Twice City AM Analyst of the Year. Chair. Board Advisor in Media, Tech and Sport. Author 'The Bigger Picture'. Runs 'How to speak the language of the CFO (TM)' course. International speaker, podcaster and contributor
As many of you know, I have been preaching the message for several years that ‘advertising is intangible capex’ ie just as firms invest in physical capex to grow sales, so they consider #advertising and #marketing spend in the same way. However, the current accounting treatment of advertising spend - where it is fully expensed in the year - means that it can be seen more as a cost and so vulnerable to cuts. It now looks as though the accounting treatment of advertising spend may be up for revision so that investment in brands is capitalised rather than expensed (see page 5 of the International Accounting Standards Board consultation paper). If this does happen - and it will probably take time - it is likely lead to a fundamental (positive) shift in how ad spending is perceived and will make it less vulnerable to short term cost cutting. Early days but this could lead to fundamental change. As usual, this is not investment advice. Sam Tomlinson Laurence Green Rajvi Kantaria
Not a day too soon. but great to hear a move in the right direction. After all 68% of the S&P 500 's BOOK value is intangible assets (of which brands). the time when the norm was to invest in plants to produce washing machines or cars is perhaps of another era indeed?
Sandy Case
8mo
Very interesting... As you say... when times get tough marketing is often the first to be chopped which makes no sense if you are looking at the longer term
Stephen Lepitak
8mo
That’s very interesting but what has prompted that shift, do you know? It cannot be the ad industry shouting about the value of marketing.
Chris Havemann
8mo
Seems only yesterday we were talking about this very topic at London Business School #MBA99 😊
Amar Chohan
8mo
Interesting. How long does this kind of accounting treatment take to change? Years?
Dom Boyd ⚡️
8mo
This would be a profound shift. Exciting (potentially!)
Exciting potential shift in the perception of advertising costs Ian Whittaker
Kate Cox
8mo
Michael Bayler one to make you happy
Sam Daniels
8mo
One to keep an eye on Tracy Smithers!
Marketing Science at Meta
8moIan this topic has come up in my work around marketing measurement, in the sense that only good measurement of the incremental impact of advertising could facilitate viewing advertising as intangible capex. I’m not familiar with accounting rules (laws?) though. Do accounting standards make it impossible to categorize advertising like this, or simply less common?