Today most businesses operate in a market where the majority of their customers can be found online, and as such, much of their advertising dollars follow suit. Here's why that's an issue.
While online advertising is taking up more and more of our total marketing spend nowadays, the majority of that spend is concentrated around three companies - Google, Facebook, and Amazon. While that might not seem like an issue in and of itself, these companies have created monopolies over the market and operate as closed ecosystems or "walled gardens", and the challenges that these walled gardens pose to businesses are increasing every day.
So, what is a walled garden?
A walled garden is an environment that controls the user's access to network-based content and services. In effect, the walled garden directs the user's navigation within particular areas to control their access to material/content.
Social media platforms like Facebook or Twitter are good examples of walled gardens. When web content shared on Facebook or Twitter includes a link, the application opens the webpage within the app itself, rather than opening an external web browser on the user's behalf. This is done largely so the user never has the opportunity to leave the app and is more likely to continue browsing after the article has been read. In turn, the longer a user remains on the social media app’s walled-garden platform, the more opportunities there are to place advertisements and other promoted content in front of them.
Traditionally, the strength of the walled gardens has been their large troves of user data. Web and phone users not only use apps like Facebook or Google daily to catch up with friends or check out the latest news but will also often use their Google or Facebook logins on other sites and services they visit. Most of what they do online and on their mobile devices is tracked and collected through these logins. This data is then packaged to marketers and businesses with the promise of easy access to prospective customers. So what's the issue exactly I can hear you saying, read on!
Why are walled gardens an issue?
The challenges that these closed ecosystems pose to businesses include a lack of transparency within their platforms, rising costs to advertise with them, and issues around how each platform operates—potentially causing brand safety and image issues.
Summarised, the walled gardens conversation is an ongoing issue of more and less. Businesses are spending more on these closed-ecosystem “walled garden” platforms, whose prices, in return, keep rising and rising. At the same time, these same companies are increasingly 'getting less' on these platforms, and as these companies spend more with the likes of Facebook or Google, they tend to become increasingly more reliant on them for their marketing activity and actually understand less about their customers in the process.
This is because marketing campaigns undertaken on walled gardens can’t be tied back to the company's customer relationship management (CRM) database. As your company is likely receiving an aggregate view of your marketing campaign's performance (rather than an individualized view) this leaves you with an incomplete view of your customers and how they have interacted with your brand across platforms.
The cookieless future
This issue is further compounded by the rise of the cookieless future, with organisations like Google announcing that they're phasing out third-party cookies and Apple announcing changes that make Identifiers for Advertisers (IDFAs) significantly less valuable than before. This makes reaching customers harder, and businesses are even more reliant on walled gardens to reach potential customers.
Getting less for more
And this brings us back to the issue at hand. As we mentioned above, as businesses spend more on these platforms, they understand less about their customers because walled garden campaigns and interactions can’t be tied back to their CRM database.
As a business, you need the advertising ecosystem to be efficient and want to spend your advertising money where it creates the most value and spend the rest of your money making your products better. When you lack transparency, marketing is less efficient, and that’s a net loss to the economy as a whole.
So, what can you do?
The issue with an over-reliance on walled gardens runs the risk of your business essentially putting all of your eggs in one basket. If you spend the bulk of your money with Google or Facebook and down the line they don't perform the way they have historically, or alternatively keep on raising their costs, your business could be in trouble. Instead, you should be aiming for a
balanced and healthy mix of platforms and activity, including those where you have access to first-party data (think eNewsletters and your website supported by a powerful CRM database).
You also want to invest in powerful big data analysis processes and systems so that you have access to operational, financial, and customer-centric trends and insights, allowing you to make more evidence-based decisions. If you'd like to talk to us further about this topic, or the work we do in big data analytics, feel free to get in touch!