Behind walled gardens: How big tech is building up ad tech

Even as the digital domination of the Big Five in tech continues to upgrade our lives and the systems we live them in, the incalculable amounts of consumer data, information and insights these companies gain from our use of them are proving to be a treasure trove for businesses, brands, and those who advertise them.

And as their rewards continue to accumulate, the more protectively they’re being stored, within their proprietary closed systems (platforms) used by their consumers, euphemistically named ‘walled gardens.’

Indeed, Siddharth Devnani, Co-Founder & Director, SoCheers believes, “As the big tech giants expand and grow bigger, they not only remain ‘walled gardens’ but their walls keep getting even higher. And it is by design. They benefit from this setup as it allows for very less competition against them. They’ve already established a stronghold in several segments in the market and it is what they monetize over.”

Dr Meenakshi Aggarwal, Chief Operating Officer, 4AM Worldwide, agrees, asserting, “The more the GAFA or GAMA or MAMAA (Microsoft, Google/ Alphabet, Facebook/ Meta, Amazon, Apple)  or whatever is the latest acronym, companies expand, the greater the need to operate as walled gardens. Walled gardens help these tech giants create monopolistic structures where their clients are forced to use their marketing stacks for various advertising-related requirements.”

On a more technical note, clients use their DMP (Data Management Platform that helps in targeting based on their user data), DSP (Demand Side Platform to buy ads), and DCO (Dynamic creative optimization to personalize and control the transmission of ads) but only receive aggregate results of their campaigns.

“They do not have access to the raw data and hence are forced to rely on the output of these companies. While a company like Apple may not monetize its data to the extent that other tech giants do, it still operates as a walled garden due to its concerns for data privacy,” adds Aggarwal.

And it is to this potent mix from which all manner of data, information, and consumer preferences can be gleaned that is drawing in the brands as well as their advertisers.

Manna for Marketers

Mitesh Kothari, Co-Founder and CCO, White Rivers Media believes that marketers are spending more time and resources on closed-ecosystem “walled garden” platforms than they are non-walled ones.  He points out that walled gardens create an exclusive environment for advertisers by making themselves an irreplaceable part of a consumer’s life.

“Their sheer amount of data makes brands dependent on them to develop their marketing strategies. Now that Google is phasing out third-party cookies from Chrome, this dependence will increase even more. Meanwhile, retaining a user on social media rather than diverting elsewhere is Facebook’s most significant move toward expanding ad reach,” he says.

Aggarwal says that becoming a walled garden is a high investment in the long-term game. “If you are a publisher such as a newspaper or a magazine, you still have access to high-quality data and can operate as a walled garden. However, they will still need the support of MAMAA to optimize their ad space. Walled gardens need to be of a scale to be of interest to advertisers,” she observes, pointing out that even a company like Twitter has faced challenges with its walled garden.

This also, ironically, makes the services of these huge multi-billion (even trillion) dollar companies, not only important but also vital to both startups and the little guy.

As Umesh Shashidharan, Media Director Planning and Operations, FoxyMoron (Zoo Media), says, “The authority and the respect a Google or Meta demands due to their reach and scale have become as important as the Government for the start-up ecosystems. The startups have to be on the right side of these networks and ensure their listing or page doesn't get suspended as it can be a major hurdle for them.”

“The duration of their path to the top can be shortened or elongated on how they perform on these closed networks. The dependence on the algorithms of these platforms is so huge and the cost of revamping strategy basis any change that they make is a constant threat, especially for the start-ups,” he adds.

And all agree that with the phasing out of cookies and these market leaders expanding into even more segments, those walls are only going to be stacked up higher. And that’s not the only issue.

Build that wall?

Devnani observes that with so many functions falling under the big giants of the industry, it is quite difficult to not find yourself dependent on them for your day-to-day needs. 

“This over-dependency is one of the major drawbacks of such closed systems. It was seen when TikTok was banned in India. The people who were creating content on the app full-time, even as their primary source of revenue, were left shell-shocked when the app wasn’t available to them anymore. Some found their way to other similar platforms, but a lot of them didn’t, owing to their dependency on the one app,” he says.

Kothari adds that marketers expect a more comprehensive view of their ad performance. “Brands generally obtain an aggregated view of how their campaign performed instead of an individualized view that gives insights into the campaign’s performance, leaving brands with an incomplete picture of their consumers and how they interact with them across platforms. Overall, this makes it difficult for brands to strategize,” he notes.

Devnani believes another drawback would be censorship. “The ‘walled gardens’ have complete control over the content on the platforms they own, which applies to politics, sensitive cultural issues, and more. The content moderation policies, even though occasionally helpful, might be the reason that not every section of the entire world’s population gets a fair opportunity to speak out on these platforms,” he says.

And then, of course, is the biggest question of them all.

Shashidharan points out that all the major ad revenue is pocketed by these walled garden ecosystems as they control first that massive pool of data. This doesn't allow a level-playing field but at the advertiser end and publisher end as data is controlled by the leading platforms.

“So partnering with them becomes almost a necessity. Some walled gardens like Google and Facebook have the quality concept which gives some kind of level-playing field to all participants but platforms like Amazon have still to implement these so ad spending capacity becomes the major factor then,” concludes Shashidharan.