TLDR: The latest IPA Bellwether Report for Q2 2025 reveals a significant rebound in UK marketing budgets, marking the strongest growth in a year. This surge is largely attributed to increased investment in direct marketing and sales promotions, reflecting a focus on short-term performance. A key driver of this shift is the accelerating integration of AI and digital channels, which marketers are leveraging for enhanced efficiency, precise targeting, and scalable content delivery.
UK marketing budgets experienced a robust recovery in the second quarter of 2025, according to the latest IPA Bellwether Report. The report indicates a net balance of +5.5% of companies revising their marketing budgets upwards, a substantial increase from the -4.8% recorded in Q1 and the strongest quarterly growth seen in a year. This rebound follows a period of decline, the first in four years, attributed to ongoing geopolitical and economic uncertainties.
The surge in spending is predominantly channeled into ‘short-term media,’ with direct marketing and sales promotions registering significant gains. Direct marketing saw an almost 19% increase in panellists reporting upward revisions, marking ten consecutive quarters of growth in this category. Sales promotions also reached their highest net balance in two years at +9.4%. Events also saw a budget increase, though at a slower pace. Conversely, traditional media channels like out-of-home, audio, and ‘published brands’ experienced declines, while market research was particularly hard-hit.
Industry experts highlight the pivotal role of artificial intelligence (AI) and digital channels in this evolving landscape. Many marketers are increasingly utilizing AI to process vast amounts of data, track competitors, and identify unmet or emerging customer needs at scale and speed. Graham Field, chief revenue officer at Outra, noted that ‘the need for more precise audience targeting and the use of AI-driven automation to boost efficiency, reduce costs, and deliver the scale, speed, and insight needed to optimise campaigns’ are key factors. Guy Jackson, chief commercial officer at RAAS LAB, emphasized that ‘AI and visual content’ are becoming ‘the price of entry for effective digital campaigns,’ with ‘agentic AI’ being crucial for delivering nuance and relevance at scale.
Chris Thurling, chairman at Armadillo, observed that ‘brands’ significant martech investments, now AI-enhanced, are finally delivering efficiencies as these technologies automate tasks traditionally handled by agencies.’ Chris Camacho, chief executive at Cheil UK, added that ‘spend is flowing into retail media, connected commerce and AI powered content delivery,’ indicating a shift where ‘media is no longer a marketing line item; it’s becoming a lever for commercial growth.’
While the focus on short-term, performance-led channels is evident, some industry leaders caution against neglecting long-term brand building. Paul Bainsfair, IPA’s Director General, stressed the importance of marketers balancing ‘short-term activation efforts with longer-term emotionally-driven brand-building strategies.’ Chris Daly, chief executive of the Chartered Institute of Marketing, views the current trend as a ‘rebalance’ rather than a full rebound, emphasizing that ‘sustainable growth hinges on consistency, creativity, and connection – factors which are amplified when data, purpose, and technology work together.’ Dan Brink, head of data at UniLED Software, warned that ‘short-termism is not a sustainable business growth strategy and should be balanced with long-term brand building.’
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Despite the cautious optimism, the report underscores a clear industry trend: digital transformation, heavily influenced by AI, is reshaping marketing strategies, pushing for more targeted, efficient, and data-driven campaigns.
