A Note on Commercial Accounts

L. Marin^*
*Correspondence: L. Marin, Department of Marketing, University of Murcia, Murcia, Spain, Email:

Keywords

Marketing accounts • Financial accounting • Accounting regulation

Introduction

We argue that marketers can use internal reporting to create marketing accounts that give a complete picture of how marketing has contributed to the value of the company and make it easier to be more accountable for how market-based assets are used. Our objective is to demonstrate to marketers how they can increase their credibility in highlighting the value of marketing. However, in return, marketers must record their own assumptions in what we refer to as "marketing accounts." We wish to be sure about what we don't do. Discussions regarding the usefulness of commercial brand valuations are unaided by our research. In point of fact, marketing accounts do not in any way necessitate the use of particular valuation models. Brand equity models, customer equity models, or any other model can be used by marketing accounts. A brand equity approach may be deemed the most effective strategy for capturing the impact of marketing on a consumer packaged goods company by the CMO (Chief Marketing Officer). A wireless carrier's chief marketing officer may favour a customer equity strategy. An approach more analogous to the multiple inputs of a balanced scorecard might be preferable for an online retailer. In the right circumstances, any number of different asset valuation models might work. Having said that, those who employ multiple strategies should take into account how they overlap. Don't count the same asset twice, for instance, in customer equity and brand equity. The good news is that CMOs can use any valuation model they want to implement marketing accounts. It is possible to track all assets, including market-based ones, when creating marketing accounts. This makes it easier for marketers to focus on raising the company's economic value rather than its accounting value. This has significant repercussions. Trick fees, for instance, currently report as profits but may now report as losses in the marketing accounts because they destroy unrecorded assets but produce cash. Long-term marketing investments can be more accurately valued by marketing accounts.

Discussion

Some individuals might argue that market-based assets cannot be valued and reject all valuation models. We would respond that academics and consultants alike already recognize their value. Implicit asset valuations must be developed in order to rank the outcomes of all asset-generating investments when establishing budgets. The question is not whether marketing assets can be valued, but rather whether the valuation is based on managerial intuition or the best available, albeit imperfect, analysis. To reiterate, marketers have the option of developing their own internal valuation model or utilizing a preferred academic or commercial valuation model. Our study offers a method for integrating valuations into a comprehensive view of marketing performance rather than advancing valuation methods or deciding between competing models [1].

In addition, we steer clear of discussions in external reporting regarding the voluntary disclosure of market-based assets. We would like to see more disclosure, but keep in mind that there is currently very little and even mandatory disclosures appear to be limited due to concerns about confidentiality. Improved valuation models based on the internal recording of market-based assets can only encourage voluntary disclosure in light of this limited disclosure, although this is not our primary objective. Market-based assets may be overlooked in reporting, which may be one reason for marketing's relative weakness in the boardroom, according to our hypothesis. Due to the small number of recorded assets that marketers control, marketing appears to be of little significance. Furthermore, if market-based assets are rarely recorded, accountability for their creation and utilization is difficult to attain. Major changes to external reports may take a while to arrive due to fears of misleading investors. Marketbased assets will be valued using a comprehensive set of marketing accounts, which is our suggested method. Marketing typically appears to be more profitable in the short term when investments are recorded more appropriately. It stands to reason that marketers would welcome such a shift. However, not every marketer will treasure this gift. Recording market-based resources in a proper framework implies that showcasing slip-ups will be more diligently to stow away. When a customer relationship asset is recorded, the CMO is held accountable for its use. We believe that companies will be more likely to switch to external reporting if they already routinely record market-based assets in their internal marketing accounts, even though this study does not address the question of whether the FASB should include more valuations of market-based assets in financial accounting. Showcasing records ought to give a proving ground to further developed valuation [2-5].

Conclusion

Marketing accounts necessitate detailed valuation models, but they need not be found before being implemented. To get started, all you need is a ready-made accounting program and the willingness to put your marketing assumptions into writing. Codifying assumptions will make it easier for everyone to understand how marketing works and valuation flaws should get better over time. In summary, advocates of marketing accountability have paid a lot of attention to external reporting. We suggest taking a different path, which may yield better results sooner. By focusing on internal reporting, marketers, who are the only individuals who have the desire and ability to improve the situation, can attempt to drive accountability. Marketers will be held more accountable for their use and misuse of market-based assets as a result of marketing accounts' increased focus on marketing's role in value creation.

Acknowledgement

None.

Conflict of Interest

No potential conflict of interest was reported by the authors.

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