The Dominance of Walled Gardens

Walled gardens, such as Google, Facebook, and Amazon, have become dominant players in the digital advertising landscape. With almost 70% of all U.S. digital ad spending being poured into these platforms, one might assume that consumers are spending a similar part of their time exclusively on these three giants. This poses a pertinent question: Does the remaining 30% of ad spend pose any challenge to the walled gardens? After all, they are more of the same methods and tactics, just smaller. An alternative will evolve via a different paradigm.

Escalating Costs, Declining Returns

Brands have been pouring a disproportionate level of spending with these opaque intermediaries who have played their structural advantage extracting a 100% or near “take rate”. Other digital players have been losing share with brands continuing to double down their spending. However, as brands invest more in these platforms, the returns they get are on a downward trend. Over-monetized walled gardens will further push ROI declines for brands in the coming years.

Bigger Walls Ahead

The proverbial walls of these gardens are poised to get even taller. Google’s announcement of phasing out third-party cookies by 2024 is a testament to this upcoming reality. These platforms are geared towards keeping as much data within their ecosystems as possible, making them even more secluded from the rest of the internet and demanding a higher toll from brands and marketers.

As the walled gardens from BigTech continue to get exposed by their governance issues and get amidst multiple controversies, it may not align with the image of many brands.

Many brands have voiced concerns about opacity while others seem satisfied by mediocre results from these platforms. There are risks of over-centralizing control, which can create power imbalances in the industry. While walled gardens remain popular, the need for alternative platforms that provide marketers with transparency is becoming clear.

Trust, Transparency, and Ownership Issues

Marketers’ lack of clarity on campaign performances within opaque walled gardens is a significant concern. As brands increase their investments, they receive less detailed information about their customers. Instead of an in-depth analysis, brands typically get an aggregate performance report, which offers little insight into individual customer interactions across platforms.

Brands and advertisers are increasingly seeking avenues that offer a clear view of performance metrics. Walled gardens’ opacity makes it challenging for marketers to identify underperforming parts of their campaigns and give resources effectively.

Marketers often struggle to understand which aspects of their media strategies work. Given the absence of verification tools, they are left to merely trust these platforms.

This growing reliance on trust is problematic, especially when Chief Marketing Officers (CMOs) face increased pressure to provide data-driven results. With the evolving role of the CMO, understanding and accurately assessing spend on these platforms becomes crucial, but the current scenario raises the question: Is this level of understanding achievable?

Walled gardens provide vast reach, but rising costs and limited transparency challenge marketers. As these barriers grow, CMOs must bridge organizational gaps and adapt to navigate this evolving landscape.

Understanding the Trade-offs

While walled gardens may boast an impressive understanding of users within their logged-in environments, the flip side is their inability to share this data extensively with advertisers due to privacy concerns. Taking Facebook as a case in point: while the social media giant lets advertisers initiate targeted campaigns, it maintains confidentiality regarding where these ads are positioned. The lack of transparency becomes even more apparent when, unless a user engages with an ad, advertisers remain in the dark about who viewed their content.

In a time where hyper-relevancy in consumer interactions is the key, brands and their marketing allies need to instantly understand and address consumer motivations and mindset. Walled gardens are trying to handle most of this process behind closed doors. The opacity, combined with potential brand image and safety concerns, makes walled gardens a complex choice for marketers and advertisers.