Walled Gardens in AdTech

What is a Walled Garden?

In the world of AdTech, the term “walled garden” refers to a closed platform where the technology provider, like Google, controls the hardware, applications, and content shared among users. This setup allows advertisers to gain insights from aggregated data that cannot be tied to specific users, ensuring privacy. However, it requires advertisers and publishers to use the platform's built-in technology for their campaigns.

Prominent Examples of Walled Gardens

The most notable walled gardens are Google’s Ads Data Hub (ADH), Meta’s Facebook Advanced Analytics (FAA), and Amazon Marketing Cloud (AMC). These secure environments provide event-level data to marketers, helping them make informed decisions without compromising consumer privacy or the platform’s security.

How Walled Gardens are Utilized

Tech giants like Google, Meta, and Amazon dominate online ad spending, controlling around 70% of the market. Their walled gardens require advertisers to use proprietary software, ensuring the platforms capture ad spend from competitors. While this may seem monopolistic, the vast amounts of data and integrated systems these platforms offer make them attractive to advertisers and publishers.

Advantages of Walled Gardens

1. Enriching First-Party Data Walled gardens allow advertisers and publishers to study large datasets in a privacy-compliant manner. This data provides insights into audience behaviour, helping to segment and target campaigns effectively.

2. Accurate Campaign Measurement Advertisers can use the data from walled gardens to create personalized, well-targeted campaigns, reaching their audience more effectively.

3. Enhanced User Privacy Walled gardens maintain high privacy and security standards, encoding user-level data to prevent unauthorized access. This builds trust among advertisers and publishers regarding user privacy.

4. Cross-Device User Engagement Platforms like Google and Meta provide cross-device data, allowing advertisers to optimize campaign reach and targeting across different devices.

Disadvantages of Walled Gardens

1. Limited Data Outputs Walled gardens are protective of their data, often providing only aggregated insights. Interpreting this data can be labour-intensive and may require specialized support.

2. No Cross-Platform Data Activation Insights gained from one walled garden cannot be applied to another, limiting the ability to leverage data across multiple platforms.

3. Lack of Collaboration Walled gardens are designed to protect first-party data, preventing collaboration between different advertisers and publishers.

4. Dependency on a Single Platform Relying heavily on one walled garden can be risky. Advertisers and publishers have no control over the provider’s decisions or algorithms, which may impact their campaigns.

Building Your Own Walled Garden

Creating a walled garden requires significant investment in time, budget, and expertise. Publishers need their own AdTech, including DSPs, DMPs, and DCOs, along with a dedicated team for maintenance and scaling. While challenging, it offers control over revenue, advertiser relationships, and first-party data.

The Future of Walled Gardens in AdTech

While walled gardens are crucial for current AdTech operations, changes may be on the horizon. Platforms like Amazon and Meta are considering providing more behavioural insights. Additionally, as AI technology advances, walled gardens might develop new features to retain users. If advertisers and publishers demand more flexibility and insights, walled gardens may have to adapt.

Key Takeaways

• Definition: A walled garden is a closed platform controlled by the technology provider, offering aggregated, non-identifiable data for digital campaigns.

• Control: Providers like Google, Meta, and Amazon dominate this space, requiring the use of their technology.

• Benefits: They offer enriched first-party data, accurate campaign measurement, user privacy, and cross-device engagement.

• Drawbacks: Data can be limited, hard to interpret, not shareable across platforms, and may create over-dependence on one provider.

• Building One: Creating your own walled garden is costly and labour-intensive but provides greater control.

• Future: Walled gardens may need to open as the market demands more insights and flexibility.

Understanding the dynamics of walled gardens helps advertisers and publishers navigate the complex landscape of digital advertising, balancing the benefits of vast data with the limitations of closed ecosystems.