Here’s something that anyone involved with setting marketing budgets should know: The cost of brand building may be 40% less than what most marketing executives believe it to be. What? Think about it. When a dollar is invested in real estate, its tax deductibility is spread out over 30 years. When equipment is purchased, the deductibility is spread over 5-7 years. But when a dollar is invested for marketing communications, it is immediately tax deductible. This means for most profitable corporations (who commonly pay 40% of profits in taxes) a dollar invested in marcom is actually costing the bottom line only 60 cents. A dollar invested in marcom can often do more to build the value of the company’s stock than any other investment.Intangible assets – like brand cache and good will – may account for as much as 80 percent of the purchase price of acquired companies. For example, the Ford brand is worth more than all its factories and inventories; the Google brand is worth thousands of times more than its hard assets. Surprisingly, I’ve never seen this thought in print (although, that may be a matter of what I don’t read). But, it is certainly not top of mind with most CEOs or Boards of Directors, even though the value of the brand is the most important line item on the balance sheet. Agree? Disagree? Have additional thoughts? Let us know.
Joe Phelps | Founder & Head Coach
Read The Brand Bubble
Gerzema and Lebar (Y & R)
You are absolutely correct.
This makes a lot of sense and should be brought into the permanent marketing ROI discussion much more often than it is.
JB, I'm thinking that one of the contributing factors is that our industry association -- AAAA -- is shy about promoting this. Because, from time to time, legislation to tax advertising expenditures raises its ugly head. So it remains a "dirty little secret" in the public eye.
Great thinking from a Great thinker. Thanks Joe.