UK marketing budgets reach two-year high, IPA

The improvement reflects a more supportive economic backdrop and stronger-than-expected performance across marketing categories.

UK companies increased their marketing budgets for a third consecutive quarter in Q3 2026, with spending revisions reaching their highest level in more than two years.

The latest IPA Bellwether Report found that 25.6 percent of surveyed companies raised their budgets, compared with 11.3 percent that cut spending, producing a net balance of +14.3 percent.

The latest quarterly net balance rose from +6.9 percent in Q2 2026, significantly exceeding the +3.0 percent balance of companies that had anticipated increasing budgets for the 2026/27 financial year.

PR, events and sales promotion lead budget growth

All seven marketing categories tracked by the Bellwether survey recorded budget growth in Q3. Public relations led with a net balance of +15.3 percent, up from +1.4 percent in the previous quarter and marking its 13th consecutive quarter of upward revisions.

Events ranked second, with its net balance increasing from +11.0 percent to +15.1 percent, its highest reading in nine quarters. Sales promotion budgets also rose sharply, reaching +13.1 percent, compared with +0.9 percent in Q2. The increase was close to the category's record of +13.4 percent, set in Q2 2023.

Direct marketing budgets recorded a net balance of +5.2 percent, up from +3.0 percent. Market research also returned to growth, reaching +5.2 percent for the first positive reading in seven quarters. The other category recorded the weakest increase, at +1.0 percent, recovering from -10.8 percent in Q2 and marking its first upward revision in nine years.

Main media advertising reaches a nine-year high

Main media advertising budgets recorded a net balance of +9.8 percent, rising from +1.5 percent in Q2 to their highest level in nine years. For the first time since the survey began tracking five main media subcategories in Q1 2020, all five recorded budget growth.

Other online advertising led the increase, with its net balance moving from -5.1 percent to +17.2 percent. Video rose from +8.2 percent to +9.8 percent, its highest reading in two years, while out-of-home returned to positive territory at +3.6 percent, compared with -2.5 percent in Q2.

Audio and published brands also recorded modest increases. Audio rose from 0.0 percent to +1.1 percent, while published brands moved from -8.3 percent to +0.8 percent. Across all categories, quarterly revisions exceeded the expectations companies had set at the beginning of the financial year.

Business confidence improves despite lingering concerns

Despite increased marketing investment, surveyed companies remained pessimistic about their financial prospects, although sentiment improved at both industry and company levels.

The net balance for industry-wide financial prospects rose from -25.1 percent in Q2 to -20.3 percent, its strongest reading in nearly two years. However, 34.6 percent of respondents remained pessimistic, compared with 14.3 percent who were optimistic.

At the company level, the net balance improved from -9.6 percent to -2.7 percent. Pessimistic respondents accounted for 27.3 percent, slightly above the 24.6 percent who expressed optimism.

The report also noted an improvement in hiring expectations, although the broader outlook remained uncertain amid economic and geopolitical pressures.

UK economic forecasts support advertising growth

S&P Global Market Intelligence raised its UK GDP growth forecast for 2026 from 0.6 percent to 1.2 percent following stronger-than-expected growth in the first half of the year. The report attributed the upgrade to factors including the FIFA World Cup, hot weather and technology-related investment.

However, elevated fuel prices and the lack of a lasting US–Iran peace deal remain risks. High energy costs are also expected to keep inflation above the Bank of England's 2.0 percent target, putting pressure on household purchasing power.

The improved economic outlook has also lifted the S&P Global Market Intelligence forecast for UK advertising expenditure growth in 2026 from 2.1 percent to 2.8 percent. The forecast for 2027 has been reduced from 2.3 percent to 1.3 percent, while growth of 2.4 percent is projected for 2028.

IPA highlights the role of marketing effectiveness

Paul Bainsfair, Director General of the IPA: "With growth back at the top of the Government’s agenda, it's encouraging to see businesses increasing marketing investment at the strongest rate in more than two years, underlining advertising's role as a driver of demand, competitiveness and economic prosperity."

He also highlighted the broad-based increase in marketing budgets and cautioned against an excessive focus on short-term promotional activity.

Paul Bainsfair: "It's particularly encouraging to see upward revisions across every Bellwether category, with main media recording its strongest budget uplift in nine quarters. The sharp rise in sales promotion spending is also understandable as businesses look to drive immediate results. But while promotions have their place, marketers should be wary of becoming hooked on short-term activation. Recent evidence suggests that over-reliance on promotions can erode long-term value."

Industry leaders point to broader investment momentum

Maryam Baluch, Economist, S&P Global Market Intelligence and author of the Bellwether Report: "With the UK economy beating expectations so far in 2026, it’s unsurprising to see businesses showing a strong willingness to lift marketing spend. The latest Bellwether data showed a substantial rise in total marketing budgets during the third quarter, with several underlying categories recording exceptionally strong upward revisions. In all cases, quarterly budget growth exceeded expectations set earlier in the year, highlighting the breadth of the improvement."

Bhavin Balvantrai, Chief Market Analyst at Omnicom Media, highlighted the increase across all five main media subchannels, noting that the data suggests overall investment is rising rather than simply shifting between channels. He also pointed to advertising effectiveness as a factor supporting continued investment, while identifying the autumn budget as an important consideration for spending in 2027.

Regional IPA representatives also welcomed the results. Brian Scott, Director and Co-Owner of Navigator Blue and IPA Chair for Northern Ireland, highlighted stronger investment in main media, PR and events, while warning that uncertainty surrounding the Northern Ireland Executive's budget could affect future confidence.

Sue Benson, CEO of The Behaviours Agency and IPA Chair for England and Wales, described the report as a sign of a more supportive economic environment for agencies and their clients. Jim Kelly, Deputy Managing Director and Head of Planning at Story and IPA Chair for Scotland, pointed to the return to growth across main media and the role of positive campaign results in encouraging further investment.

Amy Lawrence, Head of Digital, EMEA, at Publicis Imagine and Chair of the IPA Digital Marketing Group, highlighted growth in video and online advertising alongside increased investment across other categories. Samantha Smith, CEO of krow kinetic and IPA City Head for Bristol, the South West and Wales, also welcomed the third consecutive quarterly increase and the improvement across all marketing categories.

Penny Took, CEO of Mediaplus Connect and IPA City Head for Birmingham and the Midlands, attributed the budget increase partly to efforts to improve marketing effectiveness and the growing practical application of artificial intelligence. She also highlighted the importance of improving employment prospects and maintaining the human creativity that underpins the industry.

The Q3 findings point to a broad recovery in UK marketing investment, with growth extending beyond performance-led channels to include brand advertising, public relations, events and research. However, continued economic uncertainty and the need to balance immediate sales with long-term brand development remain central considerations for marketers heading into 2027.

www.ipa.co.uk

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