Walled gardens make up the vast majority of digital advertising opportunities within the publishing landscape. In fact, last year, Google, Meta, and Amazon took home 74% market share of all digital ad spend — and that number is expected to be even higher in Europe because of GDPR.
For many businesses, walled gardens are most likely where you’ll acquire the majority of your audience, buy the majority of your inventory and run the majority of your ads. So, understanding what walled gardens are and how they function is essential.
In this blog, we’ll look at what walled gardens are, how they came to be, and what challenges they’re posing to modern data-driven marketers.
What is a walled garden in advertising?
Walled gardens in advertising refer to platforms that are closed systems able to maintain a large degree of control across their eco-system, particularly in regards to data and keeping data within that system.
Prominent walled gardens such as Google or Amazon have created a very convenient 'one-stop-shop' environment for marketers and advertisers that offer access to vast collections of data, inventory, and centralized audience management. Information on social media or large online retailers is regularly updated and highly accurate, providing marketers with easy access to their target audiences.
However, while the walled gardens named in this article might seem very different, they all have one thing in common: none of them allow their most precious asset — their customer data — outside the confines of their own digital ecosystems.
Some of the biggest advertising walled gardens include:
Why do walled gardens exist?
In 2018, many platforms, including Facebook and Google (and to some extent Amazon), decided to restrict third-party cookies or any other calls to third-party ad technology providers or vendors from within the burgeoning eco-systems.
Valuable information about users was locked down and only accessible directly from those platforms. If you wanted to target those audiences Advertisers inevitably had to use their proprietary technology to buy and run campaigns.
So, why did they do this? One word: GDPR
Ok, not one word, four words (or an initialism) however, it’s no coincidence that the walls went up three months after GDPR. Facebook, Google, and many other platforms realized that, with potential fines of up to 4% of their global annual turnover, they had to be much more careful with personal information data. By eliminating third-party access to user data, it meant they could much more easily ensure compliance with already complex privacy policies, as well as empower and provide a better experience for their users.
At the same time, it also benefited those platforms as it gave them much more control over the advertising data emanating from their eco-system, especially in terms of how performance is measured. One of the consequences was that this only strengthened their dominance, and decreased the number of viable alternatives.
How do walled gardens impact marketing?
Well, walled gardens have several benefits for marketers and advertisers. First off, they tend to create a better user experience for customers which is generally agreed to be a good thing by most people. The extent to which third-party cookies have enabled multi-touch attribution and cross-domain targeting has by and large reached a breaking point where it devalues brands and reduces trust.
However, walled gardens are also attractive because they have a large amount of constantly updated, highly valuable, and fully compliant first-party data. And this means that marketers can much more easily deliver highly-targeted, highly sophisticated ad campaigns to users within these platforms all without the fear of violating data privacy legislation.
Marketers can deliver highly-targeted campaigns without the fear of violating data privacy legislation
So, it's all good then?
Not exactly. In exchange for that security and those highly-targeted, highly sophisticated ad campaigns, walled gardens also mean advertisers lose significant control and transparency over measuring and understanding ad performance.
Why? Because ultimately the data within walled gardens stays within walled gardens. Since platforms need to safeguard the privacy of their users’ data, advertisers can only ever get an aggregated view of campaign performance, and they have little to no control over how that data is aggregated or measured.
Thus, while walled gardens offer you the opportunity to run those highly targeted, highly sophisticated campaigns free of GDPR-inspired existential dread, ironically, it means you actually end up with less of an understanding of your customers.
This is because, instead of having an individualized view of campaigns and interactions that can be compared with other platforms and tied back to CRM and sales data, advertisers have to rely on the aggregated data received from within the walled garden environments.
For example, let's say you wanted to limit the number of times each customer sees a particular advert because you know that after, say, the fourth time it becomes less effective and potentially damages your brand. Within a walled garden, this is very simple to do. However, trying to do the same between different walled gardens becomes extremely difficult (if not impossible).
Thus, ultimately, walled gardens make gaining a holistic view of how customers have interacted with campaigns across multiple platforms much more difficult.
In fact, as far back as 2018, a study by the Winterberry Group found that marketers identified extracting audience insights from walled gardens as their greatest challenge when it comes to identity.
Extracting audience insights from walled gardens can be a challenge
What challenges do walled gardens pose?
1. Tracking the customer journey
Before publishers and platforms became walled gardens, the marketing landscape looked very different. Marketers could buy and sell third-party audiences, and track customer journeys from the first ad touchpoint right through to purchase much more accurately. Up until 2018, marketers had a pretty good view of this. They knew where about half of their users came from because platforms shared user IDs. However, when platforms stopped sharing that info, it left massive gaps in the path to conversion. Anything inside the realms of those walled gardens was a mystery, and advertisers had much less info to work with to improve marketing.
2. Running campaigns across multiple platforms
Walled gardens have made marketers' lives harder because you can’t run all your ads and programmatic buying from one platform anymore. It’s forced advertisers to create separate teams on each buying platform — Facebook, Amazon, Google, etc. because you have to work within their walled gardens.
3. Comparing campaigns across channels
It’s much more difficult to get a clear idea of like-for-like across walled gardens when measuring performance now. They have different methodologies for calculating metrics like views, impressions, and interactions, and these don’t align across all the walled gardens. This means that creating shared KPIs across channels can be a struggle.
There are many challenges that walled gardens pose to marketers, and it’s possible that we’ll never be able to track an individual customer journey with the same accuracy that was achievable before 2018. However, understanding what limitations walled gardens pose to marketing efficiency is the first step to finding new ways to unlock the potential of the data which is more readily available.
In fact, this disruption might be just what marketing teams needed in order to focus on other opportunities that different sources of data can provide, that focus on building a complete picture of the audience rather than an individual.
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