What marketing sees an investment, finance often sees as an expense. Here are five concepts that can help senior management rethink the bottom line value of marketing.
The perceived conflict between marketing and finance departments often stems from a difference in lexicon. While marketers posit that brand adds value to the organization, the finance team has difficulty following along because GAAP standards don’t allow it on the balance sheet. Therefore, investments in brand are only seen as expenses and the value they create goes unrecognized.
There are steps you can take to translate between marketing and finance. Here are some helpful concepts to change the dialog with your senior management about the value of marketing:
1. Marketing impacts stock price.
Brand building creates familiarity. Buyers are more likely to purchase from companies they’ve heard of — generating revenue and cash flow and ultimately impacting stock price.
2. A strong brand image companies more attractive to investors.
Favorability can be improved through marketing and customer service. Investors like to buy stock in companies they know and trust.
3. Corporate branding impacts future cash flow.
When familiarity and favorability are high, companies perform better financially. CoreBrand’s 20+ years of continuous, quantitative research has proven brand impacts stock price in a measurable way. Across all 1000 companies we track, we see an average 5–7% of market cap being directly attributable to brand.
4. Reputation can be proactively influenced.
All communications (intended or not) will impact the corporate brand. It makes sense to measure and manage marketing efforts and to train your employees to be brand ambassadors.
5. Brand can be measured.
It is possible to turn the intangible into a tangible metric, whether it makes it to the balance sheet or not. Our research has shown even Corporate Social Responsibility is a growing factor in building corporate brand equity — proving that doing good can contribute measurably to doing well.
Reframing the conversation to speak the same language is the first step toward creating alignment between marketing and finance. After all, both departments have the same overall goal: improving corporate value.blog comments powered by Disqus