More input needed on digital advertising

27 February 2019

The ACCC says its digital platforms inquiry is continuing to analyse issues about the digital advertising supply chain that affect Australian advertisers, including how advertising is verified on the major digital platforms.

In a speech delivered to the Australian Association of National Advertisers (AANA) and ThinkTV audience of marketing and television advertising executives in Sydney tonight, ACCC Chair Rod Sims called on the advertising industry to provide feedback on a number of preliminary recommendations before the inquiry’s final report in June this year.

In digital advertising in Australia it is estimated that more than sixty-eight cents in every dollar is going to Google and Facebook.

“Being big is not a sin. Australian competition law does not prohibit a business from possessing substantial market power or using its efficiencies or skills to outperform its rivals. But the dominance held by Google and Facebook in certain markets, plus the incentives they face, does mean their conduct should be subject to particular scrutiny to identify whether it is creating competitive or consumer harm,” ACCC Chair Rod Sims said.

The inquiry is also examining issues concerning the pricing of intermediary services, such as the cut of the amount paid by the advertiser for the ad impression. This is seen by many to be opaque, particularly when there are many intermediaries involved. 

Collectively, the amount charged or ‘cut’ taken by intermediaries is estimated to be between 30 and 75 per cent of the final price paid for ads. The ACCC is exploring whether there is sufficient transparency around these transactions.

“It is important that we better understand the issues with the ad tech supply chain because a lack of transparency means that advertisers do not know what they are paying for, where their advertisements are being displayed, and to whom,” Mr Sims said.

“Higher advertising prices ultimately translate to higher prices for consumers for products and services.”

The lack of clarity around ad-tech also arguably disadvantages online media businesses’ ability to monetise their premium content via advertising opportunities.

“We have not yet reached a view on these issues and we are continuing to examine the ad-tech supply chain to understand better how it works and how this impacts advertisers. In this we would like the advertising industry’s help, as it is clear these are issues that require close examination,” Mr Sims said.

Another side of the transparency equation is whether advertisers can verify whether the ads that they are purchasing are actually shown to their target audience. The AANA and Free TV have raised that Facebook and Google monitor the delivery of advertisements on their own platforms arguably acting as the scorekeeper in a game where they are a player, while, for example, TV broadcasters are subject to third party verification of their audiences.

Both Google and Facebook have rejected claims that advertisements on their platforms are not verifiable. In addition to internal processes, they both say they allow third party measurement partners to verify metrics on behalf of advertisers.

“We have not yet reached a view as to whether the existing arrangements on the major digital platforms are sufficient to address the issue. This is an issue we hope to achieve clarity on before our final report in June,” Mr Sims said.

Each month, approximately 19 million Australians use Google search; 17 million access Facebook; 17 million watch content on YouTube; and 11 million double tap on Instagram.

“With an audience of this size, digital platforms are a primary channel for businesses looking to reach Australian eyeballs and, more importantly, their wallets. This is why this inquiry is important for Australian advertisers, and we welcome feedback from everyone with an interest.”

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