The competition and consumer regulator has released the findings of its first ever examination of digital platforms in Australia, recommending sweeping changes and further industry investigations, among them an examination of the digital advertising supply chain.

The ACCC has recommended the establishment of its own specialist digital platform branch which would proactively monitor and investigate digital platforms and their ecosystem. Adtech in particular was singled out by the regulator as the first area needing investigation.

The regulator wants to further examine if adtech companies — the middlemen between brands or agencies and publishers or platforms who facilitate programmatic advertising — are operating in an opaque way which prohibits the “efficient operation of these markets”.

The investigation would also include:

  • The prices charged by suppliers of these services and the share of advertising expenditure they retain (including whether any potential excessive margins are obtained)
  • How these services are purchased and sold, including any auction and bidding processes 
  • The relationship between suppliers and customers of these services, including the extent to which company structures or contractual arrangements limit effective competition 
  • The impact of consolidation of services on competition.

The ACCC has recommended the inquiry should have Ministerial direction, be able to compel information and be completed within 18 months.

The findings from the digital platforms inquiry, released today, already concluded that the way adtech services are priced lacks transparency for both advertisers and websites with neither party able to tell what cut adtech companies are taking from the transaction. 

“This has led many participants in the display advertising market to question the efficiency of the adtech supply chain,” the report said.

The lack of transparency can distort competition and encourage a “race to the bottom”, according to the ACCC report.

“If firms win customers by misleading them, then it penalises firms that are upfront with consumers and represent their offers in a transparent and accurate way. There is a risk that competition will become a race to the bottom.”

Several submissions to the inquiry called for a transparent system of programmatic receipting and external verification of auction systems so parties could see a price breakdown and when and where ads had been served. But the ACCC ruled out this solution, saying it was not currently practical.

The regulator called for further study on potential excessive margins of adtech suppliers, the auction and bidding process for adtech services, and the impact of consolidation of services like SSPs and exchanges.

Google is by far the biggest supplier of adtech services but the ACCC noted the potential problems are industry wide.

LinkedIn
Previous post

UNSW Professor Sallie Pearson added to National Data Advisory Council

Next post

Q2 Earnings: Amazon's profitability takes a hit & Google's revenue grows to $39 billion