Is competition is fair in the ad industry?
The domination of the online ad space by Facebook and Google has led to The Cairncross Review calling on the Competition and Markets Authority (CMA) to investigate whether competition is fair in the ad industry and what can be done to even this out.
According to Marketing Week, the Cairncross Review compiled a report on the UK advertising market revealing that Facebook and Google accounted for over half the UK’s online ad revenue between them, while digital advertising accounted for 48% of total UK ad spend. By comparison, digital ad expenditure with the press was £487m, less than 5% of total online ad-spend and failing to make up for the decline in print ad revenue, which fell from £7.6bn in 2007 to £2.7bn in 2017, according to AA/Warc figures.
What does this mean for publishers?
It means that there is a growing concern that publishers are becoming dependent on Google and Facebook for ad traffic and that any major changes concerning these platforms could have a significant impact on revenue. Changes could be things like algorithm tweaks or new algorithm releases or alternations in advertising terms.
It would seem that these ad powerhouses have indeed become so powerful that it’s a reasonable assumption to consider the fact we are heading for a landscape where competition is unfair and bordering on unethical and something needs to be done to reign it back in.
What will happen to the publishing landscape?
In a bid to protect the future of journalism, the Cairncross Review proposed earlier this year that the CMA looks at new codes of conduct, to make the relationship between online advertisers and publishers much more balanced and fair. Off the back of that Jeremy Wright, the Government’s Culture Secretary wrote to the Competition and Markets Authority, the Charity Commission and Ofcom, to get the ball rolling on discussions.
Digital giants such as Amazon, Facebook and Google have already been hit by a tax on digital sales. This applies to tech companies that have at least £500m in global revenue where a 2% tax would apply on the money they make from UK users. This new tax is estimated to generate more than £400m a year and will come into effect in April 2020.
We await the next move with baited breath.
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