The report, which was published today, said that the fall in research budgets was a slight improvement from the 6.5% decline, on balance, seen in the second quarter of the year.

However, the decline in market research budgets was the third consecutive quarterly downturn registered by the Bellwether report.

Despite this, a positive net balance of 8.6% of companies in the Bellwether survey said they anticipated budget growth in market research during the remainder of the 2022/23 financial year.

The findings are based on a survey of around 300 UK-based companies, and respondents said marketing budgets had risen by a net balance of 2.1%, albeit at the slowest rate of growth since the first quarter of 2021 – when the UK was in the grip of its third Covid-19 lockdown.

The Bellwether report said that the slowdown in rising marketing budgets – with 22.2% of compan8ies increasing budgets and 20.1% reducing them – was down to the cost-of-living crisis, soaring energy bills, weakening demand and economic uncertainty.

Of the seven categories of marketing spend monitored by the Bellwether report, only events saw growth in the third quarter of 2022, reflecting the continued appetite for face-to-face meetings and engagements in person following the lifting of Covid-19 restrictions.

However, events growth also slowed notably to a net balance of +4.5%, down from +22.2% in the previous quarter.

Main media marketing budgets fell for the first time since the first quarter of 2021 with a net balance of -3.1%, having previous registered 0%.

Within the main media category, published brands had a net balance of -11.2%, from -2.6% in the previous quarter, out of home advertising was at -7.6% from -15.9%, while audio also fell slightly to a net balance of -2%, from -16.4% previously.

Other online advertising (+9.3%, from +4.4%) and video (+8.7%, from +0.8%) saw growth, according to the report.

Sales promotions budgets also fell for a second successive quarter to a balance of -7.5% from -0.7% in the previous quarter, and public relations budgets fell for the first time in a year (net balance of -4.8%, from +3.7%).

Paul Bainsfair, director general at the IPA, said: “Instead of slashing budgets that can lose brands their customers’ awareness and subsequent market share, our experts would advise that after optimising their pricing and promotions strategy, which would usually include supporting with brand advertising, companies tweak their brands’ marketing budgets subject to their geography, portfolio, channels and media – all of which will have variations that can also be optimised accordingly.

“Equally, we’d advocate a longer-term approach that steers away from heavy sales activations which can erode brand loyalty and lose companies profit.”

Joe Hayes, senior economist at S&P Global Market Intelligence and author of the Bellwether report, said: “Budget cuts are being seen across the majority of the monitored segments of marketing spend as companies move into retrenchment mode due to soaring costs and slowing demand.

“The cost-of-living crisis will continue to weigh on household earnings throughout the winter, meaning discretionary spending cutbacks are inevitable for the UK’s low-to-middle income groups that are at the heart of the economy.”