As discussed in our 2023 biggest phenomenon in digital article, one of the results of the deprecation of third-party cookies and privacy regulation in a cookieless world is an increased desire by channels like Google, Meta, TikTok et al. to each operate in their own walled garden.
A walled garden was originally described by John Malone, the founder of Telecommunications, Inc. (which was acquired by AT&T in 1999) and was used for the first time during the 1970s. Bell System, a US company in the telecommunication industry, implemented hardware that exclusively catered to its own network users. Anybody using Bell System needed to lease the hardware (phones) from the company rather than own it. It has been a few decades since then, but walled gardens are everywhere.
In digital advertising, the term walled garden is simply a closed ecosystem where the publisher controls all the buying, serving, tracking, and reporting of the data. In other words, each channel’s goal is to keep users within their native platform for the entirety of the customer journey without sharing any data.
Alternate names, such as walled prison and walled desert, have been proposed by some as more reflective of the confinement and lack of diversity of the walled garden.
Although walled gardens raise many issues for marketers, we at (Un)Common Logic also expect them to provide opportunities for businesses who strategically plan and implement solutions for these challenges. Keep reading to see what we’re talking about.
The Issues of Companies Reverting to Their Own Walled Garden Ecosystem
Websites are Losing Traffic
Of course, one of the major byproducts of platforms retaining more of the user journey is that less and less traffic will flow through to the websites that businesses have carefully crafted over years. Each site has a brand voice featured through colors, images, font choice, and more. Most sites have run significant A/B and multivariant tests on landing pages, lead forms, and shopping carts to design their digital store fronts.
When users are no longer pushed directly to the site, brands lose control over that work and the brand awareness that goes along with it.
Audience Building is Losing Insights
With less site traffic, more closed loop systems, and an added increase in privacy regulations, each business also will struggle in truly understanding audience segments. This is especially true for visitors using multiple devices.
This has implications on advertising and media spend. Customarily, using combinations of third party and first party data made it easier to group and target users based on shared type of activities (e.g. viewed products, shopping cart abandoners, whitepaper downloads).
Less audience data for businesses results in more guesswork for marketers, possible duplication, and misaligned messages of advertising efforts across different channels.
Reporting is Increasingly Difficult
Traditionally, businesses rely on their site traffic to report what marketing efforts are contributing to sales. Typically, the one source of truth for most was Google Analytics. It was easy to discern which campaign led to a completed goal and which ones assisted completed goals.
But when channels continuously keep more traffic off the site, how will marketers know which of their efforts have resulted in conversions?
Relying on channel platform reporting in a walled garden world is a problem as well. Each channel wants to declare a conversion for themselves. This results in over-reporting and possible waste in digital ad spend.
The Opportunities of Walled Gardens
Offsite Engagement is Actually Good (When Done Right)
While websites are crafted carefully and A/B tested over time, bounce rates, especially for new users that are unfamiliar with the brand, are traditionally high due to friction. This occurs for several reasons:
By working toward optimizing offsite engagement, the brand will see much higher quality site traffic and conversion volume altogether.
An optimized offsite engagement is multifaceted and involves more than one marketing practice. Here are some examples:
Data Warehouse and CDP = One Source of Truth and Privacy-First Audiences
With the calls for heightened security on private information, ad tech like secure data warehouses become a critical part of every business requirement. Having a data warehouse in a world of walled gardens has benefits.
First, the data warehouse collects data from all sources and reconciles them internally so that data can be used as the source of truth for reporting purposes.
Secondly, some data warehouses can be utilized for more than that singular purpose. Customer Data Platforms (CDPs) pool from the rich data warehouse to create audience groups to target and model in marketing initiatives.
Measure Success by Incrementality of Digital Ad Spend
Relying on one source of truth like Google Analytics throughout the years was always problematic because it was using last click as the default attribution model.
This resulted in many cases in reduction of higher funnel activities and a severe lack of diversification of the media buying portfolio leading to advertisers to invest primarily in Google and Facebook.
While short term this seemingly helped generate higher returns, the growth potential was limited and due to rising costs in both Google and Facebook, in the long term businesses have been seeing their margins shrink.
The solution then is to test and measure the impact on the business. At (Un)Common Logic, we recommend smartly testing programmatic ad exchanges and other less known social networks like Reddit and Quora.
Ultimately, digital marketing has never stayed stagnant since inception and all businesses must look ahead and adapt. Channels trying to persevere by retaining the traffic throughout the user journey and the data that comes with it do have implications on the status quo; however, smart marketers can take advantage of walled gardens without losing a step.
Want to talk about how walled gardens might impact your business? Contact us to learn more about the (un)Common Logic approach to the cookieless world and how we’re helping our clients navigate it.
Want to learn more about how to prepare for the cookieless world? Read about Google’s enhanced conversions and how to upgrade to GA4 (if you haven’t already).
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