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Yes, the ACCC’s Digital Platforms Inquiry does matter to small business

Home / Blog Posts / Yes, the ACCC’s Digital Platforms Inquiry does matter to small business

While many might think that the issues raised in the recently released Australian Competition & Consumer Commission (ACCC) preliminary report of the Digital Platforms Inquiry are directly related to a power struggle between traditional media, Google and Facebook, the points and recommendations raised in the report are very relevant to small business and communications companies working in this space.

Online advertising strategies are increasingly consuming a large portion of the promotional budget – and are predicted to be as much as 87 per cent by 2022. The inquiry focuses on Google and Facebook because they are currently the standout success stories (Google and Facebook cornering 70 per cent of the Australian online advertising market) but acknowledges that any other company replacing them would be in the same position.

As a strategic communications company that works with small business owners, we know that clients expect measurable results. It is true that the digital metrics available today assist with targeting and reporting. But, some of the issues raised in the preliminary report go to the heart of being able to understand and objectively assess the effectiveness of targeting strategies.

Some key negatives the ACCC inquiry report addresses are lack of transparency, favouritism and barriers to dispute resolution.

Does a lack of transparency reduce your capacity to review effectiveness?

Social media sites have a commercial stake in the secrecy of their ranking processes, such as the algorithms that determine what content and advertising the user sees, and this lack of transparency makes it difficult to determine how the sites rank advertising.

The ACCC inquiry report found, for example, that “Advertisers are unable to verify for themselves whether advertisements on Google and Facebook are delivered to their intended audience.”

The ACCC is still investigating the extent to which third party auditing might overcome this issue. The inquiry report does acknowledge that “both Google and Facebook reject claims their advertisements are not verifiable” and includes their responses.

Does a lack of transparency hamper your ability to assess advertising costs?

According the to the ACCC inquiry report, “The complexity and the large number of intermediaries involved in serving some forms of display advertising means that the resulting revenue flowing from advertisers to websites can be opaque and it is unclear what proportion of revenue is being retained by intermediaries.”

The ACCC is considering whether a regulatory authority should have the power to monitor and report on pricing to increase transparency.

Do Digital Platforms engage in favouritism at your expense?

The perception of favouritism is also under the microscope including, “whether digital platforms, which are vertically integrated and meet the relevant threshold, are engaging in discriminatory conduct by favouring their own business interests above those of advertisers or potentially competing businesses”.

The ACCC inquiry report found, “Facebook and Google are vertically integrated businesses and each is likely to have the ability and incentive to favour their own related businesses or businesses with which they have an existing relationship.”

The ACCC is “considering recommending a regulatory authority to monitor and report on these issues”.  For example, the regulatory body monitoring digital platforms could identify global social media platforms that put their own commercial interests ahead of their advertisers.

What sway does a small business have over tech giants?

A key finding of the ACCC inquiry report is: “as a result of this substantial market power, advertisers have a limited ability to negotiate with Google and Facebook, resulting in:  the potential for the relevant platforms to charge more;  a lack of bargaining power to negotiate terms on which advertisers acquire services and seek effective dispute resolution.”

The appointment of an ombudsman, as detailed below, could help provide the small players with a bigger voice via a dispute resolution process.

Where is the Digital Platforms ombudsman?

Many businesses are delighted with the “significant benefits” of digital advertising (ACCC inquiry report) and its flexibility and reach into previously unreachable global markets. At the opposing end are a small group of businesses and consumers who have been burned by the experience and need to pursue a complaints process. Currently there is no ombudsman who would “hear disputes on topics like the performance of advertising purchased through global social media platforms”.

The ACCC report also outlines a potential role for the ombudsman in investigating complaints and making decisions that are binding on digital platforms.

The ombudsman could, for example hear disputes:

– from businesses relating to the accuracy of the representation of performance of paid advertising on digital platforms.

–  from consumers relating to scams (and removal of such content)

– from media companies relating to the surfacing and ranking of news content

– from businesses relating to false or misleading advertising.

It will be interested to watch the outcome of the inquiry and

We have worked with small businesses who spend a considerable amount of money making sure that they remain front and centre in the digital space. While most of the time there are no issues with outcomes, it will be interesting to see how the ACCC moves forward and whether proposed changes will boost small business confidence in digital advertising investment and in turn the ongoing engagement of communication companies working in that space.

    Posted in: Blog Posts