"Indago Digital Comment for The Australian – 'Google Facing Pressure from the ACCC'

"Indago Digital Comment for The Australian – 'Google Facing Pressure from the ACCC'

Google is facing increased pressure from Australia’s advertising industry to be more transparent about its operations, with competition boss Rod Sims urging advertisers to come forward as part of a probe into the company’s outsized role in the supply chain.

Written by

Darren Friel

Published

18 March 2019

Categories

Acquisition

See full article.

Google is facing increased pressure from Australia’s advertising industry to be more transparent about its operations, with competition boss Rod Sims urging advertisers to come forward as part of a probe into the company’s outsized role in the supply chain.

“We need certain checks and balances,” Gary Nissim told The Australian.

Gary Nissim, founder and managing director of Indago Digital, said he had a problem with the fact that media was being optimised and the success measured by the same company he was buying that media from.

Mr Nissim said that while Google had benefited marketing in general, there were still a lot of unknowns about how the company’s algorithms were set and how the cost per click was calculated.

That challenges agencies like Indago, a Sydney-based independent specialist search agency and one of the fastest growing in Australia.

A “Google Premier Partner”, it has a high spend with Google across not just search but display, video, in-app, mobile and through Gmail-sponsored promotion.

“In search, we pay on a cost-per-click model in a closed auction and with an algorithm that determines our final price,” Mr Nissim said.

“Why would the price of your click increase when the amount of ­advertisers in a certain vertical drops and consumers searching in that vertical increase?

“I’m not intimating that Google games the algorithm to generate more revenue, but surely they have that ability.

“I’m also not saying that the Colonel’s secret recipe — the ­algorithm — needs to be public, but certain checks and measures would be ideal.”

Australian Competition & Consumer Commission chairman Rod Sims said he was concerned with the pricing transparency of ad-tech giants such as Google that hoover up the vast majority of ­advertising dollars at the expense of homegrown players.

“It is important that we better understand the issues with the ad tech supply chain because a lack of transparency means advertisers do not know what they are paying for, where their advertisements are being displayed, and to whom,” he told the ThinkTV conference in Sydney.

“Higher advertising prices ultimately translate to higher consumer prices for products and services.”

He said the “cut” of ad spending taken by ad-tech intermediaries is estimated to be between 30 and 75 per cent of the final price paid and that it was possible that less than 50c in the $1 paid goes to delivered advertising.

Mr Sims also said online media businesses and advertisers were potentially being disadvantaged by Google’s market dominance.

“We have not yet reached a view on these issues, and we are continuing to examine the ad tech supply chain to understand better how it works and how this impacts advertisers,” he said.

“In this, we would like the ­advertising industry’s help, as it is clear these are issues that require close examination.

“There are different examples of this vertical integration and ­opportunity to discriminate in the delivery of online advertising, particularly across the programmatic advertising supply chain.”

According to Mr Nissim, Google’s innovations in the 1990s ­cemented its current position of market dominance.

In Google’s submission to the ACCC, the company’s local boss, Mel de Silva, said Australian platforms such as Seek, Domain and REA were also to blame for ­journalism’s loss of advertising revenue.

“From an advertising perspective, search advertising is just one of many channels advertisers ­invest in and we compete directly for advertising dollars with other ­digital channels, as well as ­television, print, radio and outdoor advertising,” she said.

The dog and bone.
Subscribe and be the first to hear about news and events.

Written by

Darren Friel
The dog and bone.
Subscribe and be the first to hear about news and events.
View our last posts
AI robot tutor helping a student with homework, they are sitting on the couch at home and reading a book

Unlocking the Power of Generative AI: Google’s 10 Free Courses

Tahlia Reynolds - 6 min read
Close up of mobile displaying Chrome's incognito mode

Navigating Chrome's Block on Third-Party Cookies

Preet Singh - 9 min read
Purse with overflowing receipt

How to Grow Your Business Despite Consumer Uncertainty 

Tahlia Reynolds - 5 min read
Team members thinking together

Get in touch

Ready to get the ball rolling? Drop us a line.

First name*
Last name*
Email address*
Phone number*
Company*
Your message