Robert Webster, Founder, Canton Marketing Solutions and Wayne Blodwell, Founder & CEO at The Programmatic Advisory. In a special series of deep-dive articles, the two defend their positions on walled gardens. Following Rob’s opening salvo and Wayne’s response, Rob builds on his argument against walled gardens.
Walled gardens are a better way for publishers to monetise content
Sometimes to succeed you need to adopt the tools of the enemy. And the giants of GAFA truly are the enemy of publishers, hoovering up around 80percent of digital ad spend that would otherwise largely be going to our content creators. To compete and monetise their content publishers must learn from what these giants have done well, where their average earnings per customer are over ten times that of traditional publishers on the web.
Publishers must protect their audience’s data from leaking (and protect consumers at the same time. They must ensure that poor quality publishers can’t piggyback off their audiences and cannibalise their ad spend. They must come together to make a stand for alternative options for advertisers to GAFA. Publishers have been let down by the open ecosystem and must look to a better future in the privacy first era. A future with walls to guard their (huge) value.
This really is the kicker. Quality media and data need to be protected from cheap knock offs in order to get a fair price. Many publishers were lured into going all in on the open ecosystem, particularly those that came from a traditional print background. They have seen their audiences cannibalised and funds they need to survive lead to lower quality long tail sites.
In this new era we should ask ourselves, why would our premium publisher engage in such an open ecosystem? It would be like Gucci selling their handbags in the flea market next to all the knock offs or De Beers selling diamonds in back alleys. Worse, by engaging in the open market, publishers have had their data stolen by bad actors using programmatic architecture to identify their audience. It is this dynamic that has helped see our vital publishers become so underfunded.
Facebook 10 years ago knew it had a valuable audience and incredibly valuable data. It took one look at the open market and decided it would not allow its audience data to be cannibalised. After dabbling with retargeting and FBX it has not looked back. What is good for Facebook is good for any quality publisher with the scale to launch a walled garden. Connected TV is the advertising opportunity of a generation and, just as with Facebook a decade ago, it is going private for quality media purchases.
To thrive publishers must put aside old rivalries and come together in new walled gardens that best represent their media benefit. For many, this will be a focus on brand environments with walled gardens that have tools to showcase the reach and frequency (more on this later) of their offerings in premium environments. Facebook pioneered better formats than the open ecosystem and again these new walled gardens can learn from what has gone before to create a series of formats that allows these audience creators to thrive.
There is a huge opportunity for publishers to offer creative formats that are rich in content and drive attention away from the one size fits all restrictions of the open ecosystem. For local news, an area long in decline, the trick is easy to access local advertising gardens that can assist local businesses. No small business will engage with RTB programmatic today but they do with Google and Facebook and could with a new walled garden comprising a network of local news and local websites.
In the privacy-first era logged in data becomes ever more crucial. For those publishers lucky enough to have logged in users at scale they will not allow that data to leak via an open ecosystem – (as Facebook showed a decade ago). Thus for the authenticated web where users are logged in, expect walled gardens new and old to dominate completely.
For the rest of the web, for all the reasons mentioned, we expect walled gardens to take ever more market share. The fate of the open RTB ecosystem may lie in the new identity IDs and graphs and the fate of the IABs TCF (The Consent Framework). Even if these new IDs proliferate and the TCF remains both accepted by the regulator and public alike expect walled gardens to rapidly take market share. Should either the TCF or the new IDs fall foul of the regulator, expect the victory of the walled garden model to rapidly go from a position of dominance to complete hegemony.
App marketing is already dominated by walled gardens. Connected TV is going the same way, particularly at the quality end. I only hope our quality journalistic funding publishers go the same way before it is too late.
Walled gardens are better for the service layer
The service layer exists to service the needs of advertisers or publishers and should not be considered an end goal in and of itself.
Having said that. I have built a career (and a company) servicing the needs of the open RTB ecosystem in the programmatic era. I can now tell you that by continually looking to the future and updating our skills, myself and my company are even more confident of success in the privacy-first era.
We will likely see a renaissance in the art of planning and the need for good insight into campaign performance and 1P customer behaviour. Agencies can take ownership of this again if they are willing to accept that their programmatic teams will lose the RTB commissions.
Unlike what advertisers may be led to believe, programmatic traders are not sitting at the controls of RTB platforms making real-time decisions like a stocks and shares trader on the FTSE. Instead the service layer can pioneer a new era that combines best in class planning with the optimisation and use of data and algorithms of the trader all wrapped up in AI. There are a lot of buzzwords there and they will all have their part but as a rule of thumb they are there to service the strategic planning not replace it.
There is still a requirement to provide auditing/3P measurement of a walled garden and its counting methodology to ensure that they are not marking their own homework or building customer segments with little to no validation. Trust will be a key element here – audience targeting verification, standards of measurement, audits from Verification, Viewability and Fraud tech, also ad-servers – as will strategic partnerships.
For progress to occur there often needs to be disruption – and that is certainly the case here. Yet like the forest fire that creates the space for the next generation of forest trees this sense of renewal is very healthy. Helping advertisers succeed in the privacy-first era is a great way for new service companies to disrupt the giants of old. The crucible of competition between the new and the old will also invigorate the existing giants to offer better services. In the long run this makes for a better world for advertisers, publishers, ad tech and the service layer alike. Given that the focus of all of this change is around privacy, I for one as a founder of a new breed service company would be delighted if we could succeed and also help usher in trust between the consumer and the marketing industry.
Walled gardens are more consumer and privacy friendly
The central argument here is that the walled garden creates the data policy under which it operates and consumers choose whether or not to engage in that environment. The vast majority of walled gardens are designed to avoid a user’s valuable data leaking outside of that walled garden. Famously Facebook made a mistake with the Cambridge Analytics scandal by allowing apps to harvest data on the Facebook platform. This was a shocking break but one that has been rectified. Compare that with how today the open RTB world continues to broadcast hundreds of millions of people’s data every day to thousands of adtech companies of which the consumer has no practical awareness.
Indeed, open RTB was designed for the bid request and targeting of user data. As Brian O’Kelly, founder of AppNexus and one of the industry’s luminaries said “RTB without targeting (of individuals), why bother”?.
New IDs, led by the Unified ID (not required in walled gardens logged in environments) will be required for any targeting to work once the cookie is put out to pasture at the start of next year. Yet these IDs again open up concerns for privacy, how many users will truly opt in to these new schemes?
This leads us on to consent. Simply put, the logged in environments of the walled gardens are a far better way for consent to be asked for, stored and handled than the TCF 2.0 where IDs are still broadcast to thousands of companies and most consumers have no knowledge of how to handle their data and consent. Far less effective than having consent be handled by the walled gardens on a login – after all the walled garden is a company known to the consumer and they have the clear choice as to whether they wish to engage or not.
It should be crystal clear to all that the logged in environment, safe guarded by a walled garden with appropriate controls is the best way to handle a user’s data and consent.
Walled gardens create a more sustainable internet
This goes back to the argument on publishers. Our valuable publishers have been let down by the open ecosystem with their fair share of budgets leaking to the long tail publishers and (as the PWC study shows) different actors in the RTB ecosystem (only 51pc of fees went to the intended publisher). Quality publishers need higher walls to be able to effectively monetise their products.
A sustainable data economy is only possible with strong consent. As we have discussed in the section above, this again argues for an authenticated environment protected by effective walls. So on this point again the walled garden wins through for the sustainable web.
What about smaller publishers, those that cannot generate logged in audiences? Well, here neither the open RTB structure nor any existing walled garden has much to offer these in the privacy-first era. With retargeting and personal data buying becoming much harder to do (for good privacy reasons) long tail publishers will be robbed of the most lucrative revenues they received in the programmatic era. Some of this is a good thing as we want revenues to flow to our valuable content creators. Yet some deserving publishers too will undoubtedly struggle.
Here, the solution is a new breed of collaboration and walled garden based around local advertising and servicing the SME market particularly. The local press, local websites and niche sites must come together in a new advertising ecosystem that can reward the value that they bring to the table. This is an opportunity crying out for an existing SSP (or SSPs), disrupted by the current market changes to pivot towards and drive not only their success but a more sustainable future.
The last area here concerns innovation. One thing the open RTB ecosystem has done well is allow for new forms of advertising to come online and find monetisation quickly. The early stage of connected TV relied on existing open RTB plumbing and the same is true for in-game advertising, digital out of home (in some cases), native and other new areas. It is this role to which the many companies that have built strong RTB tech and plumbing must direct themselves. Open RTB may not be the way most media is bought but it is a protocol that can lay the groundwork for the new marketing ecosystem of the future.
Conclusion
A romantic at heart would love to see the open RTB world become the dominant way all advertising is done in the future. This simply is not going to be the case. Advertising needs more controls not less and more protections for the consumers, for advertisers, for publishers alike. These controls and protections necessitate the raising of walls for a brighter advertising future.
The programmatic era that started over 10 years ago has seen huge innovation in advertising. As the ad network led to the programmatic era so many of today’s programmatic companies can thrive in the new privacy-first era of walled gardens – such is the direction of progress. Already we are seeing DSPs increasingly looking to direct supply and SSPs creating a more privacy secure ecosystem for publishers – this trend is going to increase and quickly.
Vertical ecosystems, you could even call them modern ad networks, will proliferate (some already are). Local advertising gardens are one of the biggest opportunities around. There is still great opportunity for parts of the ad tech ecosystem to still thrive within a walled garden ecosystem, among other things – in customer analysis and segmentation, connecting the pipes, measurement, data analysis and predictive modelling approaches to customer behaviour and marketing performance.
I am proud to have been an active player in the programmatic era and for myself and the team at Canton we know the skills learnt in this era working across all channels leaves us perfectly positioned to help brands in this privacy-first era. As it is for us, so it is for all experts with an appetite to learn and embrace the future. C
hange is always hard but rather than holding on to a methodology that has had its day we must all embrace the future. Those that do will not regret it.
