AdTech has manifested into a two-tiered ecosystem: independent publishers and “walled gardens.” The latter are the cool kids on the playground – you can play with them… just as long as you play by their rules.
Let’s start with some clarity: Facebook and Google are the poster children for the lot which includes Amazon, Snapchat, Yahoo, AOL, Microsoft, LinkedIn and Twitter… the walled gardens, AKA the “easy button.” PRINTADTECH notes that all require the use of their own systems, dashboards and metrics. With that, these walled gardens retain significantly more of each dollar into their respective ecosystems.
Compare them to independent publishers, and the indies’ data doesn’t measure up. The walled gardens are able to reach a much larger audiences with deeper targeting power. At our last Roundtable it was noted that Facebook and NewsCorp (an independent publisher) hold different apparent value in the marketplace, and that is reflected clearly in a recent Yahoo Finance post, “The two tech giants [Facebook and Google] accounted for 103% of the growth in the digital ad industry, while everyone else shrunk 3%.”
Big buts, though. If your company makes its money by selling online ads, or you are an ad agency… your warm-fuzzies have vaporized. For you, easy-button companies have a different name: Frenemy. Industry professionals including Sir Martin Sorrell, CEO of WPP, the world’s largest advertising agency, have argued that the industry must take action, and In a recent Huffington Post article, Mark Haviland, EVP at Rakuten Marketing Europe stated, “In order to combat walled gardens and earn the trust of advertisers, the digital world needs to be increasingly transparent.” Note the language here. “Combat.”
Put another way – AdTech as an industry cannot continue to allow the players to be the referees. DIGIDAY notes that Facebook and Google are restricting third party AdTech companies from operating on their networks, stating, “It raises questions about whether Facebook and Google’s AdTech products can be trusted to function objectively, or if they’re merely being used to funnel ad spend through their respective media networks.”
Forrester took a deeper look at the sacrifices made in customer intelligence when working with walled gardens, recognizing that the value coming back over the wall isn’t necessarily equal. Of the research, Media Post summarized, “The short-term benefits are the ability to leverage unique user identification for targeting the measurement. However, the strategic and operational downside of closed ecosystem is that they increase cost and prevent brands from reaching consumers across channels. They leave marketers with a dangerous blind spot, losing ownership of key data pertaining to their consumer over time and coming to depend on walled gardens for customer intelligence.”
Facebook admitted to its third measurement blunder, and advertisers are calling for more accountability. Procter & Gamble announced they would be cutting their investment in targeted Facebook advertising, and Sorrell notes on the Huffington Tech article, “it could even result in budgets being switched to focus more on traditional channels, such as TV.”
Substitution is not a remedy, however. If we are going to continue enjoying the fruits of the walled gardens – and they are juicy – a checks-and-balances initiative has to be implemented now.