There is a budgeting philosophy that dominates marketing departments across industries, company sizes, and geographies, and it goes something like this: take what you spent last year, adjust it slightly for inflation if someone remembers to, and call that the plan. It’s called historical budgeting, and it is, by a significant margin, the least strategic way to allocate marketing resources. It is also, by an equally significant margin, the most common.
The creative budget specifically — the portion of the marketing budget allocated to producing actual creative work — is where this dysfunction is most visible and most consequential. Because creative work is not a commodity where last year’s price reliably predicts this year’s need. The market changes. The competition changes. The channels change. The audience’s attention changes. What needed a certain investment to be effective last year may need significantly more — or significantly less, but differently allocated — to be effective this year. None of this is captured in “what we had last year.”
The Archaeology of the Creative Budget
Dig into most creative budgets and you’ll find something like geological strata: layers of historical decisions that nobody remembers making, accumulating over years into a structure that serves the past more than the present. That line item for print production? It’s been there since 2009, when the company ran a major print campaign. Nobody’s run a meaningful print campaign since 2014, but the line item persists, because removing it feels like a commitment to never running one again, and nobody wants to be the person who made that call.
The budget for the annual brand video? It was set based on the cost of the first one, which was produced at a time when the brief was different, the team was different, and the company had a specific reason for investing at that level. The reason has changed. The brief has changed. The budget has not, because the budget is now the brief, and nobody has had the conversation about what the budget should actually be given what the company needs from that video today.
The Conversation Nobody Wants to Have
The reason historical budgeting persists isn’t laziness — well, not entirely. It’s that the alternative requires a kind of organizational honesty that’s genuinely uncomfortable. To budget from strategy rather than from history requires answering questions like: what do we actually need creative work to accomplish this year? What would it cost to accomplish that at the level of quality and scale required? And — most uncomfortable of all — what are we willing to not spend money on, so we can spend it on this instead?
These conversations require real strategic clarity and real organizational authority. They require someone — or multiple someones — to make decisions about priorities that will disappoint some people and satisfy others. Historical budgeting is popular precisely because it avoids this. If last year’s allocation was acceptable to everyone, this year’s same allocation will probably also be acceptable to everyone. Nothing changes. Nobody has to defend a decision. The budget review meeting takes forty-five minutes and everyone leaves feeling like they’ve been responsible.
The work, of course, suffers. As we’ve argued in our post on the most expensive phrase in marketing, the costs that marketing organizations fail to account for always end up being paid — just in different currencies than money.
What Zero-Based Creative Budgeting Actually Looks Like
Zero-based budgeting — starting from scratch each year and justifying every line item against current strategic needs — sounds radical but is increasingly recognized as the more intellectually honest approach. Applied to creative budgets, it means asking at the start of each planning cycle: if we had no budget and had to build one from scratch to achieve our goals, what would it actually contain?
This exercise tends to produce some uncomfortable revelations. Some line items that seemed essential turn out to be habits. Some activities that seemed expensive turn out to be cheap at the price relative to their impact. And some gaps — things the organization genuinely needs but has never formally budgeted for — become visible for the first time.
The creative team that participates in this exercise rather than receiving a pre-determined budget from above is also more likely to understand why the budget is what it is — and to work productively within it, rather than experiencing it as an arbitrary constraint that someone else set without asking them.
This connects directly to our broader argument about the brief as a strategic document: when creative work is properly briefed — with real objectives, real constraints, and real accountability — budgeting it becomes a strategic exercise rather than an administrative one.
The Investment Framing
Perhaps the most important shift in how creative budgets are conceived is from cost to investment. Cost is what you spend. Investment is what you spend with an expectation of return. When creative work is budgeted as a cost, the question is “how little can we spend?” When it’s budgeted as an investment, the question is “how much do we need to spend to achieve the return we’re targeting?”
These are not small differences in framing. They produce entirely different budget conversations, entirely different creative briefs, and — not coincidentally — entirely different quality of creative work. The organizations that treat creative work as an investment tend to get better creative work. Which is not a coincidence. It’s just arithmetic.
Working with a creative budget that hasn’t been reconsidered since the Obama administration? Our shop won’t fix your budget process, but it will make you feel slightly better about it.
