Analytical paper “Transparency in the business-to business commercial relations in the online advertising market”
The support study team just published the analytical paper “Transparency in the business-to business commercial relations in the online advertising market”.
The aim of this analytical paper is to analyse the level and means of transparency in the online advertising value chain, through collection of evidence and facts about various business models, advertising practices and stakeholders. The paper is based on literature review and desk research, complemented by semi-structured interviews. First, the analytical paper presents an overview of the functioning of online advertising and the structure of its ecosystem. Then, it provides an analysis of the main challenges identified including competition issues, transparency concerns and ad fraud. Finally, the paper presents an overview of the existing and recommended remedies including regulatory, self-regulatory and other solutions.
The raise of online advertising and programmatic technologies has significantly impacted the functioning of and revenues from advertising. Programmatic advertising is the automation of buying and selling of ad inventory using audience data to enable advertisers to show relevant ads to the audience at the right time and place. On the one hand, the automation of advertising trading has allowed to better match supply and demand, enabling publishers to sell their remnant inventory and advertisers to easily reach a large audience on different websites. On the other hand, the distribution of digital ad spend revenues shows an increasing domination of a few players in the online advertising market, namely online platforms. The vertical integration of online platforms and their access to vast amounts of data provides them with competitive advantages and enables them to act as gatekeepers to business users. In addition, the automation of programmatic advertising has raised concerns about the transparency of processes along the supply chain, such as ad exchanges, ad placements, and the fees of intermediaries. The opacity of the ad tech value chain, including the reliance on algorithms and the vast array of service firms, also makes open programmatic advertising rife with fraud, at the expense of advertisers. To address these various issues, the paper presents some proposed or experimented remedies that include responses at policy level, industry level and individual level.