Advertising has been changing and evolving over the years, although it is still essential to any successful business strategy.
With the rise of digital media and technology becoming such a big part of our lives, brands have never been able to target audiences more precisely than they can target them today.
However, the online advertising landscape is not looking flat these days, as it’s highly influenced by large tech companies that are growing their “walled gardens” and transforming the whole industry. These tech giants control vast amounts of user data and provide advertisers unparalleled access to target audiences – but this comes with a cost.
In this blog post, we’ll explore the concept of walled gardens in advertising, their impact on the advertising industry, and their potential benefits and risks.
For ages, a walled garden was just what it sounds like – a garden enclosed by high walls, which was usually done for security purposes or to shelter plants from external factors, like wind or frost.
On the internet, the purpose of a walled garden is very similar, just focused on a different area.
An internet walled garden is defined as a closed ecosystem created by a large company that is operated without the involvement of outside people and organizations. In advertising, it’s an ecosystem where publishers own the entire advertising process.
Typically, in these closed ecosystems, users stay within the platform to perform various digital activities like interacting with other users, consuming content, shopping, and similar, creating a pool of data that the walled garden companies can use to target ads.
So the term “walled garden” refers to the fact that these ecosystems are closed from the wider internet (also called open internet), with limited access to data and functionality outside the created platform.
From the definition, you can probably guess what “large tech companies” we refer to when discussing advertising walled gardens.
The best examples are brands like Alphabet (the parent company of Google), Meta, Amazon, Linkedin, Pinterest, Snapchat, TikTok, and Spotify. In fact, the total global digital advertising revenue of these companies was estimated at 77% in 2022 (vs. 23% of the open internet) and is projected to grow even further, accounting for 82% in 2026.
If you took a closer look at all these companies, you might notice that they share some common aspects that make them so-called walled gardens, for example:
But this also doesn’t mean that only large tech companies can fall under the definition of walled gardens. Essentially, a walled garden can be called any platform that “locks an advertiser” inside its ecosystem, leaving them no other choice but to use only internal functionalities.
We can still call such a platform a walled garden, as the ad technology provider has significant control over the platforms, processes, data, etc.
The idea to build walled gardens didn’t just come out of nowhere or some companies’ desire to prevent their clients from using competitor services (well, who knows, really).
Essentially, walled gardens were born because of challenges leveraging user data.
With the walls up and elimination of third-party data, it has become easier for tech giants to ensure compliance with GDPR and similar regulations. As a result, some of the tech giants now take advantage of this strategy which, in many cases, made them the only option for their clients.
Like all things in life (and advertising), walled gardens have their advantages and disadvantages, so let’s quickly go through some of them to get a better overall image of this controlled advertising ecosystem.
Even though the benefits above sound pretty good, there are some disadvantages that anyone needs to know before choosing walled gardens as one of their advertising options (or even the only one).
The choice of the advertising platform and, in this case, the overall ecosystem highly depends on your advertising goals. For some brands, advertising within, for instance, Meta’s boundaries might be enough, while others might find it challenging to tap into their target audience.
Let’s take reach, for example. Since you can only reach users within walled gardens, it can make it harder to achieve your goals, such as increasing brand awareness or generating leads.
Similarly, a lack of transparency in reporting can make it challenging to optimize your campaigns, measure success, and make the right decisions in the future.
Another important thing is a narrow variety of ad formats that may or may not align with your advertising goals. This can not only limit the creativity of advertisers but also lower engagement rates and the chances of grabbing ideal customers’ attention.
Overall, mentioned limitations can make a negative impact on the effectiveness of your advertising strategy, but it’s also something that you can think through in advance and make sure everything fits your needs before investing in the platform.
Therefore, it’s essential to consider alternative platforms and channels that can at least be used in conjunction and help diversify your advertising efforts.
Now that we’ve covered the nature of walled gardens, it’s time to see what’s on the other side of the boxing ring.
The easiest way to describe open internet is to say that those are all remaining companies and platforms outside walled gardens. It’s a more decentralized and democratic ecosystem where everyone can access and publish content without facing such a challenging environment.
Some examples of independent players in advertising are DSPs, SSPs, data management platforms, ad networks and ad exchanges, and similar that allow wider access to multiple channels, more creative opportunities, or better support.
"Publishers and advertisers, although enjoying the quality of products delivered by the walled garden companies, are increasingly looking for alternatives. One of the reasons for this is a technical strategy and dependency reduction; another and very important one – often, smaller companies outside walled gardens are much better at servicing," said Vytautas Paukštys, CEO at Eskimi.
Let’s put walled gardens vs. open web side-by-side to better understand the difference.
Regardless of the platform you choose for advertising, the key is to always keep an eye on emerging trends and tools that let you stay ahead of the curve and create more effective advertising campaigns.
Although posing several challenges, walled gardens can offer significant advantages for advertisers that can find the right balance between leveraging their strengths and mitigating their limitations.
For others, diving into the waters of the open internet can be just the right decision for achieving their goals.