In its final Digital Platforms Inquiry Report (Report), the ACCC raises significant concerns over a number of competition and privacy issues impacting the ad tech supply chain relating to online advertising. The Report makes a number of recommendations, which, if implemented, will shake-up the industry and bring on a slew of changes for all players involved in programmatic advertising.
Online advertising makes up an increasing portion of the total advertising spend in Australia. Facebook and Google are the two largest suppliers of online advertising. Outside of these two suppliers, the advertising market is highly fragmented and extremely complex. Other providers include online news publishers, online marketplaces like eBay and other types of digital platforms like Reddit and Amazon as well as media agencies. But don’t think it stops there. There are also, for example, supply side platforms, demand side platforms, ad exchanges, ad networks, advertiser ad servers, data management platforms and trading desks.
What is the ‘monopolising’ concern of the ACCC?
Despite the fragmented ad tech marketplace, the ACCC estimate that Facebook and Google captured in excess of 80 per cent of growth in online advertising in the past three years. The report refers often to monopoly and near monopoly concerns and its potential impact on competition and privacy.
How does ad tech work?
In essence, ad tech is about delivering advertising campaigns online in a targeted way to the most relevant consumers as assessed and sold against metrics known as ‘cost per impression’, cost per action’, ‘cost per click’ and ‘cost per lead’.
The majority of online advertising occurs through search advertising (ads which appear on search engines as a result of a search query) and display advertising (ads which are made up of visual elements and appear alongside website content, including social media content).
Google is by far the most common means of purchasing search advertising. The ACCC estimates that 96 per cent of search ads are obtained this way in Australia.
Display ads are purchased through four primary channels: Facebook, Google, ad tech services and direct deals. To generate display ads, the website collects user data via first and third party cookies when the user requests to access the website. The website and personalised display ads are then generated to the user.
What is at risk in the online advertising marketplace?
This trend in online advertising raises a number of issues of concern for the ACCC:
In addition to its recommendation to adopt a mandatory 'opt-in' style consent for the collection of users’ data, the commission recommends the establishment of a specialist digital platforms branch which will hold an inquiry into the competition for the supply of ad tech services and online advertising services by advertising and media agencies.
These recommendations will have significant impact for any Australian businesses engaged in programmatic advertising. The government is currently in the process of reviewing the ACCC’s recommendations before it makes its final decision.
With this in mind, it would be prudent for any Australian businesses who utilise online advertising to stay up to date on any impending developments in this space.
Authors: Lisa Fitzgerald & Madison Tonkes
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
Published by Lisa Fitzgerald, Madison Tonkes