As spring blossoms into summer, it feels like an apt time to address “walled gardens” in digital advertising. The term refers to closed marketing ecosystems in which the owner controls the content, data, inventory and engagement experience.
Google, Meta and Amazon (a.k.a. the Big 3) are today’s dominant players. Reliance on these platforms can offer marketers significant advantages and limitations. Understanding the roses and thorns can help craft a more effective digital advertising strategy.
Benefits of walled gardens
Big tech platforms like Google, Meta and Amazon present undeniable benefits, particularly in terms of scale and sophistication for marketers. It’s not surprising that collectively, they hold nearly two-thirds of U.S. digital advertising dollars. Here are some of the primary advantages of working with the giants:
Lush user data
One of the most compelling advantages of the big walled gardens is access to vast amounts of first-party data. Meta and Google collect detailed information on user behavior, preferences and demographics. This data allows for highly targeted advertising, improving the chances of reaching the right audience with the right message.
For instance, Meta’s ability to target users based on intricate criteria such as interests, life events and online behavior can dramatically enhance campaign effectiveness.
Advanced adtech and analytics
With over $200 billion in ad revenue, the Big 3 can afford to invest heavily in their adtech and analytics capabilities. They offer sophisticated tools that enable marketers to create, manage and optimize campaigns more efficiently.
Google’s suite of advertising tools, including Google Ads and Google Analytics, provides a robust framework for tracking performance and adjusting strategies in real-time. These platforms also offer machine learning capabilities to automate and optimize ad placements to maximize return on investment (ROI).
Integrated ad formats
These platforms provide a seamless integration of various cross-device ad formats, from display and video ads to native and sponsored content. This integration ensures a consistent user experience and allows marketers to diversify their advertising strategies within a single ecosystem.
Instagram Stories, Facebook’s News Feed ads and YouTube’s skippable video ads are examples of how diverse ad formats can effectively engage users within the Google garden.
Brand safety and fraud prevention
In a walled garden, the platform controls all aspects of the advertising environment, which can lead to higher levels of brand safety and, ideally, reduced fraud.
Global big tech platforms have stringent measures to combat ad fraud and ensure that ads appear alongside appropriate content. This controlled environment gives marketers peace of mind, trusting that their ads are displayed in a safe, credible and relevant context.
Dig deeper: Data clean rooms: A beginner’s guide
Shortcomings of walled gardens
Despite their benefits, playing in someone else’s playground means playing by their rules and paying for it. They own the inventory, sell and serve ad placements, report on their performance and do not share data with other systems. This creates an inherent conflict of interest and imbalance of power. Remember, the platforms have their own business goals so it’s important to be aware of snakes in the grass.
Market dominance and antitrust
The dominance of a few major players in the digital advertising space raises concerns about market competition and antitrust issues. Google operates the largest ad server, inventory exchange and bidding exchange, representing both the bidder and the seller in the marketplace.
In that context, pricing and competition are entirely in their hands. This concentration of power can also stifle innovation and limit opportunities for smaller ad tech companies. Regulators are increasingly scrutinizing these platforms, and potential regulatory changes could impact how they operate and how marketers can use them.
Lack of transparency
Walled gardens are often criticized for their lack of transparency. These platforms operate as black boxes, providing limited visibility into how ad algorithms work, how data is used and how ad performance is measured. This is true in any walled garden environment, not just the Big 3.
The platform sells inventory and then reports on its performance. Connected TV inventory suppliers each report their viewership metrics. It is in their best interest to demonstrate the highest possible viewership. This opacity can make it challenging for marketers to objectively understand their campaigns’ impact and compare performance across different channels.
Data limitations and measurement
While walled gardens offer rich first-party data, they limit access to this data outside their ecosystem. Marketers cannot export user data to other platforms or integrate it easily with customer relationship management (CRM) systems.
This siloed approach can hinder a comprehensive understanding of customer journeys and limit the ability to execute cross-channel marketing strategies. Without exporting impression data, marketers cannot control frequency across platforms, risking oversaturation, ad fatigue and wasted spend.
Dependence on platform policies
Operating within a walled garden means adhering to the platform’s policies and guidelines, which can change without notice. For example, changes in Meta’s algorithm can significantly affect the reach and effectiveness of ads. Such dependence can create instability for marketers who must constantly adapt to new rules and features.
Higher costs
Advertising within walled gardens can be expensive. The advanced targeting and analytics capabilities come at a premium and the high competition for ad space can drive up costs. Smaller businesses or those with limited advertising budgets may find it challenging to compete with larger advertisers who can afford higher bids and larger ad spends.
Success in diversification
A diversified advertising strategy is key to reaping the most value from walled gardens. While the rich user-level data and advanced tools of walled gardens can drive significant value, relying solely on these platforms can be risky. Balancing advertising efforts across open web environments, programmatic platforms, and traditional mass media can mitigate some of the risks associated with walled gardens.
Additionally, marketers should push for greater transparency and advocate for more open standards that facilitate data integration and measurement across different platforms. Building first-party data capabilities and investing in customer data platforms (CDPs) can also help create a unified view of the customer, enabling more effective and bias-free cross-channel marketing.
Dig deeper: An approach to unlocking first-party data strategies
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