Statement of the problem
The advertising on the web is a really profitable affair, still, an inappropriate use of management accounting approaches leads to the failure if gaining profit. Having conducted an analysis of the companies’ financial situation from the point of view of the cost managerial accounting approaches, that is standard cost accounting, activity-based costing, throughput accounting, lean accounting and resource consumption accounting, it may be possible to find out the failures in the accounting systems those companies suffer from and provide some recommendations for improving the strategy and increase profit by means of making good decisions. Moreover, the information is going to be considered about the most appropriate approach for using in the field of the web advertising.
The context of the problem and the current research in the field
There is much current research in the field devoted to the Internet advertising, still it was impossible to find the research which would have been devoted to the data collection in the sphere for the accounting needs. Moreover, there is hardly information online devoted to the recommendations for increasing profit from online advertising considered on the basis of the cost accounting approaches. Furthermore, it may said that the research is going to be innovative as nothing was found devoted to the identification of the best cost accounting method devoted to the making decision is the field of web advertising.
Reasons of the problem existence and the arguments for choosing it
Advertising on the web becomes a really profitable business, still, high competition creates some challenges for the companies which are involved there. Some companies do not get the profit they are expected to. One of the main reasons for problem existence is that the methods which work in other spheres do not work on the Internet. This topic is chosen because the sphere of the Internet and advertising there is a good opportunity for innovative research in the accounting sphere. Moreover, the choice of the cost accounting approaches (standard cost accounting, activity-based costing, throughput accounting, lean accounting and resource consumption accounting) may b helpful for some companies to make decisions in the advertising field.
Conducting a literature research on the problem of the web advertising and the profit companies can make out of it, it should be mentioned that the advertising in such a way costs not much and the is available “24 hours a day and up to 365 days a year” (Janoschka 2004, p. 41), especially if to compare it to the traditional methods of advertising. Information Resources Management Association, International Conference, & Khosrowpour (2001) state that Web advertising, from the point of view of the cost accounting, should deeply consider the “accounting system’s characteristics only as network effects resulting from association” (p. 1109). Moreover, it is natural that different companies create their websites for promotion. That allows them to advertise their products online on their personal sites (Stickney, Weil, & Schipper 2009, p. 349). Still, the authors do not consider the best cost accounting methods which may be used for making decisions for placing ads on the Web.
Albrecht, Stice, Stice, & Swain (2007) dwell upon the importance to consider the recent bursting accounting scandals which appeared on the basis of the topic of the revenue which should be recognized from the advertising operations online. The advertising campaign on the web should not only deal with accounting systems for making decisions, but should also relate to the taxations on the Internet (Laurence & Miller 2000). Armstrong and Barrett (2001) offer the use of CPM online method for profit calculation, without using any cost accounting method, as Procter & Gamble did when earned its first amount of money on the Internet. Still, this method may be considered as out-of-fashioned and ineffective for now. Brown (2006) offers to make the decision-making process easier by means of locating all the information on the accounting on the Web using the most innovative software which allows the users to use different cost accounting methods and provide calculation online without much afford.
The method for the research should be qualitative one as it will help to understand which accounting method is the most appropriate for making decisions on the web. It is important to consider the companies which use the Internet for advertising and the Internet organizations which provide those companies with the online advertising services. The survey should be created on the basis of the cost accounting methods with questions devoted to the business run by those companies.
Key research questions
The key research questions should be as follows,
- What cost accounting methods the companies use for making decisions while turning to the online advertising companies?
- Which method is considered to be the most appropriate for the companies-clients and for the companies-services-provides?
- Which cost accounting methods are the best for identifying the profit?
Albrecht, W. S., Stice, J. D., Stice, E. K., & Swain, M.R., 2007. Accounting: Concepts and Applications. Stamford: Cengage Learning.
Armstrong, S. & Barrett, N., 2001. Advertising on the Internet: how to get your message across on the World Wide Web. London: Kogan Page Publishers.
Brown, B. C., 2006. How to use the Internet to advertise, promote and market your business or Web site– with little or no money. Ocala, FL: Atlantic Publishing Company.
Information Resources Management Association. International Conference, & Khosrowpour, M., 2001. Managing information technology in a global economy. Hershey, PA: Idea Group Inc (IGI).
Janoschka, A., 2004. Web advertising: new forms of communication on the Internet. John Benjamins Publishing Company.
Laurence, H., & Miller, W., 2000. Academic research on the Internet: options for scholars and libraries. London: Routledge.
Stickney, C. P., Weil, R. L., & Schipper, K., 2009. Financial Accounting: An Introduction to Concepts, Methods and Uses. Stamford: Cengage Learning.