ACCC: Social Media Advertising Lacks Transparency

Chiang Mai, Thailand - February 2022 : Social media application on the smartphone screen

The Australian Competition and Consumer Commission (ACCC) has said that social media advertising lacks the transparency necessary to give advertisers — whether they are small or large businesses — the trust and confidence they need to choose the best services for their needs.

“Advertisers rely on the performance claims and metrics available to them through social media platforms to assess performance and allocate budget to these platforms,” the watchdog said in its sixth interim report from its Digital Platform Services Inquiry.

“However, they may not be able to verify the accuracy of specific claims made about the performance of their advertising campaigns. Inaccuracies may lead to wasted campaign funds and lower levels of engagement for advertisers.”

The body said that advertisers, such as SBS, had said that the methodology for generating performance data is not always available and that when data was provided, it was usually served in an aggregate form. Advertisers also told the ACCC that the degree to which platforms allow advertisers to use third parties to independently verify targeting, performance, viewability and brand safety data is limited.

Social media platforms have enacted some partnerships with third-party providers to generate more reliable metrics for advertisers. However, the ACCC said that these third-party verification methods, provided by businesses such as Moat, IAS, Comscore, DoubleVerify and Meetrics, are expensive and therefore unavailable for smaller businesses. As a result, small businesses are unlikely to use the tools and do not make for “insufficiently transparent advertising performance data.”

In the report, the ACCC also said that Meta has a commanding position within the Australian online advertising market with its Facebook and Instagram platforms and “faces weak competitive constraints from other social media platforms” with their ability to provide social media services found wanting. This problem is “especially apparent” for users aged 25 and above” as they are less likely to use TikTok.

This lack of competition is exacerbated by the “significant” barriers to entry and monetisation that new platforms face, despite the growth of TikTok and BeReal.

However, the ACCC said that the highly differentiated nature of social media sites was a cause of this lack of competition within the industry. A far higher proportion of Facebook users (44 per cent) actually post content on the platform, whereas just 15 per cent of TikTok users actually post content.

All platforms do have people that post every day — influencers. The ACCC said that while efforts by platforms to reward influencers (or creators, as they have also become known) with money directly from users or through revenue share models are commendable, they are not without problems.

“Consumers may be unaware that influencers do not always receive the full amount that a consumer has paid,” said the ACCC.

For example, when rewards are purchased in-app on iOS or Android, Apple and Google typically receive 30 per cent of the purchase price. Plus, with a Facebook Star for example, just US$0.01 will be given to the creator for each Star they receive and that money will only be made available once the balance reaches US$100.

The ACCC also said that following its influencer sweep, it found that 81 per cent of influencer posts did not meet the requisite disclosures about the payment they had received for their posts. In fact, 96 per cent of fashion influencers, 81 per cent of “home and parenting” influencers and 79 per cent of travel and lifestyle influencers made concerning posts that did not disclose who had paid them.

What’s more, the ACCC expressed concerns about the rise of “financial” influencers — likely to be crypto bros — who have not obtained a financial services license. It also said that child influencers, whose accounts are likely to be managed by their parents considering that most social media sites require users to be at least 13, face privacy risks such as the sharing of the details of their school, and online harassment. The body also said that they might face pressure to continue creating content, especially if driven by a parent’s financial incentive.

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