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April 28, 2020 Interim Report regarding Digital Advertising (Summary)

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Page 1: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

April 28, 2020

Interim Report regarding Digital Advertising (Summary)

Page 2: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 1 Digital Advertising : OverviewMarket Scale:Upward Trend. Total Advertising Cost up to 7 trillion JPY(GDP1.3%), Digital Ads Cost; over 2 Trillion JPY

Types of Digital Ads(ads which are distributed and shown on online browsers);Programmatic Ads : Ads distributed through the optimization system that fits every ad to inventories based on user info (location, preference, etc.)Search Ads : shown on Search result pages, which relates to search words, etc.Display Ads : Distributes ads on inventories in website(including social media), which are optimized for users’ attention, etc.

Reserved Ads : Distribute certain ads for particular inventory

Digital ads

Programmatic Ads

Display adsReserved ads

Others

Search ads

Scope of the Report

Advertiser (Ad Agency): Who advertises its commodities or brand, with ads expense. Nominating expected user categories or search words, etc.Intermediary: Who operates ad tech (connecting advertiser who has specific target in its mind and publisher who owns inventories), and earns brokerage. Platform operators can provide arena where the ad tech works, and also involve in ad tech operation itself.Publisher: Who owns inventories and earns revenue. In case of Search ads and social media ads, etc. platform operators occupy this position as well as an intermediary.

Page 3: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

② Display ads(except for social media ads )

③ Social media ads① Search ads

Chapter 1 Digital Advertising : Breakdown of digital ads and Overview of Distribution Scheme

Programmatic Ads

Breakdown of digital ads cost in Japan in 2019(%)

40.2%

39.4%

0.2%

13.9%

6.3%

検索連動型広告 ディスプレイ広告 その他(注) 予約型広告 成果報酬型広告Search ads Display ads others Reserved ads

Result reward ads

Page 4: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

③ Display ads in which digital platform operators partly involved

Chapter 1 Digital Advertising :Overview of Digital Ads Contracts

Ad Network: Who organizes network amongst publishers, in order to distribute ads in uniformed way.Ad Exchange: Who provides arena to operate RTB (Real Time Bidding. Automated bid system, taken place when user accesses publishers’ page, in order to determine which ads to be distributed to the publishers’ inventory).DSP(Demand Side Platform): Who participates RTB on the ground of advertisers.SSP(Supply Side Platform): Who participates RTB on the ground of publishers.

① Search ads

② Display ads for digital platform operators’ media

Page 5: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 2 Overview of the Questionnaires : Methods of the questionnaires

1. Questionnaires for businessesMethod :Web surveyPeriod :February 25, 2020 – March 13, 2020Numbers of questionnaire sent:790(Advertiser, Ad agency), 393(Intermediary), 924(Publisher)Numbers of respondents:105(Advertiser, Ad agency), 38(Intermediary), 174(Publisher)Response rate :13.3%(Advertiser, Ad agency), 9.7%(Intermediary), 18.8%(Publisher)

2. Questionnaires for consumersMethod :Web survey (outsourced)Period :February 25, 2020 - February 27, 2020Respondents: 2000 each for search service user and social media user

5

Page 6: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 2 Overview of the Questionnaires : Questionnaires for businesses(contracts)

75.0

55.6

55.6

44.4

47.2

42.1

13.9

25.0

13.9

19.4

16.7

57.9

11.1

19.4

30.6

36.1

36.1

0

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~h) 問題・課題のある内容を含む規定がある

i) 上記の内容を含む規定はなく,特に問題はない

j) 当該デジタル・プラットフォーマーと直接取引したことはない

When asked if there were any problems or issues in the contract with digital platform operators, many respondents said that the contract is uniform and cannot be changed based on their intention.(refer to chart 25-27 of the interim report)

【 Intermediary 】 【 Publisher 】【 Advertiser, Ad agency 】

6

47.4

43.3

40.2

38.1

35.1

47.6

36.1

39.2

34.0

29.9

27.8

38.1

16.5

17.5

25.8

32.0

37.1

14.3

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~h) 問題・課題のある内容を含む規定がある

i) 上記の内容を含む規定はなく,特に問題はない

j) 当該デジタル・プラットフォーマーと直接取引したことはない

65.4

44.9

28.7

25.0

29.4

58.7

22.1

20.6

9.6

9.6

18.4

34.9

12.5

34.6

61.8

65.4

52.2

6.3

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~h) 問題・課題のある内容を含む規定がある

i) 上記の内容を含む規定はなく,特に問題はない

j) 当該デジタル・プラットフォーマーと直接取引したことはない

There are problematic provisionsThere are no problematic provisions aboveHave never dealt with the digital platform operator

There are problematic provisions There are problematic provisions

There are no problematic provisions above There are no problematic provisions above

Have never dealt with the digital platform operatorHave never dealt with the digital platform operator

others others others

Page 7: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 2 Overview of the Questionnaires : Questionnaires for businesses (use of third-party service※1)

16.3

8.4

9.2

8.6

7.8

7.0

83.7

91.6

90.8

91.4

92.2

93.0

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~e) 第三者のサービスの利用について問題・課題のある行為

があった

f) 上記のようなことはなく,特に問題はない

When asked if there were any problems or issues on using the ad tech service provided by digital platform operators, many respondents answered that “there was no problem.” In contrast, there are also comments such as "The use of third-party services other than those provided by digital platform operators has been banned." (refer to chart 31-33 of the interim report)

6.3

0.0

8.0

0.0

0.0

15.8

93.8

100.0

92.0

100.0

100.0

84.2

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~e) 第三者のサービスの利用について問題・課題のある行為が

あった

f) 上記のようなことはなく,特に問題はない

【 Intermediary 】

7.6

14.6

5.8

6.4

6.2

8.3

92.4

85.4

94.2

93.6

93.8

91.7

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~e) 第三者のサービスの利用について問題・課題のある行為

があった

f) 上記のようなことはなく,特に問題はない

【Publisher】【 Advertiser, Ad agency 】

7※1 Services provided by intermediaries other than digital platform operators

There were problematic acts regarding the use of third party services

There were problematic acts regarding the use of third party services

There were problematic acts regarding the use of third party services

There are no problematic acts above There are no problematic acts above There are no problematic acts above

othersothers others

Page 8: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

1.2

1.2

1.3

1.4

1.5

3.5

32.6

32.1

35.1

37.1

33.8

29.8

53.5

56.0

53.2

48.6

52.3

47.4

12.8

10.7

10.4

12.9

12.3

19.3

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a) 感じたことがある

b) 感じたことはない

c) 分からない

d) 当該デジタル・プラットフォーマーが提供するアドエクスチェンジを利用したことがない

Chapter 2 Overview of the Questionnaires : Questionnaires for businesses (prioritized ad request※2)

When asked if ad servers sent advertising request to a specific digital platform operator preferentially, many publishers answered that they had not felt such preferential treatment. (refer to chart 34 of the interim report)

【 Publisher 】

others

We have felt preferential treatment.We have never felt preferential treatment.Don’t knowWe have never experienced preferential treatment as we use our company's ad server.

※2 In case ad servers sent ad request under Waterfall scheme etc., it is often said ad servers send such request in arbitrary manner, in favor of particular digital platform operators.

Page 9: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 2 Overview of the Questionnaires : Questionnaires for businesses (measures for ad fraud※3)

59.3

57.1

49.4

47.1

44.6

28.1

40.7

42.9

50.6

52.9

55.4

71.9

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~f) アドフラウドへの対策に不満がある

g) 特に不満はない

42.0

44.9

42.3

38.3

33.8

26.7

58.0

55.1

57.7

61.7

66.2

73.3

0% 20% 40% 60% 80% 100%

Google

Yahoo!

Facebook

Twitter

LINE

その他

a)~e) アドフラウドへの対策に不満がある

f) 特に不満はない

When asked if you have complaints against measures for ad fraud, which digital platform operators take, many respondents answered “yes”. (refer to chart 39-40 of the interim report)

【 Publisher 】【 Advertiser, Ad agency 】

※3 Practice of fraudulently representing impressions or clicks by using bot, etc. in order to generate advertising revenue

We have complaints against measures for ad fraud.We do not have complaints.

We have complaints against measures for ad fraud.We do not have complaints.

othersothers

Page 10: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 2 Overview of the Questionnaires : Questionnaires for consumers (search service)

30.1

29.8

40.2

(どちらかといえば)認識している

どちらともいえない

(どちらかといえば)認識していない

0.0 20.0 40.0 60.0

When asked if you recognized a search service collected and used information to display advertising, many respondents answered “no”. (refer to chart 67 of the interim report)

26.9

31.4

24.0

17.9

(どちらかといえば)把握した上で同

意した

あまり把握できないまま同意した

(どちらかといえば)把握できないま

ま同意した

同意した覚えがない

0.0 10.0 20.0 30.0 40.0

When asked if you had understood the terms of use and agreed, some respondents answered, “I don’t remember I agreed.” (refer to chart 68 of the interim report)

52.2

34.6

13.4

(どちらかといえば)懸念がある

どちらともいえない

(どちらかといえば)懸念していない

0.0 20.0 40.0 60.0

When asked if you had concerns about the collection and use of information, many respondents answered “yes”. (refer to chart 69 of the interim report)

61.3

46.7

25.0

0.9

3.6

0.0 20.0 40.0 60.0 80.0

検索サービスが便利であるため

検索サービスが生活に必要不可欠である

ため

懸念はあるものの,サービスの利用をや

めるほどではないため

その他

分からない

When asked why you continued to use a search service despite concerns, many respondents answered, “because it is useful”. (refer to chart 70 of the interim report)

10

Because a search engines is usefulBecause a search engine is essential for daily lifeBecause the concerns are not enough to stop using a search engineOthersDon’t know

Because it is useful

Because it is essential for daily lifeBecause the concerns are not enough

to stop using it

Others

Don’t know

(Somewhat) recognize

Neither

(Somewhat) not recognize

(Somewhat) understood and agreed

Agreed without much understanding

(Somewhat) agreed without understanding

Not remember I agreed

(Somewhat) concerned

Neither

(Somewhat) not concerned

Page 11: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 2 Overview of the Questionnaires : Questionnaires for consumers (social media)

36.5

27.6

36.0

- 10.0 20.0 30.0 40.0

(どちらかといえば)認識している

どちらともいえない

(どちらかといえば)認識していない

When asked if you recognized a social media collected and used information to display advertising, some respondents answered “no”. (refer to chart 86 of the interim report)

36.2

30.7

26.0

7.2

- 10.0 20.0 30.0 40.0

(どちらかといえば)把握した上で同意した

あまり把握できないまま同意した

(どちらかといえば)把握できないまま同意し

同意した覚えがない

When asked if you had understood the terms of use and agreed, some respondents answered, “I don’t remember I agreed”. (refer to chart 87 of the interim report)

59.9

29.8

10.4

- 20.0 40.0 60.0 80.0

(どちらかといえば)懸念がある

どちらともいえない

(どちらかといえば)懸念していない

When asked if you had concerns about the collection and use of information, many respondents answered “yes”. (refer to chart 88 of the interim report)

65.4

32.0

33.2

2.2

1.7

- 20.0 40.0 60.0 80.0

SNS サービス等が便利であるため

SNS サービス等が生活に必要不可欠であるため

懸念はあるものの、サービスの利用をやめるほ

どではないため

その他

分からない

When asked why you continued to use a social media despite concerns, many respondents answered, “because it is useful”. (refer to chart 89 of the interim report)

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(Somewhat) recognize

Neither

(Somewhat) not recognize

(Somewhat) understood and agreed

Agreed without much understanding

(Somewhat) agreed without understanding

Not remember I agreed

(Somewhat) concerned

Neither

(Somewhat) not concerned

Because a it is useful

Because a it is essential for daily lifeBecause the concerns are not enough

to stop using it

Others

Don’t know

Page 12: InterimReport regarding Digital Advertising (Summary)...Chapter 1 Digital Advertising :Overview Market Scale:Upward Trend.Total Advertising Cost up to 7 trillion JPY(GDP1.3%),

Chapter 3 Perspectives for future research and examination

1.Business transactionsClarification of the actual status of transactions from the following perspectives① Whether digital platform operators impose unfair disadvantages on other businesses that is obliged to

use the platform, by unilateral change to the contract, etc.

② Whether digital platform operators unfairly exclude intermediaries that compete with its own business

③ Whether digital platform operators unfairly restrict business activities, for example, by restricting the distribution of digital advertising that do not go through their platform

2.Consumer transactionsClarification of the situation of using information from the viewpoint of whether the collection of personal

information or the usage of such information by digital platform operators could be seen as abuse of superior bargaining position

3.Competition policy perspectiveHow digital platform operators should use the information to ensure the transparency of transactions.The JFTC also sees competition between publishers using digital platforms, that exists among such

publishers and other publishers, and businesses’ endeavor, from the viewpoint of maintaining fair competitive environment in information transaction.

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