Walled gardens - statistics & facts
Marketers worry that the disappearance of third-party cookies will make accurate targeting impossible. Yet, Google, whose ad revenue constitutes more than three-quarters of its total revenue, is pushing to complete the process, despite various headwinds. It can do that because its own targeting capabilities will not be affected. Google is a master of data collection. Anybody who has an Android phone, uses Gmail, YouTube, or even just googles things is tracked, and the data – anything from personal information over search terms, contacts, in-app ads you click, the content of your Google Drive and Google Calendar, to watch history and likes – is saved and can be used for targeting purposes. Companies that collect data like that are called walled gardens: Closed ecosystems where the publisher controls all advertising processes, safeguards user data, and does not share information with outside parties.
The second approach is called “hedged gardens.” It is a cooperation of two or more small publishers or other digital ad industry players that share first-party data they have all collected in a privacy-compliant manner. The more members in such a cooperation, the bigger and more complete the consumer data pool, which makes ad targeting more successful. An example of such a cooperation is a deal between Walmart and The Trade Desk, which lets brands run display campaigns using Walmart first-party data on platforms beyond Walmart’s digital properties.
Players exclusively from the U.S. and China
Among the walled gardens that existed in 2023, Google was by far the largest, commanding every four in 10 U.S. dollars spent on digital advertising worldwide. Facebook was the only other one that held a double-digit market share at around 18 percent, followed by Amazon with seven percent. The following four spots in the ranking are all players from China: TikTok, Baidu, JD.com, as well as Tencent, together accounting for nine percent of the total. Microsoft Search & News, Apple, and LinkedIn close the top 10. Digital properties that do not belong to a walled garden are considered part of the ‘open internet,’ which in 2023 accounted for roughly 22 percent of the global digital ad expenditure. This share is expected to shrink to 17 percent by 2027.Competitive advantage increasing
Walled gardens will be the primary beneficiaries of third-party cookie deprecation. Advertisers will have lost the ability to track consumers and will be forced to turn to Google, Facebook, and co. to regain the targeting possibilities. This will lead directly to the above-mentioned changes in market share and an even greater dependency of advertisers on digital ad market leaders. An even greater market dominance is unlikely to motivate the companies to treat their users and their data, as well as advertisers, with greater respect. Only in 2023, Meta was accused of engineering its platforms to addict children, and Google of showing billions of dollars ’ worth of video ads on websites of doubtful quality where they may never have been viewed.Solutions for small publishers
There are two ways small ad publishers can approach the problem of their impending irrelevance. The first ones are partnerships with the leaders. In fall 2023, X (formerly Twitter) announced a partnership with Google Ad Manager to boost its falling ad revenues. At roughly the same time, Snapchat made a deal with Amazon, whereas Pinterest signed agreements with both Google and Amazon.The second approach is called “hedged gardens.” It is a cooperation of two or more small publishers or other digital ad industry players that share first-party data they have all collected in a privacy-compliant manner. The more members in such a cooperation, the bigger and more complete the consumer data pool, which makes ad targeting more successful. An example of such a cooperation is a deal between Walmart and The Trade Desk, which lets brands run display campaigns using Walmart first-party data on platforms beyond Walmart’s digital properties.
