Great care must be taken in selecting and using an accounting system — not so much because of its price or features, but because these systems tend to become permanent fixtures in a company, dictating many business decisions.
The Octopus Effect
Once a chief financial officer starts using an accounting system’s reporting functions, she’ll want as much information as possible entered into the system. This encourages the company to upgrade the system to include all sorts of ancillary functions, such as invoicing, sending out insertion orders, reconciling discrepancies, billing clients, and so on. Then you’re “fast to a fish.”
Hooked into such a system, you no longer have any discretion as to how you conduct transactions — including the degree to which you can arrange pay-for-performance deals or even legal terms.
Part of the problems is that these accounting systems try to gain efficiency by treating all the different media as similarly as possible. Though this may be possible, it eliminates the use of conditions or exceptions that might squeeze just a little bit more efficiency out of one medium — all in the name of standardizing the data in one reporting system.
Large holding companies tend to be the worst offenders. They like to have all their subsidiaries use the same systems so that they can report in common. I’ve worked for three major agency holding companies — Leo Burnett, WPP, and Interpublic — and all of them eventually foisted a common accounting system on everyone.
What to Do
The fact of the matter is that most readers aren’t facing the problem of having to choose an accounting system. Almost everyone is stuck with one. So the issue becomes how to deal with these limitations.
My own experience shows that a company feels less pain if it turns off some of the automated parts of the system and returns to a manual process. For instance, back at Anderson & Lembke (then a property of IPG), we didn’t let our Donovan system dictate the type of insertion order we could send to sites. Instead, we had an accounting person — a great guy named Artie — take our customized online insertion orders and invoices and type them back into the Donovan system at the end of a campaign.
This added a new, manual layer of data entry, but it was worth it for the flexibility it gave us in our media negotiations. We, in essence, divorced the accounting system from the business-decision-making process — separating the two by placing an intelligent human between them, who could translate one into the other.
Compatibility and Openness
It was only by this mechanism that the agency didn’t fall into the trap of getting forced into using very specific — and sometimes inappropriate — services in the then-new online environment.
I liken it to the car-buying process. When I bought my first car, I was astounded to see that the dealership was charging me $250 for floor mats. I asked what was so special about the floor mats, and the sales agent told me that they had the manufacturer’s logo on them. On principle, I crossed them off the list and bought nicer ones for $40.
In the late ’90s, several banner-serving companies fought a battle for agency market share by developing closed systems. They wouldn’t work with each other, with alternative databases, with accounting systems, or with much of anything else. Worse still, the few that approached Michael Donovan, who owns and contributed his name to the industry’s most omnipresent accounting system — were rebuffed. I was witness to one such meeting, and it quickly became apparent that the now-ancient accounting system companies weren’t eager to open themselves up to exploitation by quicker-moving Internet companies.
To this day, there isn’t an open-ended banner-server application that can export to a variety of databases, automatically resolve discrepancies, or import into the Donovan system. And until there is, companies are much better served by placing a human layer between these systems rather than attempting to contort their processes to fit the antique systems.
While ad fraud has become part of every marketer’s vocabulary, attribution fraud—the practice of gaming outdated attribution models to justify self-serving means—has ... read more
On Monday, Netflix reported that it added 370,000 new subscribers in the U.S. in the third quarter, 20% more than the 300,000 it ... read more
Snapchat Discover has been a hit with publishers that want access to the popular messaging app’s highly-desirable audience, and some reports even ... read more
Spotify, the popular digital music service, is getting into the video ad game with a new ad offering called “branded moments.” Currently, ... read more