As spring gives way to summer, now seems like a good time to think about “walled gardens” in digital advertising: closed marketing ecosystems where owners control the content, data, inventory and engagement experiences.
Google, Meta, and Amazon (the so-called Big 3) are the major players today. Relying on these platforms gives marketers significant advantages and limitations. Understanding the pros and cons can help you develop a more effective digital advertising strategy.
Advantages of walled gardens
Large tech platforms like Google, Meta, and Amazon offer undeniable advantages to marketers, especially in terms of scale and sophistication. It's no wonder these platforms account for nearly two-thirds of all digital ad spend in the U.S. Some of the key benefits of partnering with these giants include:
Extensive user data
One of the big walled gardens' most attractive advantages is their access to vast amounts of first-party data. Meta and Google collect detailed information about user behavior, preferences, and demographics. This data enables targeted advertising, improving the chances of delivering the right message to the right audience.
For example, Meta allows you to target users based on complex criteria such as interests, life events, and online behavior, making your campaigns much more effective.
Advanced Ad Tech and Analytics
With over $200 billion in advertising revenue, the Big 3 can afford to invest heavily in ad tech and analytics capabilities. These companies offer advanced tools that enable marketers to create, manage and optimize their campaigns more efficiently.
Google's suite of advertising tools, including Google Ads and Google Analytics, provide a robust framework for tracking performance and adjusting your strategy in real time. These platforms also offer machine learning capabilities to automate and optimize ad placements to maximize your return on investment (ROI).
Integrated Ad Formats
These platforms seamlessly integrate a variety of 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 News Feed Ads, and YouTube skippable video ads are examples of how diverse ad formats can effectively engage users within the Google garden.
Brand Safety and Fraud Prevention
Walled gardens offer greater levels of brand safety and ideally reduce fraud, as the platforms control every aspect of the advertising environment.
Leading global technology platforms have rigorous measures in place to combat ad fraud and ensure ads are displayed alongside appropriate content. This controlled environment gives marketers peace of mind, knowing their ads are safe, trustworthy, and in a relevant context.
Read more: Data clean rooms: A beginner's guide
The downsides of walled gardens
Despite the benefits, playing in someone else’s playground means playing by their rules and paying for it. They own the inventory, sell and offer ad slots, report on performance, and don’t share data with other systems. This inherently creates a conflict of interest and power imbalance. Platforms have their own business goals, so it’s important to be aware of the snakes lurking behind the scenes.
Market Power and Antitrust Law
The monopoly of a few large companies in the digital advertising industry has raised concerns about market competition and antitrust issues. Google operates the largest ad server, inventory exchange, and bidding exchange, representing both bidders and sellers in the marketplace.
In such situations, pricing and competition are entirely in their hands. This concentration of power may also stifle innovation and limit opportunities for smaller advertising technology companies. Regulators are increasingly scrutinizing these platforms, and potential regulatory changes could impact how the platforms operate and how marketers use them.
Lack of transparency
Walled gardens are often criticized for their lack of transparency – these platforms operate as black boxes, with limited visibility into how their advertising algorithms work, how data is used, and how ad performance is measured. This is true across all walled garden environments, not just the Big Three.
Platforms sell inventory and report on its performance. Each connected TV inventory supplier reports viewership metrics. It is in the supplier's best interest to show the highest viewership possible. This lack of transparency can make it difficult for marketers to objectively understand the impact of their campaigns and compare performance across different channels.
Data Limitations and Measurements
Walled gardens offer a wealth of first-party data, but limit access to this data outside their ecosystem: marketers can’t export user data to other platforms or easily integrate with customer relationship management (CRM) systems.
This siloed approach can prevent a comprehensive understanding of the customer experience and limit the ability to execute cross-channel marketing strategies. Without exporting impression data, marketers have no control over frequency across platforms, risking oversaturation, ad fatigue, and wasted spend.
Dependency on Platform Policy
Operating within a walled garden means adhering to the platform's policies and guidelines, which are subject to change without notice. For example, changes to Meta's algorithms can have a significant impact on the reach and effectiveness of ads. Such dependencies can create instability for marketers who have to constantly adapt to new rules and features.
Rising costs
Advertising within walled gardens can be expensive. Advanced targeting and analytics capabilities come at a premium, and intense competition for ad space can drive up costs. For smaller businesses or those with limited advertising budgets, it can be hard to compete with larger advertisers who can afford higher bids and larger ad spends.
Successful diversification
To get the most value from walled gardens, a diversified advertising strategy is key. While walled gardens' wealth of user-level data and advanced tools can create significant value, relying solely on these platforms can be risky. Balancing advertising efforts across the open web environment, programmatic platforms, and traditional mass media can help mitigate some of the risks associated with walled gardens.
Additionally, marketers must push for greater transparency and more open standards that make it easier to integrate and measure data across different platforms. Building out first-party data capabilities and investing in customer data platforms (CDPs) can also help create a unified view of the customer, enabling more effective, unbiased cross-channel marketing.
Digging deeper: An approach to unlocking your first-party data strategy
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