Watchdog kicks off its inquiry into media agencies and the digital ad supply chain
Media agencies and ad tech companies are officially under review from today, with the competition watchdog calling for feedback and information about the digital advertising supply chain and agency services in Australia.
The Australian Competition and Consumer Commission’s (ACCC) chair Rod Sims told Mumbrella that while his organisation had the power to take action and make recommendations to government for further change, those organisations and individuals without anything to hide, need not be nervous. Those thriving on opacity, however, may need to clean up their act.
“If things are all hunky dory, well then they don’t have to be nervous at all,” Sims told Mumbrella this evening.
The ACCC’s final Digital Platforms Report included this diagram of how media agencies make money (Click to enlarge)
“But if there’s things they should nervous about, then they should be nervous. Sorry to put it 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.”
The ACCC said it is seeking views from all companies who buy digital display advertising – from small businesses right through to global brands – as well as from advertising and media agencies, social media platforms, website owners, app developers and ad tech services companies.
Sims told Mumbrella that between now and the 21 April deadline is the time to get involved – otherwise, others within the ecosystem will have the microphone, and then it may be too late to speak up.
Get involved now: Sims
“I think there’s benefit for everybody [of getting involved now]. 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.
“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,” Sims said ahead of announcing the inquiry’s kick off.
The Ad Tech Inquiry will seek to establish whether advertising and ad tech markets are operating effectively, and to ascertain what, if any, anti-competitive behaviours are going on.
It will seek to investigate:
- Whether market participants have enough information (including about pricing, rebates and revenue flows) to make informed choices about the use of ad agency and ad tech services
- Competition throughout the ad tech supply chain and in the supply of ad agency services
- The role and use of data in supplying these services, and
- Whether competition and efficiency are being affected by supplier behaviour, including vertically integrated suppliers preferencing their own services, or by ad tech services businesses or ad agencies not acting in the best interests of their clients.
Sims said the Inquiry’s success banks on two outcomes: Australia finally understanding, in sufficient detail, how the market operates, and knowing what action needs to be taken to correct any market failures.
“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,” Sims told Mumbrella this evening.
This inquiry was borne out of the Digital Platforms Inquiry, with Sims noting the ACCC now far better understands the ad tech market. Despite this increased understanding, he said too much opacity remains.
“During our Digital Platforms Inquiry, we heard many concerns about the complexity and opacity of ad tech and ad agency services. This has real potential to undermine advertisers’ abilities to choose services that provide the best value for money for them,” Sims said in tonight’s announcement.
“It may also prevent the companies that host those ads from maximising their advertising revenue.
“Higher prices for advertisers means higher prices for consumers. And lower revenues for ad hosts could in the longer term lead to a reduction in the quality and diversity of online content.”
The ACCC is required to provide a preliminary report to the Treasurer by 31 December 2020 and a final report by 31 August 2021.
“If things are all hunky-dory, well then they don’t have to be nervous at all,”
Rod Sims has an evil sense of humour.
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As The Seekers said…the carnival is over bitches.
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They should dismantle every bloody agency trading desk or…. “clip their ticket” so to speak (insert smug smirk)
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Potentially if clients hired people with experience in running digital media instead of morons things wouldn’t be opaque. Most of my client contacts don’t understand a thing about digital advertising so of course they have low trust. Hire professionals. Stop making 24 year old marketing graduates run your digital simply because they know what Facebook is and they are cheap.
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Standby for lots of “We had no idea this was happening and we have made the necessary changes” type comms.
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to be quite honest… this rings true for agency staff too.
too many children running the show because they’re cheap
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24 year old marketing graduates are literally the life blood of agencies. Just because they spend a year or two processing proformas and formatting data studio reports doesn’t make them digital experts either.
Ask 80% of an agencies “digital experts” to explain their trading desk’s ad tech or for a recommendation on a meaningful digital attribution model and watch them fail miserably.
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Send em back to uni then. Their negative, uninformed responses at coffee are a waste of our entertainment expenditure and my time.
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