Features
The inquiry into media agencies and the ad tech market: What you need to know
On Monday evening, the competition watchdog kicked off its inquiry into media agencies and the digital ad supply chain. But what does it all mean, and who, if anybody, should be nervous?
Ahead of the inquiry, the ACCC’s chair, Rod Sims, speaks to Mumbrella’s Vivienne Kelly about what you need to know: who should come forward, what he’s expecting to find when he looks under the hood of the ad tech market, how the watchdog will use its compulsory information-gathering powers, and why he believes this inquiry could finally bring transparency to consumers, publishers and advertisers.
INTERVIEW
Rod Sims, chair, ACCC (RS)
Vivienne Kelly, editor, Mumbrella (VK)
VK: In terms of this inquiry that you’re announcing at 9pm this evening, we obviously report on the media, marketing and advertising industries, so there’s some quite wide-ranging implications for my audience….
RS: Absolutely…
VK: One of the biggest questions I have for you is, so many countries are grappling with this, and so many markets around the world have been unable to understand, unwind and unravel this digital ad supply chain. In a small market like Australia, why do you think we’re going to be able to tackle it with this inquiry?
RS: I think we have as good an understanding of any country or any regulator in the world about how it works. We got right on top of it during our [Digital Platforms] Inquiry. We went from not understanding much at all, to writing a very comprehensive account of how the demand-side and supply-side of the ad tech market works.
The ACCC’s Digital Platforms Report included this diagram of how media agencies make money (Click to enlarge)
So, that said to us that this is a market we need to understand more about, because we need to understand where the money goes, we need to understand how effective the ads are, we need to understand whether some players are preferencing their own suppliers, and certainly the media publishers feel that this opacity of the market disadvantages them, because they can’t get accurate information out there about this sort of advertising.
Now, your question is: why do I think we can do it? I think we’ve got these inquiry powers, which are very powerful. There’s not that many other countries that are doing open-ended inquiries, Vivienne, so I mean we have the power to both do an investigation – is there a breach of the Act? – but we also have powers to do inquiries, which is what led to our Digital Platform Report.
So I think we’re as well placed as anyone, really, and probably better placed than most to be able to do this. We’ve got the starting knowledge, we’ve got the powers, we can issue notices to get the information we need. Having a dedicated 18-month look at this, I think is going to be very powerful.
We, of course, also will work with people overseas. I think the main one doing something on this is the UK CMA [Competition and Markets Authority]… But certainly my people know everybody who’s doing anything on this, and they’re closely in touch with them. So, we will learn off others overseas as well, because we’re well plugged in to all the agencies overseas and what they’re doing. So, we’ve got the capability. I just don’t see why we can’t address this as well, if not better, than most.
VK: Now everybody has heard certain anecdotal evidence of a media agency perhaps doing a deal that favours a supplier of theirs, or ad tech companies taking too big of a clip along the way, so that publishers aren’t actually left with many dollars in their pockets, but how nervous should these ad tech companies and media agencies be that you’re about to lift up the hood on their business operations?
RS: Oh well I think, Vivienne, you’d have to ask them. If things are all hunky dory, well then they don’t have to be nervous at all.
Sims: No need to be nervous
But if there’s things they should nervous about, then they should be nervous. Sorry to put it almost as a tautology, I guess, but we will get to the bottom of all this, and the outcome, I guess, you’re talking about one of three outcomes:
One outcome that certainly will be a result of this is greater transparency of what’s going on. So that’s the outcome we will get. More transparency of what’s going on.
The next outcome is whether there’s any breaches of our Act for anti-competitive behaviour, and so we can look to see whether there’s any of that.
And thirdly, look to see whether anything else is needed. And I don’t know what that is, I’m not going to foreshadow what that is. But when we do those inquiries, there’s always the potential for recommendations to government to do things. So as I say, I’m not foreshadowing that.
The main objective is going to be just ‘Let’s understand what’s going on here’.
Secondly, let’s have an eye as to whether there’s any breaches of the act.
But thirdly, we will keep an eye on whether more is needed.
VK: And a line that jumped out to me in the press release was, “The ACCC will also use its compulsory information-gathering powers to access information from market participants that is not publicly available”. What sort of information are you looking to get there with your compulsory information-gathering powers?
RS: Well, first point is that the value of these inquiries is getting information that’s not publicly available. That is, these aren’t desktop inquiries. They’re really understanding what’s going on. They’re trying to break down the opacity of the market. And the only way you do that is with information-gathering powers to get information that’s not publicly available.
This inquiry has the power to lead to real change: Sims
But I just think those information-gathering powers will be used to work out who’s playing what role in the market, who’s taking what cuts form the transactions, who’s linked to whom.
So that transparency of how it all works to the extent it’s not publicly available, we’ve got the information-gathering powers to get the private information. That’s what we did with the Digital Platforms Inquiry, and that’s what we’ll do with this inquiry. That’s what everyone expects us to do.
VK: This obviously was all borne out of the Digital Platforms Report, and this is the next step. Given that you’ve completed the Digital Platforms Report, do you have any pre-conceived ideas of how this inquiry might go?
RS: Look, only that it will bring the transparency that I think is needed, because there is a whole lot that’s just not known about where the money goes and the effectiveness of the market. So, as I said at the start, we finished that Inquiry, knowing that there were issues with the ad tech market in terms of transparency, in terms of potential for anti-competitive preferencing, so we know what it is we’re searching for.
And, so we will bring that transparency. I know that.
What else will come out of it? We’ll just have to wait and see.
I mean, we go into it with an open mind, except that we know that more transparency is needed around how this market operates – because we’ve got our knowledge to a certain point. We spent 18 months looking at digital platforms in the broad, but one thing we looked at, and I think understand pretty well, is what goes on when, you know, Vivienne goes on to Rebel Sports and that little box comes up – and it’s actually what’s going on in that nano-second before that box gets filled with an ad. We understand that. We didn’t understand that before, but we understand it now. Now we’ve got to peel off the next layer.
VK: And you’re encouraging businesses to make submissions to the Issues Paper before 21st of April….
RS: Indeed, we are, yes….
VK: … for people who might be reading about this chat, why should they submit to the Issues Paper? What’s the motivation and the benefit for them of getting involved at this early stage?
RS: I think there’s benefit for everybody.
The businesses who do the advertising have something at stake here, and they’ve told us that. The media agencies need to make sure, or the advertising agencies, need to make sure they have their say, otherwise the platform will be given over, the microphone will be handed over to others. So the platforms need their say. The website owners need to have their say.
The government gave the direction for the inquiry in February
I just think people need to get in now to make sure they shape the transparency and shape the debate. There’s no point coming in with a view in 12 months’ time saying ‘Look, we think you’re going the wrong way’. No, no – tell us now – because this will set the direction of the entire inquiry. Now is the time to give us your views, to give us your perspectives.
We treat these Issues Papers very seriously, and we are greatly influenced by the submissions that we get, so now we need to influence where the inquiry goes.
VK: And next steps after that 21st of April deadline? What happens after that?
RS: Then we look at those submissions, get the learnings from them, and work out in detail what we need to inquire into, what further information we need, who’s got information that’s relevant to us. We just follow up. And we’ll put a draft report out by the end of the year.
VK: And do you have any advice for anyone who might be thinking ‘Oh, I do have thoughts, but I’m not sure if it’s worth me contacting the ACCC with those thoughts’?
RS: Oh, yes. I just encourage everybody to give us your thoughts. There’s just no point holding back. If you’ve got a perspective, now is absolutely the time to share that with us. Not only does that mean we get your perspective early, but we can follow up with you. And if confidentiality’s a problem, we can keep it all confidential. So, we can be very flexible, but now is the time for input. Now is the time that shapes which way we go.
VK: And what does success look like for you with this inquiry? At the end of it all, what will make you think the ACCC has done a good job and has ticked all the boxes?
RS: Two things.
One is that we, and therefore Australia, understand how this market operates in sufficient detail.
Do Australians understand the ad tech market?
Secondly, is there anything we should be doing to correct any market failures or problems? So, if we feel we’ve explained the market to everybody in enough detail, that’s success. And if we feel we’ve got a view about what, if anything, should be done, then that’s success as well.
Those are the two success KPIs.
VK: One accusation that can be levied at watchdogs such as yourselves though, is that you’re toothless tigers. So, what would you say to that? Do you feel like you’ll have adequate power after this inquiry to fix any market failures?
RS: Oh, absolutely.
We can either work in one of two ways.
I mean, I think if you talk to corporate Australia, I don’t think they think we’re a toothless tiger, but you can go talk to them. Usually [those calling us] toothless tigers is somebody who doesn’t feel we lowered petrol prices enough, but the corporates don’t usually think of us that way – but by all means, ask them.
But, in terms of powers, we’ve either got the powers under the Act, but because this is an inquiry – it’s not an investigation for a breach, this is an inquiry, an open-ended inquiry – we can recommend to government if we think more needs to be done.
So, we’ve got every power we need, because we’ve got the power to work under our Act, and take action and we’ve got the power to recommend to government where our Act can’t deal with the problem. So, we’ve got all the powers we need in that sense.
VK: Okay, well I think that’s all I need at this stage, Rod, unless there was anything else you wanted to communicate to adland about tonight’s announcement?
RS: No.
Get involved is the advice to adland, and I’m sure you’ve got that one, Vivienne.
