A quick guide to the Ad Tech Inquiry submissions
The spotlight remains firmly on transparency in the advertising tech space as the ACCC’s Ad Tech Inquiry investigates whether market participants have enough information about pricing, rebates and revenue flows to make informed choices about the use of ad agency and ad tech services in Australia.
In response, AANA brought ISBA’s Programmatic Supply Chain Transparency Study to Australia delivering insights into the world’s first end-to-end investigative audit into the actual cost of Ad Tech to the media budget.
The study commissioned by the UK’s advertisers’ association, ISBA, and carried out by PwC UK was released on May 6, 2020 and provided a detailed analysis of the ‘waterfall’ of advertisers’ media dollars as they pass through the multiple parties on the way through to publishers. The study revealed that on average just 51% of the original ad spend ends up with the publisher who hosts the ads and that about 15% of the ad spend vanishes in the middle of the chain into what the report calls an “unknown delta”.
The ACCC Inquiry is also exploring the competition throughout the ad tech supply chain and in the supply of ad agency services; the role and use of data in supplying these services, and whether competition and efficiency are being affected by supplier behaviour, ie. vertically integrated suppliers preferencing their own services, or by ad tech services businesses or ad agencies not acting in the best interests of their clients.
While we wait for the interim report (due 31 December this year) – here are some highlights from some of the published 29 submissions.
Greater ad tech efficiency – greater investment in Australian content
Addressing the inefficiencies in the ad tech stack will make a material difference to the return that publishers receive on their inventory—which directly relates to the sustainability of investment in great Australian content that our community relies upon. [FreeTV]
Ad tech services add value
Buying and executing digital media campaigns using programmatic technology is now the preferred method for advertisers to deliver on their planned digital marketing activity, with the expectation that this will continue to grow. 60 percent of digital expenditure was placed programmatically in 2019. The purchase of digital media necessitates the use of Ad Tech services in some form. The mix of services required for each campaign differs depending on the specific requirements and objectives of the advertiser.
Every stage across the Ad Tech value chain represents a service which incurs a fee. These services range from data provision, ad verification, frequency capping technology etc, which work in conjunction with each other to improve the outcomes for the advertiser. As the ACCC highlights in its Digital Platform Inquiry report, this expansion of the advertising value chain has led to a greater dispersal amongst service providers of the advertising dollar, sometimes referred to by traditional media vendors as ‘non-working media’. We believe that applying the term ‘non-working media’ to Ad Tech service providers is incorrect as it implies this expenditure does not add value. Whereas marketing effectiveness and efficiency is driven by the capabilities Ad Tech tools and data provide; the ability to improve targeting, audience delivery, measurement, analytics and accountability. In fact, programmatic advertising has gained popularity with advertisers because of its greater effectiveness compared to other, less technologically driven forms of media buying, resulting in improved overall return on marketing investment. [Media Federation of Australia – MFA]
Consumer’s lack of control over data
The ACCC’s consideration of the role and use of consumers’ personal data within the digital advertising supply chain is welcomed, as it is essential to acknowledge that the commodity digital advertising services are transacting over is largely provided by consumers. CPRC consumer research indicates consumers are uncomfortable with the amount of information collected about them and would prefer to have greater control over that data collection. Control is particularly lacking given that personal data can often be traded between firms deeply embedded in supply chains without a direct link to consumers or even the basic service they’d signed up for. In addition, it can be difficult for consumers to know where and how to remove their associated data from brokers’ holdings. This issue is compounded by terms and conditions and privacy policies that are often ineffective at enabling consumers to make informed choices. [Consumer Policy Research Centre]
Advertising in Australia more affordable, efficient and effective due to technology
Online advertising services have lowered prices, substantially grown the market and empowered Australian SMBs to advertise efficiently and compete more effectively with larger and more established companies in Australia and around the world. In Australia, more than 400,000 businesses placing advertisements on Facebook spent less than US$100 in 2019. In the same year, fewer than 270 Australian businesses spent more than US$1 million to place advertisements on Facebook. Over 1.9 million Australian SMBs have a Facebook Page, and over 84% of Australian users on Facebook are connected to at least one Australian SMB’s Facebook Page. Consumers also benefit from digital advertising (such as ours), which serves them ads more relevant to their interests, and gives an unprecedented level of transparency and control over the ads they see.
During the COVID-19 pandemic crisis, small businesses have also been relying on digital advertising options to reach consumers who are no longer able to visit their premises in person. [Facebook]
Vertical integration offerings
Vertical integration offers advertisers and publishers benefits, but has not led them to have to use a single provider’s services. Most ad tech providers, including vertically integrated players, enable advertisers and publishers to use their products in conjunction with other providers’ products. Google is no different. Our products work well together, but we also enable publishers and advertisers to use them with the ad tech products of other providers, and many advertisers and publishers do so to benefit from the different innovative features offered by various ad tech providers. Multi-homing and mixing-and-matching is common in ad tech, including among Google’s customers. That is why both point players and vertically integrated providers are common and compete effectively in ad tech. Google is not the only provider that offers integrated solutions. There are several other ad tech companies that are vertically integrated along multiple parts of the ad tech stack, including Adobe, Amazon, AT&T/Xandr, and Verizon Media. And while Google and other vertically integrated companies believe there is value in offering a broad suite of products to advertisers and publishers, players servicing even only a single part of the ad tech stack (e.g., The Trade Desk and Criteo) continue to be successful as well. [Google]