Walled Gardens

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For this week’s episode of Amobee Out Loud, we had a conversation with Adam Gerber, Executive Director, US Investment Strategy at GroupM about walled gardens: media companies’ digital environments that they’ve protected with a virtual ring to control the flow of data within a consumer experience on their platform. Meta (Facebook), Google, Amazon, Apple’s App Store, and The New York Times app are all examples of walled gardens. These digital environments add unique value as well as enormous complexity to today’s advertising marketplace, raising important questions: how much marketing impact do walled gardens have and how do we know? What would a more connected and transparent ecosystem look like and how do we build it? Adam helped us make sense of the complexity and what the industry can do to improve the experience for everyone involved.

Data Usage vs Data Ownership within Walled Gardens 

The benefit of walled gardens is that media companies can curate the experience for their customers with both content and ads. This is highly valuable to marketers because of the rich data gathered within walled gardens via IP, from user location, to device type, context, and more. The downside is that the user doesn’t control their data within these walled gardens and media companies are able to monetize it in ways that consumers don’t always trust.

This has led to ongoing debates within the industry about data ownership. Wherever data flows and someone has the ability to collect it, they have the ability to own it, explains Adam, but the question becomes how they are allowed to use it. In closed ecosystems like Google and Facebook, they offer very little visibility into their own data, and at the same time use marketers’ data for their own benefit.

Are Marketers Getting Their Value in Walled Gardens? 

According to Insider Intelligence, the largest walled gardens (Google, Meta, and Amazon) are receiving nearly 75% of digital advertising dollars, yet consumers are only spending about a third of their time in these spaces. Many wonder whether this is a smart spend strategy, but Adam reframed it this way: investment should depend on content experiences where consumers are engaged, where advertising makes sense within the user experience, and where it can drive business results. So while consumers may not spend the majority of their time in walled gardens, the richly curated experiences make them effective advertising environments and that’s why advertisers are eager to invest there.

From Garden Walls to Picket Fences

Walled gardens may offer richer data in the current ecosystem, but as more legacy media companies make the strategic pivot to direct-to-consumer environments, it is further fragmenting the marketplace. The lack of visibility across channels and standardized measurement makes media planning and buying a challenge and hems overall efficiency. Advertisers waste billions each year in redundant marketing, and consumers become frustrated, by seeing the same ad in too many different environments, too often.

While it’s understandable that media companies want to protect their consumer data against leaks and misuse, innovations need to be made to reduce ad waste and improve the consumer experience.

“What we don’t need are solid walls. We need picket fences that can be seen through, in standardized, legitimate, privacy-compliant ways – so that all of these environments can connect to support the base level of needs marketers have,” explains Adam.

Data clean rooms, in which walled gardens share aggregated data with advertisers and advertisers add their first-party data to compare the two data sets to determine whether they’re over-serving ads to the same audiences, are one solution but they aren’t the whole answer, Adam explains. If every media company and advertiser has their own clean room, then where is THE clean room of clean rooms? The industry’s big challenge is to bring those clean rooms together in one holistic view, with standardized, consistent data and parameters that each clean room collects, reports, and makes available. If those things aren’t consistent, connecting the clean rooms won’t work, Adam says.

The Future of Measurement in Walled Gardens 

Another hurdle to industry progress is determining the right metrics to measure success in an evolving marketplace. Advertisers are still focused on measuring by CPM, which essentially treats all impressions as if they have the same value, explained Adam. In a fragmented digital universe, a distributed value model, in which different audiences have higher or lower value than others at a given point in time, is a more accurate and meaningful measurement for marketers and advertisers. In that model, the marketplace and biddable environment become an opportunity for media companies to capture that value and for advertisers to optimize against it.

This, again, is where a picket-fence connected ecosystem of different “gardens” would be hugely beneficial to the industry, because it would give advertisers a macro-level view of campaign performance and value created from enabling different tactics. Until the industry has that connectivity and the ability to develop attribution models, advertising efficiency in the digital era will not be fully realized, and the consumer experience will continue to suffer.

It is a really informative conversation with Adam and we’re energized by the potential for the industry to come together to create a better experience for everyone, most of all the consumer.

We hope you’ll return next week for our episode on The Attention Economy. You can follow the blog for another recap or listen to full episodes and subscribe here. Be sure to leave a review and join the conversation on our LinkedIn, Twitter, and Facebook!