Digital was the only sector to show growth, albeit the smallest since 2002. Only 19 per cent of respondents reported an increase in online spend, compared with 27 per cent in the first quarter.
Direct budgets suffered their biggest cuts in the survey's history, with 19 per cent of respondents reporting a reduction in spend. The sector has seen the longest period of budget cuts in all categories.
Spending across the traditional media channels experienced the sharpest decline, with 24.2 per cent of companies revising down. The report predicts further cuts across the board later in the year.
Moray MacLennan, the IPA president and the European chairman of M&C Saatchi, said: "Agencies can focus on cost control and strive for innovative solutions so they can buck the trend."