A sneak peek into the walled gardens
Google, Facebook, and Amazon dominate online marketing eco-space as digital ads become more prominent worldwide due to their increased acceptability. According to research done by the renowned marketing research company eMarketer, around 64% of the total ad spend goes to Google, Facebook and Amazon. These three major companies have the lion’s share in this competitive and thriving industry. Their efficient use of the ‘walled garden’ approach makes them highly successful in the online marketing ecosystem. As the name implies, a walled garden is an enclosed platform where the platform provider has complete control over its content and applications. The platform provider may even restrict the flow of information through media to create a monopoly for itself.
The walled garden concept has gained popularity in the ad tech industry due to the rapid growth of conversions. Let’s first understand the history of the walled Garden before diving deep into this topic. The term Walled Garden was initially coined by a company called Telecommunications Inc which AT&T later acquired. In 1970s, when big players like Google, Facebook, or Amazon were still in the ideation stage, telecom providers such as Bell system used the walled garden approach. This telecom provider had exclusive control of its hardware and little control over the information transmitted through its telephone lines.
It’s not surprising that big players like Apple have total control over their iOS ecosystems, just as Bell Systems did over their hardware. This control extends from devices to applications for Apple. In marketing terms, advertisers use closed platforms to run their marketing campaigns through walled gardens, which is quite different from traditional marketing methods.
The concept of a walled garden refers to data that is stored and used only for marketing purposes within silos. Walled garden platforms can keep the data in-house, facilitating the prevention of data leakage in the process. Installing a walled garden is difficult, but over time it can be one of the productive strategies for an ad tech service provider.
The benefit of the Walled Garden approach to the Publishers
Even if walled gardens seem to be menacing at some point, they are advantageous to publishers in many ways. It offers publishers an expansive audience outreach, efficient opportunities for monetization, and boosting referral traffic. Besides advertisers, publishers will also use the walled garden approach very effectively. To utilize the benefit of the walled garden approach constructively, they will bring on some exciting contents that induce the users to a subscription model. Publishers keep continuously catering to the audience with high-value content, engaging with them for a monthly fee. Following this strategy effectively helped renowned publishers like the New York Times gain 8 million subscribers recently. Regardless of size and reach, small and large publishers can use this strategy successfully. Large publishers immensely benefit from the walled garden approach as they possess an expansive audience and boundless reputation.
The benefit of the Walled Garden approach to the Tech Companies
As we discussed, three major conglomerates- Google, Facebook, and Apple, effectively utilize the walled garden strategy. With Facebook, it is effortless to target a large audience since it has over 2.89 billion users at its disposal, representing different age groups, genders, and ethnicities. All campaign performance data is housed on Facebook, and advertisers can access these platforms through its Demand Side Platform, Data Management Platform, and Dynamic Creative Optimization.
Google employs an entirely different approach to target users with Gmail accounts, numbering 1.5 billion, and searches totaling 2 trillion a year, it is easy to reach large audiences. With a data lake of rich zero, first-party data and a robust ad manager service, Google is efficiently using the walled garden approach.
With its huge e-commerce platform, Amazon is generating an ad revenue of 31 billion USD in 2021 through its Amazon Ads Services platform. While Amazon is employing the same walled garden approach as other major players in this field, it is also acquiring second and third-party data from others.
Apples’ business game is entirely different from its competitors as they are not using its platform for advertising purposes. Their user base is estimated to surpass 2.2 Billion by 2022 as a result of their multitude of hardware devices, including MacBook, iPads, and smartphones.
Advantages of Walled Garden
Through Walled gardens, companies may turn themselves into monopolies, hamper the spirit of competition, and create an unfair advantage over the other. Despite this fact, it is a magnificent tool for advertisers, publishers, and users in many ways.
- Major players like Facebook, The New York Times, and Google use walled gardens so that advertisers can target and customize their campaigns to maximize Return on Investment (ROI).
- In companies employing the walled garden strategy, user data is adequately encrypted, protected, and secured, and the former obtains the users’ consent before tracking their data.
- Since most users access these companies through laptops, cellphones, and tablets, they utilize cross-device data that is shared with advertisers regardless of the device customers use.
Disadvantages of Walled Garden
- The process of creating and maintaining a full-fledged walled garden approach can be extremely competitive and strenuous for companies.
- Keeping up with the competition is indeed a challenging task for all websites, but bringing forth quality content is a key to staying ahead.
- The ability to constantly innovate and adapt to competitive pressures is key to a company’s success in social media, e-commerce, and search engine results.
Walled gardens are beneficial for advertisers, marketers, and publishers alike. The effective walled garden strategy enables first-party data targeting, serving advertiser portals, and auction pricing.