Moving Beyond Walled Gardens: The Shift in Digital Advertising 

It’s no secret that a small handful of platforms have historically controlled the lion's share of information when it comes to digital advertising. It has been an incongruous game of chess between tech giants and brands trying to scale. But, the winds may finally be changing.

In the ever-evolving landscape of e-commerce, brands are increasingly taking control of their advertising decisions by leveraging their own data and first-party measurement solutions, like Northbeam. According to recent reporting by Adweek, this shift marks a significant departure from the traditional reliance on the walled gardens operated by tech giants such as Meta and Google.

The Decline of Walled Gardens

Adweek's conversations with four digital advertising firms reveal a growing trend: clients are moving away from the walled gardens of major platforms and turning to first-party services. This move raises the question: Are walled gardens withering away? While it's premature to declare their demise, the advertising industry is certainly experiencing a transformation.

Historically, walled gardens—digital ecosystems where the platform controls the user data and ad inventory—were seen as gold mines for platforms, media outlets, and hardware companies. These entities leveraged their substantial user data to attract advertisers and drive revenue. However, the landscape is shifting.

Financial Milestones and Market Share

Despite forecasts predicting that ‘US walled garden programmatic digital display ad spending’ will surpass $100 billion this year, there are signs of a change. For the first time since tracking began in 2017, walled gardens lost market share in programmatic ad spending last year, and this decline is expected to continue. 

One significant factor contributing to this shift is the rise of retail media networks (RMNs). RMNs allow advertisers to spread their messages across various digital storefronts, reaching a broader audience. This flexibility and reach are increasingly appealing to brands, making the restricted nature of walled gardens less attractive.

Retail media's success underscores a growing distaste for the limitations imposed by walled gardens. Advertisers seek more open-ended approaches, driven by distrust of major ad platforms and a desire for greater control and transparency.

The Cost Factor

The financial aspect is also a crucial consideration. The cost of running ads on major platforms like Google and Meta has surged, prompting budget-conscious brands to reassess their strategies. These rising costs, coupled with various controversies that have plagued these platforms, are driving brands to explore alternatives.

Trust Issues

Over the past year, both Google and Meta have faced numerous challenges, including scandals that have cast doubt over their quality control, brand safety, and return on investment. These issues have further eroded trust in the ad duopoly, pushing brands to seek more reliable and transparent solutions.

For instance, Meta’s Advantage+, an AI-powered tracking solution designed to mitigate signal loss caused by Apple’s AppTrackingTransparency change, has faced criticism. Accusations of inflated metrics and budget-draining practices have not helped Meta's cause, contributing to the growing disillusionment with walled gardens.

As the advertising industry evolves, a more open-ended approach is gaining traction. Brands are increasingly relying on their own data and first-party measurement solutions, reducing their dependence on these major platforms. This shift signifies a move towards greater autonomy and control over advertising strategies.

Embracing First-Party Solutions & Diversification

While walled gardens are hardly disappearing entirely, one of the key trends in shifting away from them is the adoption of first-party measurement solutions. Northbeam, for example, is platform agnostic and provides brands with more accurate and transparent metrics, helping them make more informed, more nuanced decisions, daily. By relying on first-party data, brands can avoid the potential biases and limitations associated with walled gardens and create more personalized and targeted advertising campaigns, enhancing their effectiveness and ROI. Brands such as HexClad and Kizik have been able to leverage Northbeam in this precise way. Achieving significant growth that would not have been possible through the gated and biased channels of in platform metrics only. 

Diversification is another strategy brands are adopting. Rather than relying solely on major platforms, brands are exploring a variety of advertising channels. This includes social media platforms, influencer marketing, programmatic advertising, and retail media networks. Through this method, a broader audience can be reached and any previous reliance on one single platform to drive conversions can be spread across multiple audience pools.

Emphasizing Transparency and Trust

Transparency and trust are becoming increasingly important in the advertising industry. Brands are seeking partners and platforms that prioritize these values, providing clear and honest metrics. This emphasis on transparency helps build stronger relationships between brands and their customers, fostering loyalty and trust.

Conclusion

The advertising industry, and e-commerce in general, are at a crossroads with a decision needing to be made. While walled gardens have long been the dominant force, a shift is clearly underway. With the advent of solutions like Northbeam’s MTA tool and MMM+ offering, brands are taking control of their advertising strategies, leveraging their own data and first-party solutions to make more informed decisions. The rise of retail media networks, increasing costs of major platforms, and distrust of gatekept data are all contributing to this transformation and transition.

As the industry continues to evolve, transparency, control, and cost-effectiveness will remain key priorities for brands. While walled gardens may not disappear entirely, their share of ad spending is likely to diminish. The future of advertising lies in a more open-ended approach, where brands have greater autonomy and flexibility to reach their target audiences effectively.

In this new landscape, the ability to adapt and innovate will be crucial. Brands that embrace these changes and prioritize transparency and trust will be well-positioned to succeed in the ever-evolving world of digital advertising.

Set up a demo with Northbeam today to see how you can evolve past in-platform metrics, and stop leaving money on the table.