Throughout my MBA I always had one question in Finance and Accounting related classes: “Where is the brand value?” As someone who believes in the value of brand building, I was also asked the same question by my peers: “Where is the brand value? And if you can’t show it, why should we spend money on it?” Sadly, my rudimentary knowledge of Finance and Accounting did not come to the rescue. Today; I am glad to say, I have an answer:
The brand value is in there. Everywhere. And this fascinating answer comes from none other than Aswath Damodaran.
To help elaborate on (and to possibly help my peers in the branding business justify themselves) where exactly the brand value is reflected in the income statement, I’ve made my own simple version of an income statement. These include some notes of where the value of a powerful brand is reflected in your (or, our clients’) income statement:
My plea to those in the business of brand building: Understand this, as it helps us help our clients. My plea to those in management: Understand this, as it helps you make more informed decisions.
So, having understood this, I have one question for all non-believers: Now, is brand building an expense, or an investment?