A more competitive ad tech supply chain would benefit advertisers, publishers and ultimately consumers, according to Rod Sims, the chair of competition watchdog the ACCC..
SIms, speaking at the Global Competition Review webinar, says that without strong competition advertisers and publishers pay more for ad tech services.
When publishers receive less for the advertising space on their websites or apps, this is likely to lead to less and poorer quality online content for consumers.
Increased fees for advertisers results in consumers paying more for advertised goods, he says.
The final report of the ACCC’s Ad tech inquiry, released last month, found that competition for ad tech services is ineffective and that Google dominates the ad tech supply chain.
“Google’s vertical integration and dominance in the supply chain, as well as its strong position in related services such as YouTube, has allowed it to engage in leveraging and self-preferencing conduct, which have likely interfered with the competitive process,” says Sims.
“Over time, this conduct has lessened competition for ad tech services and allowed Google to establish and entrench its dominant position in the ad tech supply chain. This vertical integration has also created conflicts of interest, which can harm advertisers and publishers.
“The lack of competitive pressure and transparency means there is little incentive for Google to manage these conflicts, and unlike other industries, such as financial services, there are no regulations requiring Google to manage these conflicts."
The inquiry recommended the ACCC be given powers to develop sector specific rules to address conflicts of interest and competition issues in the ad tech supply chain.
“Many other competition regulators have also closely examined ad tech markets and have identified many similar issues to the ACCC, and are in the process of developing regulatory interventions to address these issues,” says Sims.
“Our recommendations, and in particular, the need to introduce sector specific rules, are broadly consistent with these proposals which are being put forward overseas.”
The industry generally responded positively to the inquiry's investigation. IAB CEO Gai Le Roy: "We recognise the critical importance of transparency across the Australian ad tech supply chain and are actively working to develop measures that work for advertisers and publishers, as well as consumers.”
The ACCC’s inquiry 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.
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 adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.