Ever since the first display ad was served in 1994, digital advertising’s walled gardens have risen and fallen in response to the disruptive nature of their surrounding ecosytems. While these walls are currently higher than ever, history indicates that we are simply experiencing the natural ebb and flow of how digital data is controlled.
Put more simply, while marketers may fear that they are ceding control of their data and impressions to fewer parties at the moment, they have nothing to fear in the long run. Technology and innovation are poised to once again dismantle the walls around online media, especially as the Internet of Things (IoT) makes way for the next cycle of opportunity.
The idea of a walled garden began because supply sources and audience data were severely limited. Advertisers bought media directly from content providers, and the supply side effectively had a bargaining advantage given the limited availability.
However, the age of programmatic fundamentally changed the way advertising was bought, sold and executed. Suddenly, the data and control began shifting more toward the demand side and the established walled gardens began to crumble.
Today, though, there has been a resurgence of walled gardens, built on an even stronger foundation of data and control, driven largely by the popularity and inherently closed nature of mobile. Facebook, Google, Apple, Amazon, Snapchat and other media juggernauts have a more focused approach to how they store, process and monetize their increasingly vast data sets.
To them, media is data. In other words, as soon as content appears, it immediately returns usable data in the form of a mouse position, the path to and from content, or the various interactions users make. Interpreted appropriately, all of this data is ascribed great value to each of the providers.
In recent years, brand advertisers have gone to great lengths to develop their own first-party data sets too, allowing them to better understand their audience and buy more effectively across publishers, channels and devices. Interestingly, within these walled gardens, the playing field has become more level as buyers, both big and small, utilize the same datasets provided by the supply side to reach their target audiences.
For publishers, walled gardens also provide owned distribution channels, as users are more likely to read or engage with the content within their natural boundaries. And, with social sharing and other proprietary features baked in, content can potentially reach much wider audiences. However, this increased reach also has its downside.
Like advertisers, other publishers are concerned with the power that these core platforms hold over their data.
For the immediate future, walled gardens will likely grow higher as media platforms vertically integrate their tech stacks and mobile app usage continues to rise. However, at the same time, we are slowly realizing the next inevitable market disruption: The Internet of Things (IoT).
Unlike the swift disruption we saw with the advent of programmatic, the IoT is evolving at a more measured pace as new internet-connected technologies hit the market, giving advertisers new and ever more tailored ways to interact with their consumers.
Billboards now have the capability to deliver custom messages based off facial reactions. Refrigerators can monitor and suggest new grocery products, and sensor-equipped cars can contact a claims representative after an accident. The possibilities for brand marketers are virtually endless.
As these devices proliferate into the mainstream, led in part by the increased ubiquity of internet/WiFi connectivity, the walled gardens of today will be forced to live in "coopetition" with new and exciting forms of digital advertising like IoT.
Big Data and programmatic technology will take on a new role as advertisers will truly be able reach their audiences in real-time—in many more places. Data sources will again proliferate and a few players will not hold all of the cards but will be fending off, once again, a multitude of new entrants.
Bargaining power will again shift toward those with the best data, the fastest technology, and the most creative executions,-- three capabilities that will, in turn, prevail in this brave new world. Doesn’t that sound familiar?