- Elgar original reference
Edited by Bernd H. Schmitt and David L. Rogers
Chapter 16: Returns on Brand Investments: Maximizing Financial Returns from Brand Strategy
16. Returns on brand investments: maximizing ﬁnancial returns from brand strategy Joanna Seddon A fundamental shift is taking place in attitudes towards brands and marketing. The traditional view that brands are ‘hot air’ and marketing a cost, is still very much alive. As McDonald (2002) tells us, ‘CFOs see their marketing colleagues as slippery, evasive, and unaccountable.’ Recent research among CEOs has found that over a quarter of them still consider marketing an expense. However, the majority do not, choosing instead to focus on branding as a major investment. Behind this lies an evolution in the structure of business in the US as well as around the world. The move from manufacturing to a service- and information-based economy has been accompanied by a dramatic rebalancing of corporate assets. In the old manufacturing world, corporate value was tangible value – the value contained in property, plant and equipment. These things were relatively easy to measure. This was the world for which the current accounting and ﬁnancial valuation standards were created (mostly in the 1950s). They made sense until quite recently. As late as 1980, 80 per cent of the value of the Fortune 500 list of companies was represented by tangible assets. Since then, change has happened fast. Intangible assets grew to overtake tangibles as a proportion of shareholder value around 1990. They now account for over 70 per cent of the value of the Fortune 500, trending upwards (see Figure 16.1). This change has drawn the attention of accountants and ﬁnanciers....
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