Why Cutting Spend Costs You

There's a boardroom move so familiar it barely needs explaining. Growth gets harder, the quarter gets tighter, and someone reaches for the brand budget. Not because it's the biggest line item, but because it's the easiest one to defend cutting. Nobody ever got fired for trimming a campaign that they can't prove the ROI of in the next ninety days.

Margin goes up. The slide looks great. And for about four quarters, everyone feels dandy.

Then a competitor who leaned in while everyone else pulled back starts showing up in every conversation your brand used to own. And the money you saved on brand investment starts looking a lot less like savings and a lot more like a loan you took out against next year, with an interest rate nobody disclosed at signing.

What the data actually says

Here's the part that should give budget-cutters pause: most marketers aren't actually making this trade right now, at least not in the UK. The IPA's Q2 2026 Bellwether Report, published in July, found that UK companies revised their marketing budgets up to the second-highest level in two years, despite genuinely tough economic conditions. Just under 25% of respondents increased marketing spend in the quarter, compared with 17% who cut it, and nearly sixty percent held steady.

That's not a market whistling past the graveyard. It's a market that's learned something from the past few downturns.

IPA Director General Paul Bainsfair put it plainly: it is "more important than ever that companies play the long game and continue to invest in brand-building media that is proven to be better placed to drive sustainable business growth." Sue Benson, IPA Chair for England and Wales, went further, and handed marketers a genuinely useful line for their next budget defence: "short-term activation is tempting, but brand memorability remains your best defence. Brands only grow when they are totally unignorable."

Not every part of the picture is rosy. Jim Kelly, deputy MD at Story and IPA Chair for Scotland, called the quarter "a game of two halves" — spend on events and direct marketing is up, much of it lower-funnel and conversion-focused, while several main media categories are still contracting. His read: "long term brand investment is taking a back seat to the short-term commercial outcomes". That tension is worth sitting with, because it's the same tension underneath every budget conversation this piece is about.

The trade nobody puts in the deck

Something we've observed is that declines in brands compound quietly. A brand budget cut rarely produces an immediate, visible consequence. What it produces is a slow erosion of the reasons a customer, a partner, or an AI model picks you over the alternative. It's an erosion that's very hard to notice until a competitor has already claimed the ground that was once yours.

This is the kind of reactionary mindset we aim to avoid in our 3rd Order Thinking. Instead of "Should we cut brand spend this quarter?", how about "What might that cut actually cost eighteen months from now?" or even better "What could we achieve if we increased the budget while everyone else is cutting theirs?". Most budget conversations never get asked the second-order question, let alone the third, because the first one is so much easier to fit on a slide.

Holding the line

None of this is an argument for spending recklessly through a downturn, and the IPA's own data shows plenty of restraint alongside the growth. The argument is narrower and more specific: brand investment is one of the few line items whose value only becomes visible in hindsight, which makes it uniquely vulnerable to being cut by people looking for a number they can see this quarter.

If you're the person in the room arguing to hold the brand budget while the spreadsheet is screaming otherwise, you're not being sentimental. You're pricing in a cost most of your peers are choosing not to look at. That's a harder argument to win in the room. It's usually the right one to make anyway.

Source

• UK companies revise marketing budgets up despite tough economic conditions, IPA, 16 July 2026