Why brands deserve a place on the balance sheet

By Mofeoluwa Awe

In today’s brand-driven economy, where perception often shapes profit, the value of brand equity is no longer up for debate. Yet, despite its power to influence consumer behaviour, shape company direction, and drive long-term profitability, “brand” still remains absent from one of the most important financial documents: the balance sheet.

Currently, international accounting standards categorize marketing expenditure as an operating cost, something deducted from, revenue to calculate profit. This means no matter how strategic a campaign might be, it’s not recognized as a long-term investment in financial terms. Unlike physical assets such as factories or equipment, which are recorded as capital expenditure (CapEX), brand-building efforts are often dismissed as short-lived spend.

That perspective might soon shift. The International Accounting Standards Board (IASB) is in the middle of a comprehensive review into how intangible assets, including brands are treated in financial reporting. While this process will take years and is not focused solely on marketing, it does present a potential pathway for brands to finally be acknowledged as financial assets.

The IASB’s research so far indicates there’s substantial evidence linking brands with future value generation. Academic studies and expert submissions have consistently shown that internally developed intangible assets, like brand equity, contribute meaningfully to business growth. Even accountants have admitted that allowing brands to be recognized on the balance sheet could improve access to funding, especially for startups or companies investing heavily in R&D and brand development.

However, the challenge isn’t whether brands are valuable, it’s how to measure that value. There is no universally accepted method for evaluating a brand’s financial worth.

Consultancies like Brand Finance, Kantar BrandZ, and Interbrand have long provided brand valuations, but their varying methodologies often lead to inconsistent, and sometimes controversial, figures.

Another layer of complexity lies in how brand investment is distinguished from general business development spend. Marketing activities often serve multiple functions: from awareness to conversion, from culture-building to revenue generation. Drawing clear boundaries around what counts as ‘brand-building’ for financial purposes will be key to making any accounting reform effective and fair.

The implications for marketers are huge. If brand spending were recognized as an investment rather than an expense, it would shift how marketing is budgeted, how CMOs are evaluated, and how long-term strategies are planned. More importantly, it would solidify marketing’s position at the core of business growth, not just as a cost centre but as a true value driver.

As the IASB continues to review feedback and deliberate on the next steps, the door is open for marketing professionals, agencies, and financial analysts to contribute to shaping the future of how brand value is captured. This is more than an accounting exercise, it’s a long overdue recognition that in the modern business world, intangible assets are no less real than physical ones.

Until a new standard emerges, marketers must continue advocating for brand’s true worth, both inside and outside the boardroom. Because the brands that win hearts and shape culture shouldn’t be invisible on financial statements, they should be seen for what they truly are: assets with the power to define a company’s legacy.