“Despite England not winning the Euros, we did get growth and positivity in the pages of the IPA Bellwether,” says Sue Benson, Managing Director, The Behaviours Agency, and IPA City Head for Manchester & North West. The Q2 2024 IPA Bellwether Report cites the highest revision of marketing budgets in a decade, and the second highest in almost a quarter of a century.

For marketers, the report paints a picture of light at the end of the tunnel, as economic conditions improve. This is despite a general election, which would usually cause uncertainty. Against a backdrop of constant socio-economic unrest, the political race became merely another variant to factor into budgets. The report is largely optimistic, with upward revisions in each Bellwether category and increased confidence from companies regarding their own financial prospects.

“This is a refreshing change from the previous quarters. Even with some political uncertainties, UK companies have been feeling upbeat thanks to a stronger economy, lower inflation, and the hope of interest rate cuts,” says Bill Doris, VP Analytics, EMEA at EssenceMediacom, & IPA Media Research Advisory Group Chair.

Rising from +9.4% in Q1 to +15.9% in Q2, the net balance of UK businesses that expanded their total marketing budgets was at its highest level since the first quarter of 2014. The net balance has registered in positive territory in each of the past 13 quarters, signalling a sustained period of growth in UK marketing spend.

Growth across all categories

While all Bellwether categories were revised upwards, events continued to perform best, increasing from +17.2% to +23.1%, showing that the appetite for in-person connection post-pandemic shows no sign of wavering. For the sixth successive quarter, direct marketing budgets increased, while sales promotions saw the third-strongest expansion in budgets.

“The leap in promotional spending sets some alarm bells ringing for me. It’s a common tactic during major sports events like the men’s Euros, but brands should be careful not to get addicted to deals,” says Dom Boyd, managing director of Insights at Kantar UK.

However, contrary to previous reports, main media budgets, including big-ticket advertising campaigns broadcasted on television and radio, returned to growth after a reduction in Q1. The net balance of companies recording upward budget revisions was +3.5%, up from -0.7% previously. Within this category, growth was driven by online (+15.3%) and video (+7.8%).

“Main advertising budgets experiencing growth is another positive indicator as we look towards planning season. We’re moving from reactionary short-termism as the economic landscape starts to stabilise and are more able to work with our clients on long-term objectives, which not only future proofs brands but the industry at large,” adds Alex Uprichard, Managing Director at IMA-HOME, and IPA City Head for Leeds, Yorkshire and Humberside.

Uncertain optimism lies ahead

With the UK economy slowly but steadily improving, a strong rate of expansion in GDP seen in the first quarter is likely to be followed up with further growth in the three months to June. Therefore, S&P Global Market Intelligence's GDP forecast for 2024 has improved since the last Bellwether Report, with annual growth of 0.6% anticipated, up from 0.2%.

Following upward budget revisions, companies remain optimistic towards their financial prospects – though this is largely unchanged since Q1. However, where negative sentiment fell, a respective increase of 13.6+% emerged, resulting in the highest levels of optimism since Q3 2021.

While the recession at the end of last year may have subsided, elevated borrowing costs, high food and energy prices and a new incoming government mean that the financial picture is far from stable yet. Businesses remain cautious and industry-specific pessimism remains; just 16% of Bellwether participants were optimistic towards the financial outlook of their industry.

Providing several reasons to be optimistic, with upward revisions for 2025 onward, when interest rates are expected to fall and inflation is also set to cool, The IPA Bellwether sees marketers continue to proceed with cautious optimism. With a summer of sport on the horizon and the advertising frenzy of Christmas still to come, there are more opportunities for growth ahead.