Your 2027 Ad Budget: Time to Stop Protecting the Sacred Cows?

As the year draws to a close, a familiar ritual begins in marketing departments. Last year's advertising reports are brought out, performance is reviewed, growth targets are assessed, and planning for next year's budget gets underway. Google Ads gets its share, Meta gets its share, and whatever remains is allocated to other channels and experiments. If this year's results were strong, the budget might increase. If they were disappointing, it might be trimmed slightly.

Sounds reasonable. But there's one weakness in this approach: it assumes that what worked yesterday will continue to work tomorrow.

Meanwhile, the advertising market continues to grow, although growth is expected to slow next year. According to WARC's latest forecast, published in October, global advertising spend is projected to increase by 11.9% in 2026, reaching $1.34 trillion. In 2027, growth is expected to slow to 8.4%, bringing total spending to $1.46 trillion. Social media advertising alone is forecast to attract $394.6 billion worldwide in 2026, up 21.3% from the previous year.

In a growing advertising market, businesses need to do more than simply plan bigger budgets. They need to critically assess whether their investments are still going where they can create the greatest value.

That's why planning your 2027 advertising budget shouldn't start with the question of how much more to spend on Google or Meta. First, it's worth asking which advertising channels truly deserve their place in the budget – and whether you're continuing to fund them simply out of habit.

When the Best-Looking Results Get the Biggest Budgets

Imagine a business that invests most of its advertising budget in Google Ads. Its campaigns generate steady revenue, return on investment looks good, and sales targets are being met. So why not give this channel even more money next year?

The answer depends on how many sales the advertising actually creates.

Some people who click on paid ads are already searching for a specific brand or product. They may have discovered the company on social media, read a recommendation or seen a video ad. By the time they reach Google Search, they're simply completing a buying journey that started somewhere else.

In this situation, search advertising may appear to be the most effective channel because it gets credit for the final sale. But that doesn't necessarily mean it was responsible for creating the demand in the first place.

The same applies to other platforms. Meta may attribute a sale to an ad impression even though the customer was already planning to buy. Both platforms may report strong results, but that doesn't mean the business has generated twice as much revenue.

That's why, when planning your 2027 budget, it's important to distinguish between two questions: which channel gets credit for the most conversions, and which channel actually generates the most additional sales?

They're not the same thing.

Even Advertising Platforms Admit Their Reports Don't Tell the Whole Story

In September 2026, Google once again highlighted a challenge facing businesses trying to measure advertising effectiveness: data from a single platform or metric is not enough to understand the full impact of advertising.

The company recommends combining different measurement methods, including attribution, incrementality testing and Marketing Mix Modelling (MMM).

Each answers a different question. Attribution helps identify which advertising interactions receive credit for conversions. Incrementality testing measures how many additional results advertising actually generates. Marketing Mix Modelling examines how different marketing channels and other factors contribute to overall business performance.

These methods can help large advertisers make more informed investment decisions, but not every business needs a complex model or a dedicated team of data analysts.

Sometimes much simpler experiments can provide useful answers.

For example, a business could reduce advertising activity in one comparable market or audience group while maintaining it in another, then compare the results. Do sales decline when advertising is reduced? Do customers arrive through other channels? Do some sales continue even without the ads?

Of course, such experiments need careful planning. Seasonality, competitor activity and other changes can distort the findings. Nevertheless, a properly designed control-group test may reveal more about advertising's incremental impact than another annual report from an ad platform.

The Past Often Gets More Budget Than the Future

Another problem is that advertising budgets are usually built around channels that businesses already know and use.

And that's understandable. Google and Meta performance data is readily available, their reporting systems are familiar, and campaign management processes are well established.

But while businesses focus on optimising existing campaigns, new opportunities continue to emerge.

One example is Retail Media, which includes advertising across retailers' digital environments, such as their online stores and marketplaces.

According to an IAB Europe forecast published in September 2026, Retail Media advertising spend in Europe is expected to grow by 18.5% this year. Growth is also forecast to remain strong over the longer term, with the European Retail Media market projected to reach €32.7 billion by 2030.

This doesn't mean that every Lithuanian business should rush to invest in marketplace advertising in 2027. However, the trend shows that the advertising landscape is expanding beyond traditional search and social media.

Video advertising, creator-led channels, new ways to reach potential customers and changing consumer behaviour in AI-powered search also deserve consideration.

The problem is that new channels often face tougher expectations than established ones. A new platform is expected to deliver results almost immediately, while a familiar channel may continue receiving funding even when its performance has stopped improving.

That's why it's worth setting aside part of next year's budget for experimentation. Not to chase every new trend, but to make sure the business doesn't miss opportunities to discover more effective ways of acquiring customers.

How those experiments are measured matters too. If a new channel is designed to build brand awareness, expecting it to deliver the same immediate return on sales as advertising aimed at people who are already ready to buy would be a mistake.

What If You Don't Actually Need a Bigger Advertising Budget in 2027?

It's a question worth asking before the budget is approved.

Growth plans usually focus on how much more needs to be invested in advertising to achieve higher sales targets. But what happens after someone clicks on an ad doesn't always receive the same attention.

If an online store loses a significant proportion of potential customers during checkout, improving the purchasing experience may deliver more value than increasing advertising spend.

If most customers only buy once, it might make more sense to redirect part of the budget towards customer retention, email marketing or encouraging repeat purchases.

And if campaigns are reaching the right audience but people aren't responding to the offer, the problem could lie in product positioning, pricing or the advertising message itself.

In these situations, a bigger budget won't necessarily solve the problem. Sometimes it simply allows a business to spend more money, faster, for the same result.

Advertising planning should therefore never happen in isolation from the wider business strategy. The purpose of marketing isn't to spend its allocated budget as efficiently as possible. It's to contribute to business growth.

Try Building Your Budget From Scratch

Before signing off on your 2027 advertising budget, try a simple exercise.

Imagine you're creating a marketing strategy for a completely new business. You have no historical budgets, no established channels and no decisions carried over from previous years.

All you know is what you're selling, who your customers are and what you want to achieve.

Would you still choose the same advertising channels? Would you allocate your budget in exactly the same proportions? Would you really spend more on advertising than on customer retention, website improvements or exploring new sales opportunities?

Of course, that doesn't mean ignoring previous years' data. Historical performance is a valuable starting point for making decisions. But last year's budget shouldn't become an untouchable rule that determines every future investment.

In 2027, businesses that can do more than simply optimise their existing campaigns will be better positioned to find new growth opportunities. They'll be the ones willing to question whether their advertising investments still reflect the market they're operating in.

And perhaps the most important decision when planning next year's budget won't be where to spend more money, but where to finally have the courage to spend less.