Topical formulations aim to target the skin for a variety of cosmetic, protective or therapeutic needs. Despite the use of creams and ointments over the millennia, the bioavailability of actives from topical preparations remains quite low, often not exceeding 1-2% of the applied dose. In this review we examine the reasons underlying the poor performance of topical preparations. We also outline a rational approach, based on Fick's laws of diffusion, to develop advanced topical formulations. Methodologies which are currently used in research and development are critically examined and the importance of understanding the fate of the vehicle as well as the active is emphasised. Advanced topical formulation development will also be facilitated by emerging and sophisticated analytical techniques that are able to probe real time delivery of actives to the skin. A good understanding of the underlying physical chemistry of both the formulation and the skin is crucial in the development of optimised topical products.