04 Aug 2020

ADMA to gather information and case studies for ACCC digital advertising inquiry

The datafication of advertising has forever changed the marketing landscape, with Australia’s ACCC investigating the fairness of online advertising. ADMA is leading an industry submission and offering webinars for those keen to know more.

From interruptive video ads in our social feeds to display ads that follow us around the internet, Australia’s competition and consumer watchdog, the ACCC, is investigating digital advertising services and technology.

Publishers, advertising agencies, industry associations, data providers and others – including Association for Data-Driven Marketing & Advertising (ADMA) – have so far made more than 40 submissions to the federal watchdog, with an interim report due by December 31, 2020.

Treasurer Josh Frydenburg said the current ACCC ad-tech inquiry will focus on the technologies that “gather information about consumers and use it to target them with highly personalised advertising”.

“Digital technologies are going to be an increasingly important part of our economic and social landscape,” Mr Frydenburg said, in a statement announcing the launch of the inquiry in February 2020.

The treasurer hinted there could be changes to legislation surrounding the sector. “Our reforms will ensure we get the balance right and position Australia as a leading digital economy,” he said. A final report will be delivered by August 31, 2021.

Many submissions to the inquiry make reference to a May 2020 report by the Incorporated Society of British Advertisers (ISBA) which found programmatic advertising delivers just 51% of an advertiser’s spend to publishers, with 15% of costs disappearing into “the unknown delta”.

The ISBA report into the £2 billion UK programmatic market found more research is needed to find out more about the “unknown delta” of spend that cannot be accounted for.

The 15-month ISBA study mapped the way advertisers and publishers receive and distribute revenue through the programmatic ad delivery system, representing a state of affairs likely to also exist in the Australian advertising market.

About the ADMA submission

ADMA, who represents businesses from all industry sectors, made a submission to highlight where it can help the ACCC’s Digital Platforms Branch gather information and develop case studies in areas like:

  • Where the value lies in the advertising services supply chain;
  • Identifying the distribution of budget across the advertising supply chain;
  • The sustainability of new supply chains within the current business environment;
  • Standardisation of measurement metrics to reduce mismatched reporting;
  • The level to which scale and depth of data determines success of a campaign;
  • Valuation of the bidding processes and setting of floor prices between platforms;
  • Brand trust and digital marketing practices.

Learn more about the ACCC inquiry in ADMA’s upcoming webinar.

The inquiry’s importance to advertisers and publishers

Australia’s advertising industry fuels our economy by helping businesses to grow and compete against one another.

Advertising historically supported traditional media and free-to-air entertainment but now also has to fund a vast quantity of online content and services, prompting traditional investigative journalism to resort to paid subscriptions and philanthropic models to continue to exist. Understanding the supply chain of this industry is crucial to its success and sustainability, as well as how the country funds entertainment and journalism.

Advertising communications are usually designed to reach the targeted consumer through media channels, which remain the largest expense in many marketing budgets. Marketers want to optimise this spend as efficiently as possible, though it’s getting harder for marketers to stay on top of brand-safe, effective media channels as technology disrupts viewing and engagement habits.

The advertising industry is governed by a combination of industry codes and regulations, and has the underlying goal of promoting behaviour that is legal, ethical and trustworthy. Traditionally this regulatory model has been effective but the industry is in a state of flux with online advertising spend increasing at a faster rate than all other media collectively.

Although most news media and content publishers have moved online, publishers confirm that advertising revenue from this new source does not compensate for the loss of revenue from the decline in conventional advertising.

Publishers are also concerned that the production of high-quality content is under threat, especially where such content is freely accessible to its audience and funded by digital advertising rather than a paid subscription model.

Growth and change in the online advertising supply chain

The rapid growth of digital advertising has changed both the overall supply chain and individual businesses within the advertising industry.

To remain competitive, a growing proportion of digital advertising is delivered through automated processes collectively known as ‘programmatic advertising’. Agencies have adjusted their traditional business models at a speed to meet the demand of a constantly changing industry.

This plethora of new business models has seen the advertising supply chain evolve organically with many individuals within the industry not having a comprehensive understanding of how it works.

Advertisers claim the programmatic system is not transparent and they find it hard to work out where their money is being spent and whether they receive value for it.

In an industry led by global tech giants, international publishers, content houses, data managers and global advertising agencies, the issues in question are not confined to any one specific local market or any one market player. The concerns are universal but need to be regulated with respect to local market needs and requirements.

Digital advertising veteran Joshua Lowcock –who is the Chief Digital Officer of UM and Global Brand Safety Officer – said the industry could use the inquiry to drive innovation, competition and efficiency.

"Data-driven marketing is an important part of our industry. If performed with transparency and respect for the trust the public places in us, it has the power to not only make our industry better but help advertising fund new content, services, and tools that contribute value to society and the economy,” Mr Lowcock said,

“This is an opportunity to evaluate the advertising supply chain and provide opportunity for all players to enhance their offering competitively and efficiently and make the industry, which contributes much to society - including innovation, free access to services and content as well as a valuable stimulus to the Australian economy - more sustainable in the long run."

One of the complexities of the digital advertising services inquiry is to examine claims the market is dominated by a small number of very large technology companies. These companies maintain that they do not abuse their position and that the market remains highly competitive. The alternate view is that there is a lack of transparency and reduced competitiveness in the market.

The inquiry will investigate these claims and make recommendations on how the market can operate in a way that is fair for consumers while allowing for a competitive business environment.

The current federal government has committed $27m over four years to establish and resource the ACCC Digital Platforms Branch, which will carry out inquiries.

This digital advertising services inquiry comes hot on the heels of the federal watchdog’s digital platform services inquiry into search engines, social media platforms and other digital content aggregation platforms, which sparked a move to have Google and Facebook pay Australian media firms a cut of their revenue.

The ACCC also launched court action against Google in the final week of July 2020 for misleading consumers into signing away their privacy.

The ACCC Digital Platforms Branch will consider the competitiveness and efficiency of the digital advertising supply chain, concentration of power, role and use of data, auction and bidding processes, impact of mergers and acquisitions, suppliers’ behaviour and corporate structures, contractual relationships between suppliers and customers, and the distribution of expenditure between publishers, digital ad tech service providers and advertising agencies.

Other international competition and consumer agencies – such as the UK Competition & Markets Authority - are also considering these issues, which has the potential to lead to more regulation of the global technology giants.

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