Brand expert, professor Don E. Schultz in a recent article
in Marketing Management magazine describes quite accurately the importance of
the value of brand as an asset. He
points out that the value of the brand makes up 48% of Coca-Cola’s enterprise
value and 37% of that of Google. However, the point of his article is that
marketing and brand managers do not understand that relationship which makes it
difficult for them to get the support of financial officers to back brand and
marketing initiatives. From my experience it is often the financial managers
who do not understand the value of brand. They see it only as a marketing
expense to be tied to the marketing budget for the year.
While I don’t doubt for a second that big brand companies like Coca-Cola, Google, IBM and Apple, senior financial management totally understand the value of brand and I imagine that they are in sync with their marketing and brand managers. However, I think in smaller and less brand visible companies, it is the marketing and brand managers who understand the financial benefits of the company brand and struggle to convince the financial managers to support brand initiatives.
Mr. Schultz does point out that short-term fiscal year accounting systems work against support for long-term brand funding. Brand development and creating a brand strategy can be a significant investment of finances and personnel, and usually takes more than a year to gain momentum. Brand needs to be viewed as an investment. This may be difficult for financial managers of small to medium size companies to grasp, and they find it difficult to justify expenditures on brand development. I would be interested in hearing from others about who has the better understanding of the company’s brand value. Is it the marketing and brand managers, or is it financial managers who understand brand value?