Your marketing budget pays for last year.
Why most budgets reproduce the past instead of buying a position
Most companies spend their marketing money on the year behind them. They repeat what happened last year, only slightly more expensive, and call it a budget.
A budget isn’t a repeat of the past. It’s a decision about the future. The question isn’t how much you spend, but on which year: the one behind you, or the one you’re not yet.
Where the money actually goes
Look at an average marketing budget and you’ll see a copy of last year. The same trade show, the same campaign, the same agency, the same channels, marked up by a percentage for inflation and good cheer.
It happens almost on its own. Marketing takes last year’s line items, adjusts them, and tables them. The board tests the total against revenue: if it’s around the usual percentage, it’s defensible. Finance checks that it fits. And out rolls a budget nobody really chose, but that everyone can defend.
What goes unasked in that whole process is the only question that matters: what should this money have changed a year from now? Nobody at the table can say what the line items returned the last time. And nobody asked whether it was even the right work. The money goes to what’s familiar, not to what’s needed. That isn’t strategy. It’s a habit with a price tag.
The reason is comfort. Repeating last year is easy to defend: we do what we always do. What it returns stays out of view, and that’s exactly why the budget goes unquestioned.
How do you spot a backward-looking budget?
You don’t need to open the spreadsheet for it. Four signals give away a budget that looks backward.
First: it’s built by adjusting last year’s line items, not by starting from a goal. Last year’s shape is the point of departure.
Second: not a single line traces back to where you want to stand in three years. Ask of any row, “which future does this buy?”, and the room goes quiet.
Third: the conversation is about how much, not about where to. The debate is whether it can be five percent more or less, never whether it’s going to the right thing.
Fourth: the biggest line items are the oldest. What’s been in there longest sits in there thickest, purely because it was always there.
Recognise these four and you’re looking at maintenance, not an investment.
Cost or investment
Here it splits. A cost repeats itself: you pay to stay where you are. An investment changes something: you pay to get somewhere you’re not yet.
Marketing budgeted as a cost reproduces the present. Marketing budgeted as an investment buys a different position: better known, clearer, harder to replace. The same amount, a different question underneath.
The distinction isn’t accounting. On the books it’s all cost either way. The difference is in the intent: does this money keep you upright, or does it take you somewhere. Most budgets sit unconsciously on “cost”. They keep the machine running. That’s no error as long as you’re content with this year plus a few percent. If you want to look different in three years, you don’t buy that with a repeat.
Why “what percentage” is the wrong question
The most popular budget question is “what percentage of revenue?” Dutch figures point to around eight percent on average, with rules of thumb between three and ten. It’s a reassuring question, because a percentage can be compared with the company next door.
But the percentage only says how much you spend, not on what. Two companies can both spend eight percent: one reproduces last year, the other builds a position. The same number, an opposite result. The percentage feels like an answer, but it’s only a measure of the amount, not of the direction.
There’s a second skew, too. Les Binet and Peter Field showed, with years of effectiveness data, that most budgets tilt too far toward the short term, toward what’s measurable now. What makes the difference over the long term gets too little. Short is measurable, measurable is comfortable, and comfortable beats important.
Looking back or investing forward
Put two budgets side by side with exactly the same amount.
The first is anchored to last year: the line items that were already there, slightly more expensive. It’s easy to build and easy to defend, and it returns roughly what last year returned. That’s precisely the problem if you want more.
The second is anchored to where you want to stand in three years. It doesn’t start from the line items but from the position: who you need to become known to, what you want to be chosen for, what has to become visible first. The line items follow from that answer, not from last year’s budget.
Often little money moves in that second budget, and yet everything changes. A line that ran along for years because it ran along gets cut. A place where your market does look but you weren’t present gets added. The amount stays the same, the destination doesn’t. The difference isn’t the size. It’s the anchor point. The first budget looks back. The second looks forward.
The analysis
A marketing budget that repeats last year buys last year. Usually a little more expensive. That isn’t an investment but maintenance of the status quo, and it explains why so many companies spend the same year after year and stay the same.
The shift is small and uncomfortable at once. Small, because the amount need not change. Uncomfortable, because it forces a choice at the board table that’s rarely made: where do you want to stand in three years, and which part of this budget gets you there.
The question isn’t how much you spend on marketing. The question is on which year.