The ACCC has released submissions from the current digital advertising services inquiry.
First announced in February, the inquiry follows on from the regulator’s landmark Digital Platforms Inquiry and is being carried out by the ACCC’s newly created Digital Platforms Branch.
The inquiry, set to produce an interim report by the end of 2020, investigates the competitiveness of digital advertising, concentration of power, the auction and bidding processes and the distribution of ad spend between publishers and ad tech providers.
There have been calls to increase the viewability into advertising technologies in recent times, after an ISBA/PwC report out of the UK revealed 15 per cent of programmatic ad spend remains unaccounted for.
With vertical integration a key focus of the inquiry, Google acknowledges it is ” one of the ad tech providers that is present at more than one level of the ad tech supply chain”.
However, the search engine giant indicates that this vertical integration can reduce costs for businesses (presumably on advertising spend), with these savings then passed on to the consumer.
Google points to Adobe, Amazon, AT&T/Xandr, and Verizon Media as other ad tech providers that are vertically integrated along multiple parts of the ad tech stack.
And while Google is one – if not the – highest-earning advertising companies in the world, it maintains it is just one piece in the ad tech ecosystem.
“Most ad tech providers, including vertically integrated players, enable advertisers and publishers to use their products in conjunction with other providers’ products. Google is no different,” the company says.
“Our products work well together, but we also enable publishers and advertisers to use them with the ad tech products of other providers, and many advertisers and publishers do so to benefit from the different innovative features offered by various ad tech providers.”
In terms of mergers and acquisitions, which is another area of focus for the inquiry, Google points out that its ad tech acquisitions have occurred “mostly in the 2008-2011 timeframe when ad tech was less developed”.
When it comes to transparency, although it points out the importance of being able to provide accurate metrics to clients, Google recognises the issues that are apparent in the ad tech ecosystem.
Fragmentation is one of the key culprits, says Google.
“Lack of transparency can arise from the variety of services and number of service providers in programmatic ad transactions, rather than the practices of individual ad tech providers,” the company says.
“Advertisers (and in particular ad agencies in Australia) and publishers multi-home among many different vendors and solutions, which contributes to complexity.”
Google also suggests that it is at times limited in the amount of data it can share on digital advertising, given consumer privacy concerns.
As part of its response, Facebook seeks to clarify its role in the digital advertising landscape, which it maintains has been misconstrued in the inquiry.
With the ACCC’s talks so often centring around ‘tech giants’, Facebook indicates that when it comes to ad tech, it is being unfairly bundled in.
“The ACCC’s issues paper in this Inquiry (Issues Paper) inaccurately states that Facebook operates across multiple parts of the Australian advertising ecosystem and is vertically integrated. This is not correct,” the submission states.
“Our role in the ad tech supply chain is—as set out above—limited, and we are not vertically integrated: we do not provide publisher ad servers, we do not run publisher-side auctions and we do not independently offer market-wide analytics.
It is important that, going forward, this Inquiry recognises the limited role we play in the ad tech stack and acknowledges that our advertising business is very different from other more prominent players in the ad tech stack.”
Although Facebook does operate Facebook Audience Network for third-party publishers, the “the vast majority of ads delivered using our advertising solutions are surfaced on our owned and operated platforms”, the company says.
Another ‘tech giant’, Microsoft instead points its finger at Facebook and Google as the most influential players in digital advertising, specifically display.
“Each platform is a gateway to a massive universe of users for digital advertising purposes that cannot be replicated or achieved in any other way,” Microsoft says.
“Their size and user engagement mean that the only way to practically run display advertising campaigns that reach users online in a targeted way is to include those platforms.
“In other words, major brand owners seeking to reach millions of users could not substitute other platforms to achieve advertising campaigns of similar scale to a targeted audience.”
Sheer scale also makes Google and Facebook the market leaders in tracking and measurement, says Microsoft, both through ‘tags’ on websites and mobile data.
“This means that Google and Facebook are better able to track users, demonstrate the effectiveness of any particular advertising efforts, and enable advertisers to adjust campaigns to maximize their effectiveness,” the submission says.
“Given the importance of measured performance in driving advertisers’ decisions on how to allocate expenditure in display advertising, these advantages are likely to create a barrier to entry for potential rivals.”
In its submission, Verizon Media makes mention of perhaps the most pressing issue for the advertising technology industry at the moment – Google Chrome’s discontinuation of third-party cookies.
As Verizon points out, such a change has the potential to impact competitiveness in the space.
“For example, the shift away fromcookies could require competing ad intermediaries (who do not also operate a browser) to adopt different identifiers to continue operating and an identifier acceptable to the browsers,” the company says.
Verizon also adds weight to calls for independent verification to improve pricing transparency in the industry, with blockchain technology floated as a potential solution.
“Verizon Media and others are beginning to test these technologies in some markets and will evaluate the results to identify the outcomes they deliver relative to the engineering costs involved,” Verizon says.
“Such market-led initiatives seek to enhance transparency between parties without the need for forced disclosures.”