By George Birley, Performance Planning Director at Zenith
“UK expenditure on digital advertising was around £14bn in 2019, equivalent to about £500 per household. About 80% of this is earned by just two companies: Google and Facebook.” (CMA 2020)
To date, both Facebook and Google have had a free reign of the digital ad industry, monopolising market share through acquisitions. Unsurprisingly, Google posted their highest profit figure in FY2019 at a mere $8.92 billion (Alphabet 2020). Yet right now, if your digital media plan doesn’t feature both Facebook and Google, from a social and search standpoint, you’re doing something wrong.
So, is it a surprise that the Competition and Markets Authority (CMA) have spent the last two years delving into the digital ad realm, with a specific focus on these two tech giants? Probably not.
What does the CMA’s latest update include?
The latest CMA update released on Thursday last week, contains two important updates. The first is the update on their findings, and a conclusion from their research held last year with major brands, advertisers and tech companies.
The second is the formation of the “Digital Task Force”, a partnership with the Information Commissioners Office (ICO), and the Office of Communications (Ofcom) – a punchy government-led organisation, with a view on making the digital ad industry fairer for practices and competition.
There is a substantial amount in the CMA update. To highlight the key points, the CMA wants to specifically look at introducing measures to:
- Enable and enforce a code of practice that provides a remit for platforms, with a position of power, to not engage with exploitative or exclusionary practices.
- Restrict Google being the default search engine choice.
- Order Google to open up its click and query data, so that other search engines are able to adapt their algorithms to that of Google.
- Allow social media platforms to have a degree of interoperability with each other.
- Launch a Fairness-by-Design duty on the platforms, which will give greater power to consumers to make informed choices on what they agree to, such as personalised advertising.
Perhaps the biggest point, and a key theme from the CMA’s initial research into the digital ad industry, is the need for “the separation of platforms, where necessary, to ensure healthy competition”. This has the grounds to cause the biggest impact on tech-giants and how they are structured.
Sounding like a Special Forces operation, the Digital Task Force will be a team consisting of multiple government organisations. In the CMA update, there isn’t too much about the role of the team aside from advising the government, although there is already a webpage set up for them, complete with a timetable too. The Digital Task Force will look at recommending a range of powers (i.e. legislation) and processes advised by the work already done. On the timetable, there is a deadline for advice by December 2020.
What does this mean for brands?
In the long-term, there’s likely to be a radical shift around who brands and agencies work with, specifically looking at capabilities on ad personalisation. Together with potential legislation that could change the way Facebook and Google operate, this could lead to a fairer ad industry market.
One thing we can expect is a rise in the number of competitor search engines. You may have heard of DuckDuckGo being an alternative, which was created due to users wanting to preserve their anonymity when searching the internet. Allowing access to Google’s click query data might enable a rise of homegrown search engines in the UK; with the likes of Autotrader, Rightmove or Skyscanner moving into the search space with their own industry offerings.
When it comes to social platforms, as Facebook is encouraged to become more interoperable with other competing platforms, media plans will change to reflect this. This is, of course, is depending on the force of the legislation and consumers’ choices. However, there is less likely to be as much change here compared to the search market, because the social landscape is already saturated with Twitter, Snapchat and TikTok.
The Digital Task Force may recommend that the tech-giants have to separate their ad-business away from their core-business as a way of ensuring healthy competition. This would mean, from a technical point, that advertisers and agencies have a range of different platforms in their technical stack to suit their own needs, with these platforms being allowed to access the ad-business to buy, report and optimise advertising.
If the UK forced measures through into legislation and forced tech-giants to dismantle their businesses, then we would expect other nations to take similar steps. This may be great for competition, but may lead to a fragmented ad tech landscape, in particular across multinationals having to pick different providers across markets.
For the short term though, especially for 2020, expect no changes to the ad-industry and the tech-giants among us. With the Digital Task Force deadline in December, and then the draft legislation to go through to becoming law, it will be at least into mid-next year before we see any enforced changes.