While many in the industry believe marketing spend should be seen as capital expenditure, how can marketers convince businesses without changes to accounting?
A proposal that could see brand listed as an asset on balance sheets and marketing spend classed as CapEx has some marketers excited.
Under current accounting rules, marketing spend is classed as operating expense (OpEx), rather than CapEx – which is long-term spend classed as an asset. This means marketing spend is expensed immediately and deducted from revenue, as opposed to CapEx, which is depreciated over time.
Marketing spend cannot be treated as CapEx, because internally generated brands are not currently allowed to appear on the balance sheet as these are intangible assets.
The International Accounting Standards Board (IASB) is currently undertaking a review into how intangible assets, like brands, are accounted for. This includes examining whether intangible assets should be allowed on the balance sheet.
