Google dominates digital ad space - ACCC
Google's woes in Australia deepened today as the Australian competition watchdog released a report outlining how Google dominates aspects of the A$9.1 billion Australian digital ad market.
The interim report from the Australian Australian Competition and Consumer Commission is only likely to strengthen the Australian Government's resolve to push ahead with plans to require Google and Facebook to pay news publishers licence fees to run snippets of content on their digital platforms. Last week, Google threatened to pull its popular search engine from the Australian market if the mandatory code progressed.
Today's 222-page report from the ACCC reveals why the stakes are so high for Google and Australian businesses which rely on search engine and display advertising to reach customers. The report looked at the state of competition in four aspects of the digital ad market - advertiser ad servers, demand-side platforms, supply-side platforms and publisher ad servers.
The extent of Google's ad tech dominance
If found that Google dominated the Australian market in all four categories, claiming up to 90% of impressions in the advertiser ad server category, up to 70% of revenue and up to 80% of impressions in the demand-side platforms, up to 60% of revenue and up to 70% of impressions in the supply-side platforms, and almost all of the impressions in the publisher ad server space.
The integrated nature of Google's business, including its reach across Google search and Youtube gave it a massive advantage when it came to offering up ad inventory, its ad targeting capabilities and the quality and pricing of its services.
"There are a number of potential barriers to entry and expansion in the supply of advertiser ad server services including the degree of single-homing, the magnitude of switching costs, and the degree of vertical integration," the ACCC report read.
"The ACCC is seeking further information on the extent to which these barriers may prevent competitive entry and expansion by smaller rivals."
While Google is clearly the dominant player in the Australian ad market, the ACCC said more research was required to determine whether the search giant, was "self-preferencing" its own platforms and services over others and potentially misusing its market power. The ACCC has invited public submissions on the report through to February 26 and plans to issue its final report in August.
The ACCC report amounts to the most thorough examination of the digital ad market in Australasia to date and is striking for its almost singular focus on Google. Facebook, in comparison barely rates a mention. That's because it doesn't have the integrated ad-tech services that give Google the edge to "enable the near-instantaneous delivery of A$3.4 billion in display advertising opportunities in Australia each year".
no similar research has been undertaken by the Commerce Commission locally into the digital ad market, despite a similar level of market concentration existing here.
Download the ACCC Digital Advertising Services Inquiry here.
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