The ACCC is taking aim at a lack of pricing transparency for programmatic advertising

By Chris Pash | 26 July 2019

Consumer watchdog the ACCC has recommended an inquiry into adtech services and advertising agencies over a lack of price transparency in the complex area of programmatic. 

The ACCC is concerned about the potential for the misuse of market power within advertising.

"There is a lack of transparency in the pricing of services used to facilitate automated or programmatic online display advertising, known commonly as adtech services," says the ACCC in its final report of its investigation into digital platforms Google and Facebook.

"This means that both advertisers and websites lack visibility over pricing. They do not know what proportion of advertiser spend goes to adtech services versus how much goes to the purchasing of advertising inventory.

"This has led many participants in the display advertising market to question the efficiency of the ad tech supply chain."

There is the potential for bundles of advertising inventory, advertising demand, advertising services, and ad tech services to lessen competition in certain advertising markets, says the ACCC.

"Advertising and media agencies add another layer of opacity to the advertising supply chain," says the ACC.

"Because advertisers have little visibility into the advertising supply chain, there may be an incentive for agencies to act in ways that benefit their own interests and are to the detriment of advertisers."

"Advertisers have a limited ability to negotiate with Google and Facebook. Google and Facebook are each likely to have the ability to charge advertisers more (or offer less in terms of service) in the provision of search and display advertising services than they could if competition were effective." 

The ACC says digital platforms with substantial market power have the ability and incentive to engage in leveraging behaviour which may affect competition in advertising.

There is international evidence that digital platforms have engaged in anti-competitive leveraging behaviour in the past and the risk of leveraging behaviour is increasing as Google and Facebook expand into other markets," the report says.

The inquiry, to be conducted by a specialist digital platforms branch be established within the ACCC, would look at: 

  • the prices charged by suppliers of adtech 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.

"Advertising and media agencies perform a key role in the purchase of advertising inventory, including the purchase of programmatic advertising," says the ACCC.

"The ACCC has concerns about the lack of transparency in the way advertising and media agencies operate, including where the agencies or their holding companies act as intermediaries and purchase advertising opportunities from large platforms or media for resale to clients.

"This is a complex area and the ACCC’s experience in this Inquiry suggests that advertisers and others may be unwilling to publicly identify their concerns." 

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