The marketing accounting interface – lessons and limitations
Abstract:The disciplines of Marketing and of Accounting are facing challenges that threaten their respective roles in the firm and beyond; the Marketing profession faces renewed threats to its place at the boardroom table, while the Accounting profession is beset by calls for indicators of shareholder value well beyond what is permitted under the traditional accounting model.
Much has been written about the need for marketing and accounting to get more in tune with the financial value of the firm. Little has been written about the need (or opportunity) for marketing to work more closely with the accounting function in reporting value creation or performance enhancements achieved through its activities. And yet, the accounts represent the primary and formal mechanism by which the firm reports its past financial performance, for internal control purposes and to the financial community. In the face of a widening accounting-finance gap (evidenced by growing Market to Book ratios) a closer marketing-accounting communication may allow accounting to increase its relevance to shareholder value without compromising its aversion to numbers involving uncertainty and judgment.
This paper explores the issues giving rise to these challenges and urges a stronger marketing-financial analyst dialogue underpinned by a stronger marketing-accounting shared language. We address some of the obstacles on this path, given that both groups have different objectives, methods and metrics, and discuss ways in which each discipline can leverage off the other.
Document Type: Research Article
Publication date: September 1, 2008