The ACCC recognises that there are real challenges in the digital advertising industry. It sees the strength of Google and Facebook and the dense and opaque supply chain. Its inquiry into digital advertising and ad tech aims to identify exactly what is wrong and fix it.

The ACCC has kicked off its inquiry into digital advertising, releasing an issues paper and calling for submissions by 21 April 2020. The inquiry will focus on the competitiveness, efficiency, transparency and effectiveness of markets for the supply of ad tech services and ad agency services.

It follows findings in the Digital Platforms Inquiry that Google holds market power in search advertising, Facebook holds market power in display advertising, and that the digital advertising supply chain is generally murky and quite possibly uncompetitive.

As with most things, the ACCC is ultimately interested in how the digital advertising supply chain impacts its end-users. It wants to know:

  • whether digital advertising end-users (i.e. advertisers) have enough information about pricing, rebates and revenue flows to make informed choices about the use of ad agency and ad tech services;
  • whether supplier behaviour is impacting competition, by preferencing their own vertically integrated services or by agencies not acting in their clients' (i.e. the advertisers') best interests; and
  • what is the state of competition and the impact of data in the supply of digital advertising services more generally

The Inquiry will inevitably hone in on much-discussed issues around rebates and transparency, which to date have somehow largely flown beneath the regulatory radar. The density of the advertising supply chain and influence of large players like Google and Facebook has the potential to erode revenues downstream, which can in turn incentivize risky rebate behaviour.

The Inquiry offers an excellent opportunity for all players in the industry, from publishers, to agencies, to ad tech and right through to advertisers, to participate in and influence the evolution of the industry. A lot of the focus will be on Google and Facebook, and what steps can be taken to mitigate their market power and improve competition right through the supply chain.

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