Closing the Gap between Marketing and Finance: The Link to Driving Wise Marketing Investment

Open access

Abstract

Unlike a couple of decades ago, today the majority of a firm’s value is in intangible assets. Marketing carries the primary responsibility for most of these intangible. Therefore, it is imperative to understand how marketing expenditures are linked to these intangible assets and that increasing the value of intangible assets is in the interest of both marketing and finance. It is not always easy to demonstrate this link, and many marketing departments still struggle to prove the financial returns of their activities. Too often marketers rely on typical marketing metrics, like awareness or preferences, whereas finance is more concerned about market results like profit, cash flow or EBITDA. Rather than letting marketing budgets be cut during economic downturns, marketing managers should learn to show the value marketing brings to the firm. The key for marketers is learning to speak the financial language of the firm and helping train the rest of the organization to understand the longer-term financial assets resulting from marketing.

References

  • Farris, Paul W.; Bendle, Neil T.; Pfeifer, Phillip E.; Reibstein, David J. (2010): Marketing Metrics: The Definitive Guide to Measuring Marketing Performance, 2nd ed., Wharton School Publishing.

  • Lehmann, Donald R.; Reibstein, David J. (2006): Marketing Metrics and Financial Performance, Marketing Science Institute.