Market Spotlight: What We Learnt From Australia’s AdTech Inquiry

By Aqilliz  

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Market Spotlight: What We Learnt From Australia’s AdTech Inquiry

It’s hard to deny that in the 21st century, Big Tech is king. From mid-roll video ads to display ads that follow you around the internet, the “data-fication” of advertising has forever changed the marketing landscape. By capitalising on the commoditisation of data, tech titans like Facebook and Google rose to power over the past decade, reaching seemingly unattainable heights and ultimately shaping the digital advertising landscape as we know it.

While there have long been concerns about the market dominance of tech giants, the US has traditionally taken a free market approach to regulation and antitrust in the digital economy — however, there are significant signs that this is changing. Addressing the imbalance of power between tech giants and Australian news media organisations, the recently passed News Media Bargaining Code can be seen as a big step forward in ensuring that publishers and journalists get paid a fairer share for their work. The bill was fiercely opposed by Google and Facebook, with the former threatening to pull its search engine services and the latter imposing a black-out of Australian news content. In standing up to the dominance of the tech oligopoly, Australia has shown the world what’s possible and provided a framework for lawmakers globally to build on.

In its inquiry into digital advertising services, the Australian Competition and Consumer Commission (ACCC) called out market behemoth Google for its “ability and the incentive” to prefer its own AdTech in anticompetitive ways, warning of a lack of transparency and competition in the digital advertising supply chain. Launched over a year ago, the ACCC’s inquiry puts advertiser ad servers, demand-side platforms, supply-side platforms, and publisher ad servers under the microscope in order to investigate the fairness of online advertising. The ACCC has also issued its interim report on the state of the digital advertising supply chain and, like other regulators around the world, have found that Google plays an omnipresent role in the $3.4 billion digital display ecosystem in Australia.

Here’s what we learned so far:

Big tech’s data advantage

Within the AdTech supply chain, different participants acquire data in a range of ways for targeting and attribution purposes. However, when it comes to their ability to collect and use data within their own closed ecosystems, large advertising-funded digital platforms such as Google, Facebook, and Amazon possess an obvious advantage over other market participants — and this disparity is widening.

For instance, the ACCC’s preliminary findings highlighted that Google’s diverse range of consumer-facing services and products allow unsurpassed access to an extensive amount of data from a range of first- and third-party sources. This includes personal information from signing up for a Google Account, as well as data provided through the use of its services including search histories, location history, and movement data from Google Maps, and interests and hobbies from the likes of YouTube and Gmail. Google also has access to data collected from its devices, such as Android phones and Google Home, as well as data generated from the Google Play Store such as payment information and app downloads.

In addition, Big Tech platforms also have access to large networks of trackers on third-party websites and apps, which provide a large amount of data on a user’s online activities and browsing behaviour that can be easily linked to their profile for targeting purposes. Outside of these walled gardens, however, data collection is much more fragmented, often consisting of different identifiers, data formats, and rules.

Complexity in the supply chain

As marketing budgets tighten, advertisers want to maximise campaign performance and optimise ad spend as efficiently as possible — but as technology disrupts viewing and engagement habits, it’s getting harder for advertisers to stay on top of brand-safe, effective media channels. Furthermore, the speed and complexity of the AdTech supply chain can make it difficult for advertisers to fully understand how services interact and how money moves through the entire AdTech supply chain.

Since advertisers typically cannot directly observe the operations of AdTech services, this means they rely on information provided by AdTech providers and sometimes third parties. However, more often than not, advertisers are unaware of how much of their own advertising spend reaches publishers, and publishers are unclear of how much advertisers are paying for their own inventory.

Last year, an ISBA study on the UK programmatic supply chain found that on average, 15 percent of ad spend disappeared into an unknown delta. Meanwhile, just 51 percent of ad spend was received by publishers, with the remainder going towards various fees charged by AdTech platforms. This raised industry-wide concerns about the opacity of the existing digital advertising supply chain. In order to promote effective competition in the supply of AdTech services, the ACCC’s interim report maintains that greater transparency is needed in order for advertisers to be able to make informed choices about which AdTech services they will use.

Recommendations for a fair, open ecosystem

In its interim report, the ACCC considers that increasing data portability and interoperability may promote competition in the supply of AdTech services by enabling market participants to more easily access and use information held by large platforms with a significant data advantage. This could, for instance, mean a user would be able to instruct Google or Facebook to make certain types of data regarding their interactions on those platforms available to a news publisher or to another social network on request. However, any measures to increase data mobility should be carefully designed to ensure that there are effective mechanisms to protect consumer privacy while ensuring effective controls over the sharing of their personal data.

Another recommendation from the ACCC is for the industry to implement a common system where each transaction in the AdTech supply chain is identified with a single identifier. A common transaction ID would allow providers across the supply chain, including advertisers and publishers, to follow individual ad impressions and better observe the performance of their AdTech services. The ACCC also proposed more transparency around the supply chain from advertiser to seller and recommended mandating the breaking up of datasets held by large incumbents, in order to make it easier for rival AdTech providers to enter and compete in the supply of AdTech services.

While the ACCC is still finalising its advice to the Australian government, the findings from its interim report appear to be consistent with actions being taken around the world to support an open and transparent AdTech market. Undoubtedly, 2021 promises to be a year of significant regulatory efforts to foster competition and antitrust legislation — and in many ways, all eyes are on the AdTech industry in Australia.

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