In a speech delivered to an AANA and Think TV 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.

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

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

Sims explained: “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”.

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 cloudy, 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.

Sims continued: “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.

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

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

Sims observed: “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”.

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.

Further, Google vice-president of search Pandu Nayak has warned that too much transparency in their algorithms could open the door to manipulate the system.

“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,” 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”.

Sims concluded: “As an independent regulator, we want innovation. But it requires strong competition.

“It is important, at this pivotal moment, that we stay true to our purpose of making markets work and ensure markets in this critical sector are working as they should: for the benefit of media businesses, consumers, and advertisers alike”.

Facebook senior policy executive Andy O’Connell has commented that the specific problem needs to be ascertained before a solution is proposed, while Google Australia managing director Mel Silva expressed in a B&T guest post that the regulation needs to keep up with the technology.