Competitiveness and transparency: the main challenges of the digital marketing industry

The rapid pace of evolution of the Internet has had a constant impact on the way in which an online marketing strategy is considered.

A team from the Open University of Catalonia carried out an investigation to approach the challenges that this area faces, based on the current situation of the online advertising market.

Online advertising in the middle of a concentrated market

The work carried out was presented to the public through a report entitled Support to the Observatory for the Online Platform Economy, issued by Open Evidence, the UOC’s digital consultancy.

The research results reflected that the online market is increasingly dominated by a concentrated group of companies that occupy a strategic position throughout the advertising chain, affecting free competition. Examples of this situation are Google and Facebook, companies that, through their main platforms, account for a significant share of the flow of advertising on the Internet.

Through the use of cookies, both companies, which are practically ubiquitous on the web, are able to collect information of a demographic nature and allusive to the online behavior of Internet users. This allows them to better profile the sale of their advertising space, by guaranteeing their advertisers an easy reach to their audiences.

The study authors identified industry-wide threats in the world of digital marketing. As the main ones, the opacity and lack of transparency in this market stand out, in the absence of regulatory measures under local and international scales, which are presented in the report as a control proposal for the establishment of antitrust filters, codes of conduct and other reforms regulatory.

In the most common instances of digital advertising, the best-positioned companies in the area, such as Amazon and Facebook, are in a dominant position that allows them to limit the disclosure of information about the cost, revenue, and effectiveness of ad placement. As long as that information remains confidential, it will remain difficult to know how to spend money and where ads appear, causing advertisers and publishers to question the effectiveness of online advertising and hamper decision-making, according to what points out the investigation report.

The use of algorithms and the presence of intermediaries in some processes of digital marketing campaigns have opened spaces for another important threat: fraud. These perjuries, according to figures indicated in the report, have cost advertisers around 13.6 billion euros worldwide.

The deployment of personalized advertisements on the web depends mainly on Google and Facebook, which respectively account for 33% and 16.2% of global revenues, according to 2017 figures cited in the study.

Both companies, and to a lesser extent Amazon, benefit greatly from user data and from providing a vast inventory of ads across their websites and services that can be monetized, generating most of their revenue. advertising, the authors point out in their research, adding that 83.9% of Facebook’s revenue and 98.5% of Google’s revenue in 2019 was generated from advertising services.

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