Only two companies (Google and Facebook) can control 80% of online advertising in Spain, according to IAB, an association that represents digital marketing companies. Internet advertising is a market that exceeds 2,000 million euros in turnover per year and that has displaced television as the main destination for advertisers’ investments. It is estimated that this year, the two technology companies will enter by advertising more than Mediaset and Atresmedia and, today, they do not have a competitor capable of facing them. The digital environment has broken the classic rules of advertising investment.
Faced with this growing and groundbreaking market, which has put traditional media on the ropes, the CNMC (National Commission of Markets and Competition) has placed technology in the spotlight. The body chaired by Cani Fernández finalizes the publication of a study on the conditions of competition in the online advertising sector in Spain. The document, which began in 2019, began with a public consultation, in which agents responded on the impact of online advertising on competition and efficiency.
Digital advertising has gone in a few years from attracting an almost anecdotal investment to heading the ranking. According to Infoadex, digital advertising in Spain closed 2020 with a value of 2,174 million euros, the highest of all segments, despite having fallen 5%. The search engine section (Google is the most relevant actor) takes most of it, 818 million euros. Advertising on websites (display and video) accounts for 777.2 million and social networks, 579 million. Digital advertising surpasses television, traditionally the advertising king, which closed with 1,640 million euros, 18.4% less than the previous year.
The CNMC began two years ago to collect data to make an X-ray on the “conditions of competition in the online advertising sector in Spain.” The organization has focused on those sectors in which the new digital technologies “have modified the traditional models of competition.”
And that is what, in the opinion of the traditional media, has happened in web advertising, according to the opinions gathered in the Competition report. The Association of Advertising Media of Spain, in which the majority of Spanish media are represented, considers that these have been “harmed” since, in their opinion, “not all those who operate in Spain do so with the same rules, since both Google and Facebook do not compete with the rest of the Spanish media on equal terms ”.
For its part, the Spanish Association of Commercial Broadcasting (AERC) considers, according to the opinion issued in the public consultation, that the entry of new agents, more familiar with digital environments, “may be positive for competition”. But it can also “concentrate activity on a few players, posing potential risks to competition.” In the summary of the opinions, the CNMC indicates that the agents “have some concern” about the competition problems and, specifically, “the concentration in few operators”.
The CNMC, in its roadmap for 2021, sets as one of the objectives the conclusion of the aforementioned study on online advertising “in collaboration with other units with systematic submission to public consultations and greater involvement of civil society.”
The report may or may not end in a more in-depth investigation. However, industry sources consider that, given the condition of multinationals and since it poses a conflict that affects several European countries, the investigations may end in the sphere of the European Union. In fact, the Commission has two investigations open on Google, one related to data processing and a second into search engine operations in the advertising market. In 2019, Google already received a fine of 1.49 billion for abusing domain position in online advertising through AdSense.
It is not the regulator’s only focus on digital media. In November 2020, it opened a public consultation on the application of audiovisual regulation to communication service providers that are supported by video exchange platforms ”. Youtube, Instagram or Facebook may also be in orbit.
- Maneuver. Google’s online advertising business is estimated to exceed 150,000 million dollars in the world this year, while in Spain it would be around 1,000 million. But, the company has caused some regulators, such as the UK Competition and Markets Authority, to put the magnifying glass on it for its latest move: it has announced that its Chrome browser, which accounts for more than half of internet traffic , will stop collecting third-party cookies in 2022.
- Rules. Google is committed to the federated learning cohort system (FLoC), which will target anonymous user groups with common interests, not individuals. Something that supposedly will improve user privacy, but many voices in the sector already warn that what it seeks is to define the future of a large part of the advertising industry with new rules that will benefit it.
- Enemy. Google and Facebook claim that there are more alternatives in the online advertising market. That is, they are not a monopoly, and they point to a common enemy: Amazon, which according to eMarketer accounted for 10.3% of online advertising in the US in 2020. According to Statista, Amazon’s advertising revenue will be this year of some 26,000 million dollars, still less than 10% of its total income (in Google and Facebook it is 84% and 98%), but growing strongly.