LAUSR

The Competition and Markets Authority (CMA) is the United Kingdom’s primary competition and consumer authority. It is an independent, nonministerial government department responsible for carrying out investigations into mergers, markets, and regulated industries as well as enforcing competition and consumer law. The CMA’s statutory duty is to promote competition, both within and outside the United Kingdom, for the benefit of consumers. As described in Gordon et al. (2021, hereinafter Gordon et al.), the CMA carried out an in-depth review of online platforms and digital advertising in the United Kingdom between July 2019 and June 2020. In addition to considering the advances and benefits for consumers from online platforms and digital advertising, the review explored whether practices in those markets could have an adverse effect on consumers. It also considered what steps could be taken to remedy, mitigate, or prevent any adverse effects. The resulting report not only presented the CMA’s findings but also made a series of recommendations to government to inform its deliberations on future regulatory structures for online markets in the United Kingdom (CMA 2020). The CMA’s work on online platforms and digital advertising has sparked interest from a range of commentators and has already been used as the basis of articles making the case for competition enforcement against both Google and Facebook in the United States (e.g., Scott-Morton and Dinielli 2020). Gordon et al. lists four areas of market inefficiency in digital ad markets—measurement of ad effectiveness, internal frictions, ad blocking, and ad fraud—and suggests that these areas have received less attention from various regulatory and competition reviews. In fact, the CMA did explicitly consider the theoretical and practical challenges of measuring ad effectiveness in the United Kingdom (see CMA 2020; Appendix O) as part of a broader analysis of the challenges of assessing and evaluating the quality of digital advertising. The CMA approached the assessment of the quality of digital advertising in terms of a process involving several discrete stages: (1) verification: checking the viewability of the advertising, the context in which it was displayed, and identifying the potential for ad fraud; (2) attribution: tracking what actions the consumer took after being exposed to the ad; and (3) measuring effectiveness: did the advertising meet the campaign objectives the advertiser had set? For instance, did it produce an incremental uplift in sales? On the key theoretical and methodological issues relating to measuring effectiveness, the CMA reached findings similar to Gordon et al. We also identified issues related to verification and attribution, which were relevant to the operation of digital advertising markets in the United Kingdom. In this commentary, I begin by considering why measurement matters for effective competition in digital advertising markets. I then pick up from Gordon et al. and consider the extent to which the experimental techniques for the robust measurement of ad effectiveness proposed in that article have actually been adopted by U.K. advertisers. I present data collected by the CMA showing that the level of experimental testing being carried out in the United Kingdom is currently very low. In exploring why this is the case, I find that this is due to internal frictions (e.g., considerations of time and cost) rather than lack of access to data or deliberate actions on the part of the digital advertising platforms to impede measurement of ad effectiveness. I then discuss challenges related to the verification and attribution of digital advertising. Here, the CMA did find that lack of access to data and actions on the part of Facebook and Google were having an adverse impact on U.K. advertisers’ ability to properly and independently evaluate the