Interviews, insight & analysis on digital media & marketing

The NDA Debate: Wayne Blodwell – Why walled gardens are not the answer for the digital advertising industry

Robert Webster, Founder, Canton Marketing Solutions and Wayne Blodwell, Founder & CEO at The Programmatic Advisory, are two of the most knowledgable people in the digital marketing industry. Both have firm, informed, views on industry development. While normally aligned in outlook, the two have very different views on the benefits or otherwise of walled gardens. In a special series of deep-dive articles, the two defend their positions.

Today, Wayne responds to Rob’s opening argument.

Introduction

I have never, and will never, endorse walled gardens (companies that wall off access to supply and data behind their owned self-serve tech, or owned manage service). Maybe it’s naïve of me to think that optimal buying & selling should be one of the industry’s north stars and technical solutions should work towards facilitating that, but very simply, a walled garden approach is sub-optimal for buyers and publishers, as maximum demand (defined by all demand the seller wants) can never reach maximum supply (defined by all supply the buyer wants).

Maybe I’m also naïve in that I want a competitive industry which has as many value-adding companies thriving as possible, so that innovation is the winner not scale. In a world of walled gardens the only winners are those with scale, and that becomes self-perpetuating, as they make more and more money, continue to scale their solutions, can reduce cost to access reach/campaign performance in the short-term, so the rest of the market can’t compete, and then can control price and product.

I also want technology to be technology. I want it decoupled, allowing for democratized access to inventory and privacy-compliant data. Your buying platform is your media plan. I want media companies plugging into non-conflicted technologies so that they can monetise ad inventory effectively. I want innovative companies to be able to build on top of other technologies (such as machine learning optimization, new targeting techniques, creative innovation etc.).

I want privacy at the heart of it. We are relatively nascent as an industry compared to others; we need time to build solutions and for protocols to evolve. Let’s not throw shade on the past, let’s look at the light in the future, and for that future not to be short-term moves, but 5-10 years at a time.

Finally, whilst walled gardens offer simple and short-term solutions to existing industry challenges, industry participants need to think bigger and be supported for doing so, else we’ll fall into the mercy of a handful of companies, and as recent times have indicated, that is terrible for society and economies.

Walled gardens provide better returns for advertisers

Optimal media buying would have unlimited access to inventory and data, you know, right user at the right time with the right message at the right price, at any time.

Walled gardens are more like ‘probably the right user, probably the right time, probably the right message, at the price the walled garden decides, some of the time’. Further to this, third party tools have restricted access, so in lots of cases buyers must take the word of the walled garden for campaign planning & effectiveness, which is fraught with challenges & inaccuracies.

I will say that this can be managed by some smart planning as information access has increased, but it’s simply nowhere near as effective (like 50% as good) as an internet wide, technology, data and media connected system, for buying and selling ads.

I am also yet to meet a top 100 advertiser who has an ambition of spending more with walled gardens, they’re desperately trying to find alternatives and choice. When large advertisers boycotted Facebook last year, nothing really happened to Facebook as they monetise the long-tail so well, but these same large advertisers could drive significant change in programmatic if they commit to it and lean in to the industry initiatives

Walled gardens are safer places for brands to invest

Walled gardens, especially those that are news or UGC led have repeatedly shown to be lenient with their categorization of content, so that they can monetise ads. They have also been resistant to varying levels of third-party brand safety integration, and generally talk negatively of how brand safety tools are implemented.

I’ve always taken the view that the advertiser should be in control of where their ads are served not the company selling them the media. (side note – advertisers *need* to be more proactive in taking control of this)

Walled gardens are a better way for publishers to monetise

Publishers want as much access to demand (that they can control – i.e many don’t want “belly fat” ads on their sites/apps) that competes against one another. A no brainer. A walled garden doesn’t do this. As a publisher creating a walled garden you become restricted to demand you can generate yourself or that is endemic, as opposed to leveraging wider industry connections (such as prebid) to plug demand into. It’s very hard for you to monetize as effectively as having open connections, unless you have significant scale in a vertical/channel.

Previous theory suggested that programmatic devalued publisher inventory, but maybe the inventory was over-priced in the first place? Letting the market decide is the best way to establish an equilibrium where everyone can win.

It’s been interesting to see the approach to connected TV & digital audio advertising across the world in recent years. In markets where there’s content fragmentation or where the company has an ‘open’ mentality, they start with trying to integrate with adopted buying platforms. In less fragmented markets where companies are already dominant in another medium, we have seen them take a walled garden approach forcing them on to managed or own solutions. Horses for courses, but as you can tell by now, I’m hopeful walled gardens now will integrate into new and existing technologies in future, making buying and selling better for all.

Publishers/broadcasters/app developers also don’t need to go all in on open or walled, they can run both if they so wish, but let’s call walled gardens by what they really are, anti-competitive. Locking out value-adding third parties so they can upsell their own solutions, remove auditing rights, and to lock buyers into the use of their own systems to buy an ad impression. It’s a make money at all costs and care about it later attitude.

See NDA tomorrow for Rob’s response.

Analysis

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