Industry Leaders Voice Caution amid Budget Uncertainty as IPA Bellwether Report Shows Industry in Limbo

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The Q3 Bellwether report signals a pivotal moment for UK marketing, revealing a cautious shift among companies amid uncertainty surrounding the upcoming budget. For the first time in 14 quarters, total marketing budgets remained stagnant, with the net balance of firms adjusting their budgets up or down landing at a neutral 0.0%. This marks a notable departure from the robust growth of previous periods.

Despite this overall pause, the report showcases resilience in several key areas. Public relations experienced its largest upward revision to date, with a net balance climbing from 2.6% to 11.0%. Additionally, the events category demonstrated strong performance, with a net balance of +9.9%. Direct marketing maintained positive growth momentum, achieving a net balance of +9.7%. These results reflect an industry that – while cautious in the face of political and economic uncertainty, continues to invest strategically in high-return areas.

Paul Bainsfair, IPA director general, noted, “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. As clarity emerges, this may indeed prove to be a temporary dip in overall marketing spend rather than the start of a long-term downward trend.”

While many advertisers are treading carefully as they await clearer policy direction, there are those continuing to invest in long-term projects, particularly in media-heavy areas like video campaigns. VCCP for example reports ongoing commitments to long-term spending, suggesting that the current restraint may not signal a broader retreat but rather a temporary hiatus.

In contrast to the cautious optimism surrounding specific growth areas, overall confidence in company and industry-wide financial prospects has deteriorated. Sentiment regarding company-specific outlooks turned negative for the first time in seven quarters, with a net balance of -2.2%, down sharply from +13.6% in Q2. Broader industry sentiment saw an even more pronounced drop, as the net balance plummeted to -16.2%, marking the most pessimistic outlook since late 2022.

Nevertheless, the forecast for ad spend remains encouraging. Industry leaders generally anticipate that this pause in expenditure will be temporary, with expectations of a rebound once greater economic clarity emerges. 

Rebecca Crook, chief growth officer at Modern Citizen

Naturally the forthcoming autumn budget is slowing down marketeers’ decision making whilst they see the outcome and potential business impacts for 2025 and beyond. However, with inflation stabilising, the encouraging news from the report is that consumer confidence is slowly starting to return with optimism particularly from the retail and FMCG sectors. Nevertheless brands should not be complacent with their marketing approaches and need to be investing in enhanced customer service and experiences to really differentiate themselves from competitors to persuade consumers to part with their cash.

Chris Falconer, group managing director at McCann Central

Following a strong first half of the year, marked by significant new business wins and growth within our existing client base, we did notice a slowdown, with some clients becoming more cautious. As we approach the end of the year, we’re continuing to invest in areas of the business where we are seeing increasing demand, such as social, PR, and media, as well as our core advertising business. While we have an exciting pipeline lined up for 2025, securing new business remains crucial to closing out 2024 on a high note and positioning ourselves for success in the year ahead.

Gabby Ludzker, chief executive officer at RAPP UK

The impending doom of the autumn budget is doing nothing to bolster confidence in the advertising market, with brands displaying reticence to move their accounts or grow their marketing spend (for the 14th month in a row).

But as a precision marketing agency, my hopes cannot be dampened with the news that direct marketing is seeing an ‘impressive growth streak’ with an upward budget trajectory of nearly 10%. That’s not a small metric. I believe it’s due to the increased sophistication and leverage of precision itself – targeting exactly and solely the consumers who show relevant buying signals. But, precision with added empathy for the volatile and unnerving economic climate we all face. It is the art and the science of direct marketing that is delivering the customer experience and results businesses crave right now, so no surprise they are distributing more of their budget in this area. After all, results are what the nation needs right now in spades.

Christian Johansen, president at McCann Worldgroup, UK & Europe

It’s no surprise that we are witnessing caution in advance of the upcoming budget announcement, in addition to the ongoing geopolitical headwinds. However, it is encouraging that overall ad-spend forecasts are predicted to lift in the next 12 months. To ensure our industry supports clients through this current phase of uncertainty we need to continue to build for the future with a diversification of agency capabilities, deliver creatively effective work, and have a real understanding of our clients’ commercial reality and businesses. Building enduring brand platforms during this time has never been more important to sustain business value during periods of volatility – and our clients understand are prioritising that more than ever.

Matt Longley, managing director at Mobsta

It was surprising to see online spend down, as this doesn’t reflect what we’ve seen this year in our business. However, the shift towards increased video investment is clear. The report highlights the uncertainty in the market, which isn’t unexpected given elections, geopolitical tensions, and the new UK government’s autumn budget. Even the most optimistic marketer would hesitate this year. However, a stronger UK GDP outlook, following the budget, could spark optimism. Brands that emerge from the cautious fold, and take a bold and proactive approach to 2025, have a real chance to capture market share.

Natasha Broady, client services director at Seen Presents

It's encouraging to see the events sector continue to grow despite the report showing that the sector’s growth has slowed down since 2023, as marketing budgets are tightening. Even though data shows the weakest increase in events expenditure in the last year, at Seen Presents, we've had a successful Q3, securing new briefs and planning several exciting projects for our core and new clients reflecting a strong, sustained appetite for brand experience. Research shows that the best way to drive brand love and loyalty is through authentic brand experiences, so I’m hopeful that the industry will see that continued growth in 2025 and beyond.

Patrick Reid, global chief executive officer at Imagination

The IPA Bellwether Report paints a picture of an industry in limbo, awaiting fresh budgets amid geopolitical uncertainty. This caution is reflected in paused marketing budgets. Yet, even in challenging times, one thing is clear: for the 11th consecutive quarter, events marketing continues to rise. This is because human connections matter. Live events bring unmatched energy, creating multi-sensory, immersive experiences that move people and leave lasting memories. In today’s competitive landscape, brands that tap into these emotions – making people feel something real – are the ones that build lasting loyalty.

Richard Exon, co-founder at Joint

A new government brings new policies and directions, as well as new levels of uncertainty. Which makes businesses twitchy. As we await the first budget from Rachel Reeves, chancellor of the exchequer, businesses can only watch and wait to see how she approaches that much-mentioned growth agenda while fixing the black hole. Nervous brands put pressure on the advertising industry and that has started to be evident in this report. The long-term impact won’t be fully clear until the next Bellwether so it’s currently more a case of hesitation rather than a decline in spend.

Michael Sugden, chief executive officer at VCCP Group

While the headlines around the latest Bellwether report may well focus on the ‘pause’ in marketing spend due in part to the budget announcement at the end of this month, there is nothing to spook the herd in these latest figures and in fact there are some surprisingly positive trends to celebrate.

Whilst mooted tax changes are weighing on some decision makers, the recent fall in inflation to 1.7% could mean a cut in interest rates come November and more disposable income for consumers as we head into the busy Christmas period – good news for FMCG brands.

Continued growth in main media advertising expenditure, and the highest increase in video spend since Q4 2022 shows the appetite for the sort of big ticket campaigns and long term brand building that VCCP is famous for.

Mark Scott, director of marketing and communications at the Chartered Institute of Marketing

Pre-election political uncertainty, combined with concerns around the chancellor's upcoming budget, has led to a broad freeze in UK marketing spend. While advertising has pulled back this quarter, we've observed growth in areas like PR and direct marketing, as businesses focus on influencing regulation and driving short-term sales. Looking ahead to Christmas, we're optimistic that investment in long-term brand building will rebound, and that marketers with professional qualifications will be best positioned to navigate these dynamic market conditions.

Dan Walsh, marketing and communications consultant at The Business Side

There’s no doubt that there’s currently a level of caution around marketing activity. If you analyse who’s delivering excellent campaigns, they aren’t necessarily spending more money, they’re spending their money in a better way which is delivering better value. There are also a number of brands that are recognising that innovative marketing strategies deliver growth and these brands are investing. The brands that aren’t investing, in my opinion, are the brands that aren’t thinking outside of the box, aren’t being innovative, aren’t thinking about their product or service, and are essentially being lazy. As I said at the beginning, there is certainly caution across the industry but there are also pioneers who have understood the needs of the modern market and adapted accordingly.

Chris Ambidge, commercial director at Collaborate

We view this as a temporary pause in the recent rise of marketing spend; unsurprising given the current uncertainty around October’s budget.

That said, experiential spend tracks as the second highest in marketing investment – which is reassuring for us. The number of brand activation pitches and briefs seem higher than ever, in readiness for year-end and Q1 2025 activities. There is – quite rightly – increased demand for insights, data and evaluation to help CMOs justify experiential spend.

IRL brand engagement seems more crucial than ever: people still crave connection, while brands are seeing the value of a 30-minute personal engagement versus product placement in a three-minute doom scroll. We’re working closely with clients to validate the value of those experiences. 

Jo Penn, managing director at Armadillo

As UK companies talk of pausing marketing spend amidst autumn budget uncertainty, it's great to see growth in precision and relationship-building strategies like direct and event marketing. There is a move to put customers front and centre with brands understanding the importance of connecting with them, and using direct marketing channels to do that in a more personalised and targeted way.

We're seeing a growing need from client partners to help create efficiencies and effectiveness of their in-house tech platforms to accommodate the demand for this new customer-centric approach.

Michael Frohlich, global chief transformation officer and chief executive officer at Weber Shandwick

The Q3 2024 Bellwether Report highlights a challenging economic backdrop, with total marketing budgets failing to grow for the first time in 14 quarters. Caution in the UK, combined with global volatility and ongoing geopolitical and economic uncertainty, creates an unpredictable picture for Q4. However, PR budgets have been revised upwards to a record high of 11%, reflecting the growing recognition of PR’s value. As AI, data and tech improve measurement and ROI, PR is becoming an increasingly critical channel, driving influence and shaping business reputations in this uncertain climate. Marketers can now see the immediate impact PR has and how it contributes to long-term success by shaping perceptions and building trust with audiences.

Rob Drake, founder at Brave Spark

The latest report tallies with a lot of what we’re hearing from clients – but it’s not all doom and gloom for agencies. It just means that it’s more important than ever that clients can trust their agencies to provide them with value while industry-wide sentiment declines. That could mean cutting the waste they see in the creation process – doing more with the time you have by joining up teams to enhance both speed of delivery and the quality of craft using the budget available. Or it could mean working with them to upskill in-house teams and understand the possibilities (and limitations) of AI. Either way, it’s during these times where the most collaborative and agile agencies can really prove their worth.

Matt Lewis, president (Europe) at Momentum Worldwide

While many clients have shown increased caution in spend, it’s encouraging to see the continued investment in PR and events. These mediums are siblings in that they seek outcomes through authentic connections that are harder to automate. In today's fragmented media landscape, marketers increasingly believe that investing in these channels is crucial for standing out.

Charlie Griffith, managing director at Unbound

Upon viewing this report, it would be all too easy for the industry to be concerned by the lack of total marketing budget growth. However, the best marketeers and partner agencies will always have in mind that ROI, in the most part, will come from creativity and ideas over media. With the expansion of main media budgets specifically, this fact must not be forgotten.

Furthermore, PR is unsurprisingly on the rise and growing in popularity. Innovative and less traditional, fame-driving thinking plays a major role in culture and that applies to executions, not just ideas. Being faster and more nimble as a business is paramount to success in this field.