The ACCC’s inquiry into adtech and agency services investigated conflicts of interest and lack of transparency with media agencies but made no major adverse findings.
The inquiry says discounts and rebates, and holding group arrangements, can be a problem for advertisers if there is a lack of transparency over the operations of their contracted agency.
“We have heard concerns that this may be occurring from some advertisers, but there does not currently appear to be widespread issues across the industry,” the competition watchdog says in its report.
The ACCC also noted industry work on transparency. The Australian Association of National Advertisers (AANA) and the Media Federation Australia (MFA) earlier this year agreed guidelines, Successful Agency Pitching Guide
The report on the inquiry found that Google has a dominant position and estimates that more than 90% of ad impressions traded passed through at least one Google service in 2020.
However, the inquiry found sufficient competition in the supply of media agency services to advertisers.
This was despite a concentration of agencies belonging to the six global holding companies: WPP, Omnicom Media Group, dentsu, IPG, Publicis Groupe and Havas.
The ACCC noted a number of independents including Pearman Media, The Media Store, Nunn Media, Involved Media and Cummins&Partners.
“We consider that generally advertisers are able to access a wide range of pricing and performance information in their agency relationships,” says the inquiry report.
“Based on submissions, we understand that agencies provide advertisers with a large amount of information on campaign performance and various fees are often itemised by cost component.”
The inquiry found that conflicts -- the interests of the agency versus those of the client -- can arise when agencies are offered incentives by publishers.
“While discounts, rebates and other incentives are not inherently a problem, they can influence how an agency chooses to direct advertiser dollars,” the inquiry report says.
These “have the potential to create conflicts of interest between the agency and the advertisers they represent”.
Agencies can be incentivised to purchase advertising from particular publishers or use certain adtech providers because they offer larger discounts or rebates.
And agencies may encourage advertisers to use particular services owned by the agency’s holding group to generate additional revenue.
“Discounts and rebates, and holding group arrangements, can lead to efficiencies and cost savings for advertisers,” the inquiry report says.
“However, where an advertiser does not have transparency over the operations of their contracted agency, these situations can create problems.”
Factors that can impact the ability of advertisers to gain oversight over their agency include the structure of an agency holding group, the agency remuneration model chosen and general issues with the cloudy path of the adtech supply chain.
The ACCC says conflicts of interest may be less problematic if advertisers are aware of the rebate and discount arrangements, are aware of the ways in which agencies can interact with other services owned by the holding group (trading desks and data services) and are able to switch to a better provider if an agency is not acting in their best interests.
The inquiry noted the Australian Association of National Advertisers’ (AANA) Media Contract Template and the AANA Media Contract Guidance Notes.
The Media Federation of Australia (MFA) also hasTransparency Framework for Agencies and Advertisers which has been signed by its member agencies.
This outlines a set of practices for advertisers and agencies to follow with the aim of ensuring transparency: Disclosure, Education, Accountability and Sustainable Contracts.
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