Marketing budgets rise despite economic strain

UK companies increased their marketing budgets for a second consecutive quarter, despite subdued economic confidence and continuing pressure on operating costs.

The IPA Bellwether Report for the second quarter of 2026 recorded a net balance of +6.9%, meaning that the proportion of companies increasing expenditure exceeded the proportion making reductions by that margin.

Almost a quarter of respondents, 23.8%, reported an increase in total marketing budgets, while 16.9% made cuts and 59.4% recorded no change. The result was slightly below the +7.3% balance reported in the first quarter but remained the second strongest expansion in two years.

Events recorded the strongest growth, reflecting sustained demand for exhibitions, conferences, hospitality, and experiential activity. Direct marketing also expanded, while video budgets reached their highest level for seven quarters.

Published brand expenditure remained under pressure. Its continued contraction points to a wider reallocation towards formats that offer more immediate audience information, clearer attribution, or direct customer interaction.

Marketing has retained a degree of protection within corporate budgets even as economic growth remains weak. Companies commonly reduce discretionary expenditure when demand is uncertain, yet continued expansion suggests that many still regard customer acquisition, retention, and market visibility as necessary investments.

The destination of that spending is becoming more selective. Events can support relationship building and complex business to business sales, while direct activity offers a clearer link between expenditure and customer response. Video now serves social platforms, connected television, websites, product education, and internal communication, giving it a wider role than conventional advertising.

Marketing teams are nevertheless being asked to produce more material across a growing number of channels without equivalent increases in headcount. Generative AI is being used to accelerate research, drafting, localisation, and asset creation, although the technology can add review work where output requires extensive checks for accuracy, consistency, legal risk, or brand suitability.

An examination of the revision burden created by AI generated marketing material found that faster production does not necessarily result in lower overall workloads. Poorly governed use can simply transfer effort from creation to checking and correction.

Larger budgets therefore do not amount to a simple increase in campaign volume. Additional expenditure is also being directed towards data infrastructure, measurement, automation, compliance, and the technology needed to coordinate increasingly fragmented customer journeys.

Data quality remains a persistent constraint. Personalisation depends on accurate customer records, consent, product information, and behavioural data, while privacy requirements limit how information can be collected and combined. Creative investment without comparable improvement in data and measurement can weaken returns.

Direct channels have benefited from the demand for greater accountability. Finance teams are examining customer acquisition costs, conversion rates, retention, and lifetime value more closely, particularly where slower growth has made revenue forecasts less certain.

Events present a different measurement challenge because their contribution may extend across reputation, partnerships, recruitment, customer relationships, and long sales cycles. A single return figure can be difficult to calculate, yet companies appear willing to accept that complexity where face to face contact supports high value relationships.

The continued weakness in published brands will concern media owners whose commercial models depend on advertising. A prolonged reduction could intensify competition for branded content, subscriptions, events revenue, and first party audience information.

Investment is also becoming more uneven between organisations. Large companies can fund integrated data platforms, specialist analytics, and coordinated campaigns, whereas smaller businesses may concentrate spending on a limited number of channels with more immediate and measurable results.

That divide may widen as marketing technology becomes more sophisticated. Access to software is becoming cheaper, but effective deployment still depends on clean data, governance, experienced employees, and sufficient material to guide automated systems.

Economic conditions could alter the pattern quickly. If demand weakens, finance directors may challenge expenditure that cannot demonstrate a clear contribution to revenue or customer retention. Conversely, companies that cut activity too deeply may lose visibility at a point when competitors are continuing to invest.

The Bellwether findings do not show the disappearance of caution. Most respondents left budgets unchanged, and the overall expansion remained modest. Expenditure is being concentrated where companies expect stronger commercial evidence, closer customer contact, or greater control over distribution.

The next test will be whether larger allocations produce revenue rather than additional complexity. Marketing functions will need to demonstrate how spending supports demand, retention, pricing power, and customer value while retaining control over technology and production costs.

Companies have not withdrawn wholesale from the market, but they are applying greater scrutiny to the channels they support. Events, direct activity, and video have benefited from that assessment, while less measurable formats continue to compete for a diminishing share of expenditure.