity, highlights a shift towards performance-led investment and short-term ROI.
“There have been significant changes in the main media budget forecasts since the previous Bellwether report,” said Lawrence. “Whilst the overall outlook shows a slight decline, there are notable swings within channels, most prominently video (from +6.7 percent to -5.1 percent) and other online (from +2.1 percent to +13.2 percent). Although caution is required when interpreting these broad categories, the sharp increase in other online spend points to a wider shift towards performance-focused investment and short-term ROI amid ongoing economic uncertainty. With potential rate cuts on the horizon, a degree of rebalancing may emerge in the next wave of results.”
Headwinds and green shoots
In the meantime, the growth outlook for UK marketing spend is notably subdued. Initial budget setting for the 2026/27 financial period shows a net balance of +1.7 percent of firms predicting an increase in total marketing spend, representing “one of the weakest preliminary outlooks” in the Bellwether’s 25-year history. Respondents noted that the pressure to generate greater return on investment has led to lower budget allocation for the forthcoming financial year, with main media budgets down by -3.1 percent on net balance.
The results also pointed to pessimism among panellists regarding their own companies’ financial prospects over the next three months. The net balance came in at -19.0 percent, reflecting the highest level of negativity in 13 quarters. And on an industry level, the survey revealed a net balance of -30.1 percent pessimism towards industry-wide financial prospects.
Meanwhile a combination of “lacklustre consumer spending, persistent global trade uncertainties and heightened geopolitical tensions” are set to dampen economic growth in the UK this year, prompting S&P Global Market Intelligence to revise its GDP growth forecast from 1.1 percent to 0.8 percent.
However, consumer spending is forecast to improve by the end of 2026, in line with slowing but continued growth in real incomes, lower inflation and retreating borrowing costs. GDP growth is therefore forecast to rebound in 2027, according to the report. Brighter economic conditions are also expected to support growth in UK ad spend, which is forecast to rise by 1.5 percent in 2026 and 2.3 percent in 2027 and beyond.
“It’s nice to start the year on a positive note,” said Jim Kelly, Deputy MD Head of Planning, Story and IPA Chair for Scotland. “At least the latest Bellwether Report does indicate some green shoots in the form of anticipated easing of inflationary pressures, alongside reduced borrowing costs, seeing business investment springing back in 2026. Also, there’s recognition that marketing budgets did hold firm despite such significant levels of uncertainty in the latest quarter.”
“However, there’s no hiding from this being one of the weakest preliminary outlooks in Bellwether history, with no growth anticipated in main media advertising,” he added. “Perhaps that’s no surprise given the continued lack of confidence amongst both businesses and consumers, combined with cost-of-living pressures. It’s imperative for agencies and their clients to keep building the case for continued marketing investment and the benefits that this delivers, to give those green shoots any chance of pushing through.”
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