Television lobby group Free TV wants regulators to force Facebook and Google to implement third-party Software Development Kits (SDK) to ensure transparent measurement of web traffic and level the regulatory playing field between the 'traditional' media companies and the largely unregulated digital duopoly.
The comments were released in a detailed submission as part of the Australian Competition and Consumer Commission's (ACCC) inquiry on digital platforms.
Seven has also made public its submission to the ACCC, warning the power of Google and Facebook threatens the long-term sustainability of the ad-funded Australian content creation industry, while Nine boss Hugh Marks has called on the commission to create the “right regulatory balance” to ensure content creators are appropriately supported and rewarded.
At the time of writing, Facebook had not made its submission public and AdNews will report on Google's submission in a separate follow up article.
A watershed moment
The most in-depth contribution from the TV industry, to date, was delivered by Free TV, which represents the three commercial Free To Air TV networks, Seven, Nine and Ten.
“This is a watershed moment for the media sector. Google and Facebook have become virtual monopolies, with huge influence and market power, but very little regulatory oversight,” Free TV CEO Bridget Fair said.
“We are competing with these platforms for advertising dollars and for viewers. The ACCC has a critical role to play in ensuring that this fight occurs on fair terms.
“Commercial television broadcasters are still operating under a regulatory framework which was largely conceived in the 1980’s. We are the cornerstone of the Australian production ecosystem and the source of trusted news content that is vital to our democracy.”
Among its key recommendations for the ACCC is greater transparency over how Facebook and Google report on success, particularly around areas like reach, impressions and CPMs.
FreeTV also wants greater transparency over the algorithms these companies use as well as controls over how they collect and use consumer data.
In a 47-page submission, FreeTV said that Google and Facebook's grip on search and social media had fuelled digital advertising to capture more than half of Australia's advertising revenue in a decade.
“However, Google and Facebook have in part been able to achieve this outcome based on unsubstantiated and exaggerated claims around reach, viewability and effectiveness. They write their own standards and force advertisers to use their vertically integrated products to get access to their platforms,” the paper stated.
Free TV cited Facebook's exaggerated reach estimates, first discovered by an AdNews investigation (see above), as well a series of cases where Facebook has admitted measurement mistakes that lobby group says were “false and misleading to advertisers”.
This included misreporting errors, such as excluding video views less than three seconds, which artificially increased the average view length (some by up to 80%); and, counting every single page view over a 7-day or 28-day reporting period, even if the view was by the same user, which had led to up to 55% inflation on views on the 28-day metric.
Facebook has admitted and corrected both metrics mistakes but has so far not addressed reach figures that significantly exaggerates its audience of millennials – see chart.
“If dominant players like Google and Facebook in one sector of the market are making systemic overestimations of reach, this will distort the advertising market by misleading media buyers into overvaluing one sector ahead of others with robust measurement systems,” the FreeTV report stated.
As a top priority, the lobby group has called on regulators to require Facebook and Google to implement SDKs so that third-party measurement firms can measure their results at source rather than relying on Facebook and Google to supply their own data.
“It is vital that this inquiry lead to the mandatory acceptance of SDKs and transparent measurement of web traffic across all Google and Facebook advertising products to enable genuine third-party measurement and verification of the effectiveness of their digital advertising,” the paper stated.
“This is the standard approach for most other media outlets and online businesses. This will provide the advertising industry, along with policy makers and regulators, the tools necessary to make informed purchasing decisions, backed by independent, robust reach and viewability metrics.
“In the absence of this data, the advertising industry will continue to be distorted by two dominant players who, despite recent announcements, are still effectively marking their own homework.”
The paper also cited a recent ThinkTV study by Dr Karen Nelson-Field that found out of 18,219 executions on Facebook, YouTube and television, only 6% of ads on YouTube were viewable to the same standard as television (100% viewable for 30 seconds) and no ads on Facebook were 100% viewable for 30 seconds.
It said this lack of transparency on reach and viewability is “compounded by reach estimates that vary so wildly that it is unclear what the advertiser is paying for”, citing how the reach of a three-day campaign on Facebook can deliver huge variations in reach ranges, such as more than 1.3 million people for a $65,000 campaign (see above).
“It is hard to imagine another product where the purchaser has to accept that the effective unit cost may vary by over 160% depending on the performance of the service provider and that the service provider writes the standard against which the product is measured,” the submission added.
“...The fact that advertisers accept these conditions is an indication of the market power held by Google and Facebook.”
The paper also took a swipe at Facebook and Google's programs to embed their staff within the media agencies that advise clients on how to spend their money.
“Both Google and Facebook run programs where staff are placed within advertising agencies, ostensibly under the banner of “educating” clients on how to use the digital platforms,” the paper added.
“When combined with the issues described above regarding the efficacy of measurement of reach claims and viewability, these marketing programs have the potential to be providing false and misleading information to advertisers.”
The paper said these programs blur the lines of 'marketing' and 'education' and that clear guidelines and a codes of conduct need to be established to regulate marketing behaviour, such as those that exist in the ethical marketing and promotion of medicines.
The paper also touched on what it claims are misleading CPMs, brand safety and concerns over near-monopoly market power in search and social, which impacts how publishers promote and monetise content on the internet. A full list of Free TV's recommendations is listed below.
The cost of an algorithm change
Seven West Media's (SWM) submission touched on the grip the digital duopoly had over the internet and how this impacts its magazines and newspapers division.
“On average in the last 12 months, across SWM’s various digital properties, around a third of traffic comes from Facebook, a third Google (via paid and organic search), with the remainder coming from other sources (such as click-through from another website, EDM or direct entry of the web address into a browser. However there is significant variability across the different sites, with some having more than 50% of traffic from Facebook,” the submission paper points out.
“Given the extent of traffic that is generated from these two platforms it is clear that SWM must engage with Google and Facebook to maintain digital visibility. For many internet users, Google and Facebook are the internet, because they are the gateway through which all other digital information and entertainment is sourced.”
An example it highlighted is the “significant impact” a recent change in Facebook's algorithm had on its Pacific Magazines business where posts by friends and family would be prioritised over public content. This follows years of investment in building organic traffic to magazines' Facebook pages.
“Traffic from Facebook to Pacific Magazines sites from Facebook has fallen around 40% from what it was in June 2017 to now. To reach the same audience that was previously being reached organically would cost millions of dollars,” it said.
“Additionally, the drop in Facebook’s traffic due to the new algorithm has impacted Pacific's commercial digital campaign delivery, as commercial campaigns rely on projected audience and traffic numbers.”
SWM also said the advertiser-funded business model that has supported the creation of high quality news and Australian content “will not be sustainable in the long run if Google and Facebook continue to exercise their market power to the detriment of traditional media”.
Nine did not make public its submission to the ACCC, however CEO Hugh Marks issued a statement.
“This inquiry represents an opportunity for the ACCC to reassess the competitive landscape for the digital era, to ensure creators of content are supported and appropriately rewarded for their efforts.
“It is in the interest of all parts of the Australian media sector to work together to achieve this. We must retain the benefits of creative output to the Australian economy and our society, therefore the Commission must create the right regulatory balance – one that both rewards creation and drives innovation.”
Tomorrow, AdNews will look at submissions by other key players, including Google.
FreeTV's full set of recommendations
- Restoring balance to the regulatory framework - consider the extent to which the existing regulations that apply to local media companies are still required in the modern media environment, where local companies compete against entirely unregulated digital media companies.
- Establishing independent digital advertising metrics – require Google and Facebook to establish transparent measurement of web traffic and the inclusion of SDKs across all of their advertising products to allow robust, verifiable and consistent measurement against independently set standards for reach and viewability.
- Increasing transparency of marketing conduct – recommend legislation to require that the marketing practices of digital advertising platforms be regulated by a Code of Conduct authorised by the ACCC.
- Enabling genuine negotiation on terms and conditions - provide guidance on the terms under which the ACCC would authorise collective bargaining by local media outlets with Google and Facebook and consider how a dispute resolution role could be administered by the ACCC, including in relation to regulated pricing or character limits for third party content.
- Bringing greater transparency to algorithms – require that Google and Facebook publish clear information on how their algorithms function and provide time to consult with affected parties and explain the impact of any changes on related businesses in the supply chain.
- Addressing vertical integration competition issues – fully map out the digital supply chain and closely investigate bundling and potential full-line forcing competition issues.
- Requiring independence and minimum service levels in setting technical standards – where the digital supply chain involves buyers and sellers with common ownership, interoperability and technical standards must be set independently and with minimum service levels.
- Applying the right market definition and collaborating with international regulators – ACCC and other counterpart regulators should review the market definition and competition tests they apply to protect new entrant innovators from being acquired by already dominant digital players.
- Holding digital media companies to account for piracy – recommend law changes to ensure that the party that facilitates access to pirated material is liable for the loss to the rights holder.
- Maintaining the integrity of Australia’s copyright system - find that the current safe harbour framework strikes the right balance and that there should be no further extension of the scheme to digital media companies
- Bringing transparency to data collection by Google and Facebook - Review whether the current privacy framework is sufficient for the scale of data collection undertaken by Google and Facebook and whether consumers are given adequate information on the full extent of the data they are handing over.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at firstname.lastname@example.org