Google has a monopoly on online advertising in Australia – and it’s not a good thing

Print media, radio, and television were the mainstays of advertising in the pre-digital era.

Digital advertising has now eclipsed those mediums, infiltrating our computers, laptops, cellphones, tablets, and a number of other internet-connected gadgets. Google is, without a doubt, the most powerful company in the online advertising arena.

The Australian Competition and Consumer Commission (ACCC), Australia's competition watchdog, claims that Google now has such a stranglehold on the country's online advertising that it has to be reined back.

The ACCC claims that Google's advertising technology has evolved to the point of being anti-competitive during the last ten years.

The lion's share

The ACCC stated in a report released on Tuesday that Google gained market domination with a substantial data advantage. Google Search, YouTube, Gmail, Google Calendar, Google Docs, Google Contacts, Google Sites, Google Meet, Google Chat, Cloud Search, and other Google products collect a lot of data about its users.

In 2020, the watchdog expects that 80–90% of all online ad impressions in Australia would have traveled through at least one Google service. When an ad is displayed on a mobile app or a website, it creates an "ad impression." It's the metric through which advertisers determine how many times their ads have been seen.

Given this figure, it's safe to assume Google has the lion's share of Australia's digital advertising market, which accounted for A$9.5 billion in expenditure last year.

The ACCC has proposed a new industry code to make the advertising process more transparent from beginning to end. It also wants to establish regulations for how user data is gathered for digital advertising and how service fees are computed.

The entire list of suggestions is targeted at curbing Google's monopoly influence in the digital advertising sector.

What does Google have to say about it?

Google responded by claiming that the ACCC failed to consider other online advertising channels available to Australian businesses, such as Facebook, Twitter, and Snapchat.

Google also cited a PwC analysis estimating that three-quarters of Google's advertising clients in Australia are small to medium-sized businesses (SMEs) and that Google's services contribute A$2.4 billion to the Australian economy each year.

According to The Guardian, a Google spokesperson reiterated the company's desire to engage with the ACCC to create a "healthy ad ecosystem."

Google’s winning formula

A business advisor is claimed to have questioned the founders how they planned to generate money in the early days of Google, when their only product was a groundbreaking search engine. This may be fictitious. The response was something along the lines of "we'll work something out." It appears like something was Google Ads.

Last year, Google Ads helped Alphabet (of which Google is a part) surpass $1 trillion in market capitalization, joining Apple and Microsoft. It is the principal vehicle by which marketers may contact customers via Google's services, and it places adverts in Google Search results, as well as on mobile apps, webpages, and videos.

Behind the scenes, when someone uses Google Search or visits a website that uses Google Ads, an automated ad auction takes place. Advertisers place bids based on the maximum cost-per-click they are willing to pay for their ad.

Cost-per-click advertising means that instead of paying for ad space, the winning advertiser pays Google a specific amount each time someone clicks on their ad.

Of course, not everyone who sees an advertisement will buy something. Depending on how hot or cold the market is, only one out of every 10 clicks may result in a sale.

If the cost per click is 50 cents and the conversion rate from click to sale is one in ten, the marketer must sell their goods for at least $5 to break even on their ad spend. But how does that price compare to the ones offered by their competitors? They must be meticulous in their calculations.

The cost-per-click bid must be adequately high, the ad should be of high quality, and the ad must contain terms directly relevant to the search inquiry in order for it to be placed in a prime position.

Ads can be targeted based on a variety of characteristics, according to Google, including audience "demographics" (certain areas, ages, genders, and device types) and "similar audiences":

Expand your audience by targeting users with interests related to the users in your remarketing lists. These users aren’t searching for your products or services directly, but their related interests may lead them to interacting with your ads.

However, because Google closely guards its methods, the exact intricacies of the procedure remain a mystery.

What does the future hold?

As artificial intelligence (AI) becomes more prevalent in people's lives, the task of shopping may be delegated to AI assistants. This is Peter Diamandis' vision, who is best known in Silicon Valley as the founder of the technology nonprofit X Prize Foundation.

What would be the process? So, over time, your personal AI will learn everything about you, including your daily routines, the items you use, how often you use them, what brands you like, where you travel, who you meet, and so on.

Based on these patterns, it will then make product recommendations to you. This is a more advanced version of what Google's Google Assistant function already does.

Amazon performs the same thing, sending alerts to users that say things like "we noticed you're reading this. Others who have read it have also read...”

The next step will be for AI to buy the consumables it knows you need, when you need them, and have them delivered to you – all without you specifically requesting for it. As a result, you won't run out of items you didn't realize you were running low on.

This prospective future, on the other hand, presents severe issues about our personal privacy, agency, and consumerist tendencies.