Businesses’ willingness to invest in their brand tends to be deeply connected to the economic backdrop. In challenging times, many companies will opt to cut back on marketing budgets.
This connection is something that has been charted in 25 years of the IPA Bellwether Report. Since the year 2000, the report has asked businesses whether they are increasing or cutting their marketing budgets each quarter. Those responses, recorded as a percentage net balance, tend to track with what’s happening on a macroeconomic level.
For example, the quarter that saw the lowest reading was the second quarter of 2020, when a net balance of 50.7% of UK companies revised their marketing spend down, as the first Covid lockdown kicked in, curtailing many businesses dramatically. The second lowest point recorded across the 25 years was in the fourth quarter of 2008, when a net balance of 41.7% of companies downwardly revised their marketing spend. This coincided with the financial crash of that year.
Businesses’ willingness to invest in their brand tends to be deeply connected to the economic backdrop. In challenging times, many companies will opt to cut back on marketing budgets.
This connection is something that has been charted in 25 years of the IPA Bellwether Report. Since the year 2000, the report has asked businesses whether they are increasing or cutting their marketing budgets each quarter. Those responses, recorded as a percentage net balance, tend to track with what’s happening on a macroeconomic level.
For example, the quarter that saw the lowest reading was the second quarter of 2020, when a net balance of 50.7% of UK companies revised their marketing spend down, as the first Covid lockdown kicked in, curtailing many businesses dramatically. The second lowest point recorded across the 25 years was in the fourth quarter of 2008, when a net balance of 41.7% of companies downwardly revised their marketing spend. This coincided with the financial crash of that year.
While shocks like a pandemic and financial crash will naturally cause many businesses to be more cautious and downwardly revise marketing spend, there is much evidence to suggest that this is precisely how companies should not react. For example, a seminal 2010 article in the Harvard Business Review called Roaring Out Of Recession found that businesses that had emerged from the 2008 recession in good shape had been those that had maintained advertising spend.
The negative spending reaction to the financial crash lasted nine quarters from the last quarter of 2007 (as signs of the crisis began) to the final quarter of 2009, making it the longest consecutive period of a net balance of companies cutting their marketing spend.
Following this period of negative revisions to budgets due to the financial crash, there was some uncertainty in budgets over the next couple of years, with some quarters of cuts and others of growth. However, from the end of 2012, the Bellwether report recorded its longest period where most companies surveyed upwardly revised their budgets.
For 24 quarters, from the fourth quarter of 2012 to the third quarter of 2018, a positive net balance of companies reported they were increasing their marketing budgets. These years of growth came after the dust had a chance to settle after the financial crash, and suggests many businesses were perhaps more willing to maintain and increase advertising investment after they had seen its positive impact during and after the 2008 crisis.
The picture from then onwards is far from smooth, with Brexit uncertainty dampening confidence and the pandemic sending the figures sharply into negative territory.
Indeed, in the first quarter of 2025, when Bellwether data was last reported, the figure was back in negative territory for the first time in four years.
A turning point?
While the quarter of a century of marketing budget data largely suggests that budgets follow macroeconomic trends, it does appear to demonstrate some positive momentum.
Of the 100 quarters recorded by Bellwether, during 41 of those, marketing budgets were in decline or stagnation (an equal number of companies were increasing budgets as were cutting). While that does suggest marketing budgets have been in decline for a significant amount of time over the last 25 years, a disproportionate number of these negative or stagnation quarters came towards the beginning of the 2000s.
Of the 41 quarters where marketing budgets were being cut, just 11 were from 2012 and beyond, despite the dramatic impact of the pandemic. This suggests that the resilience of UK marketing budgets has increased since the beginning of the century.
Commenting on 25 years of the Bellwether report, analyst Ian Whittaker, founder and managing director of Liberty Sky Advisors, says business leaders are beginning to realise the importance of investing in brand.
“The turning point was the inflation crisis of 2022 to 2024, which was a vast, unplanned experiment in showing how brand strength directly contributes to both the top and bottom line,” he says.
The Bellwether report has also been asking companies about their own financial prospects alongside their budget revisions for 20 of the last 25 years. Respondents are asked whether they are more or less optimistic about their company’s financial prospects versus the previous quarter, which is then recorded as a net balance. Perhaps unsurprisingly, marketing budgets have often correlated with the rise and fall of businesses’ sentiment about their financial prospects.
However, since 2022, the net balance of businesses upwardly revising their marketing budgets has actually stayed above the net balance of those optimistic about their own financial situation. Even in the most recent quarter, where a net balance of 4.8% of businesses were cutting marketing spend, this was less negative than financial sentiment, which sat at a balance of 12.9% feeling pessimistic.
This recent pattern of companies being more likely to increase marketing spend than to feel positive about their financial prospects may suggest a growing understanding that the bad times necessitate brand investment almost more than the good times.
Making choices
The Bellwether report also asks businesses about specific marketing investment choices. When it was launched in 2000, it started with a handful of core categories (media, direct marketing, other, internet), and has gradually expanded and tweaked over the subsequent 25 years.
This reflects a changed media landscape as well as an expanded report. Many of the categories largely follow the total budget trends, in particular main media (which is broken down into video, audio, published brands, out-of-home and other online advertising).
Market research is one more recent addition to the report, having been added in 2012. It is one category that, concerningly, has generally charted below the total budget trends since its introduction, apart from on a handful of occasions. This underlines businesses’ willingness to cut insight when times are tough.
Several components of main media, namely audio, published brands and out-of-home, have charted consistently below the total spend figure since they started being recorded in 2020.
Brands’ investment patterns seem likely to continue evolving in the coming years, particularly with the impact of generative AI and shifting consumer media patterns.
With so much economic uncertainty persisting globally, it’s difficult to know how UK businesses will approach marketing investment going forward. The next 25 years seem likely to bring as many challenges as the last. Marketers will continue to have to fight hard to make the case that investment in brand is crucial to driving growth, regardless of the backdrop.
For an interactive breakdown of data from the IPA Bellwether Report over the last 25 years, including individual media channels, click here.