UK firms increase marketing budgets despite uncertainty

Events remained the strongest-performing marketing category, with a net balance of +11.0 percent

UK companies increased their marketing budgets for a second consecutive quarter in Q2 2026, despite continued economic uncertainty and inflationary pressures, according to the latest IPA Bellwether Report.

The report found that 23.8 percent of businesses increased their marketing spend during the quarter, compared with 16.9 percent that reduced budgets, resulting in a net balance of +6.9 percent. While slightly below the +7.3 percent recorded in Q1, this represented one of the strongest increases in marketing budgets over the past two years.

Events and video attract higher investment

Events remained the strongest-performing marketing category, with a net balance of +11.0 percent, although this was down from +14.7 percent in the previous quarter. Direct marketing also recorded growth at +3.0 percent.

Within main media advertising, video was the only sub-category to post stronger investment, reaching a seven-quarter high with a net balance of +8.2 percent. Audio budgets stabilised after three years of consecutive declines, while published brands, out of home and other online advertising all recorded lower spending.

PR and sales promotions also remained in positive territory, although both saw slower growth than in Q1. Market research and other marketing activities continued to experience budget reductions.

Financial confidence weakens

Despite continued investment in marketing, business confidence deteriorated during the quarter.

The net balance of companies expecting improved financial prospects for their own business fell to -9.6 percent, down from +0.6 percent in Q1. Expectations for the wider industry also weakened, with the net balance declining to -25.1 percent as more than a third of respondents anticipated a deterioration in market conditions.

S&P Global Market Intelligence maintained its forecast for UK advertising expenditure to grow by 2.1 percent in real terms during 2026, followed by growth of 2.3 percent in 2027 and 2.4 percent in 2028. UK GDP is forecast to increase by 0.6 percent this year.

Long-term investment remains a priority

Paul Bainsfair, Director General, IPA: "The overriding message from this quarter's report is that UK companies continue to recognise the value of advertising. Encouragingly, we also see signs that businesses understand the importance of investing in long-term brand building; within the main media category, investment in video advertising has been revised up to its highest level in almost two years, while spending on other online activity – a shorter-term activation medium - has been cut for the first time in seven quarters.

"Despite these positive markers, it is understandable that companies' financial confidence levels have taken a hit this quarter. Amid geopolitical turmoil, wars, ongoing heightened inflation, supply-chain disruption, not to mention political upheaval closer to home, it makes for an undeniably tough and uncertain environment in which to operate.

"In light of such challenges, it is therefore more important than ever that companies play the long game and continue to invest in brand-building media that is proven to be better placed to drive sustainable business growth."

Maryam Baluch, Economist, S&P Global Market Intelligence: "Bellwether panellists have demonstrated notable resilience against a backdrop of persistent economic uncertainty. By continuing to bolster marketing spend – particularly as high inflation threatens to weigh on consumer demand – respondents are indicating a commitment to investment and brand-building activities that underpin growth.

"The fact there hasn't been a considerable scaling back of activity in response to the economic shock arising from the Middle East war suggests firms are taking a strategic, longer-term view rather than getting bogged down in short-termism."

www.ipa.co.uk

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