It’s no wonder that Facebook and Google have created powerhouse walled gardens. They offer brand-safe, advanced targeting opportunities at scale, with an easy-to-use platform and standard metrics. Much of the rest of digital advertising can’t compete, with a tangle of processes to manage, fraud, non-viewable ads and a complex web of data that is often just a proxy for valuable behavior. Advertisers are voting with their media spend. In Q1, 85 cents of every new dollar spent on digital media went to Google and Facebook.
While advertisers flock to Google and Facebook because of the value they provide to brands, these companies don’t necessarily meet all of their needs. That is because neither Google nor Facebook have actual transaction or purchase data that creates the ideal precision targeting and “closed-loop” environment that marketers crave. This opens the door for new walled gardens to emerge in several key categories, from retail to TV to mobile and location based advertising.
Retailers have shopper data that is more meaningful to advertisers than Facebook’s demographic and behavioral data, and more transaction and sales-oriented data than even Google search. That’s allowed several savvy retailers to provide advertisers with walled gardens that offer an ideal targeting opportunity through digital advertising platforms that enable their partner brands to select target audiences based on the retailer’s shopper data and advertise on that retailer’s own site and/or across the web. .Amazon Ad Network is now reportedly raking in billions of dollars annually on their digital advertising program for brand partners.
Similarly, Walmart has its own digital advertising platform called WMX, which the retailer claims is so appealing to their partner brands that the program is really a gateway for Walmart to capture national brand dollars, not just a place for co-op budgets. Many brands reserve only a portion of their entire budget, often called co-op or cobrand budget to advertise through retailer channels, such as in a weekly circular or on retailers’ websites. Offerings like the Amazon Ad Network offer such accurate targeting and generate such good results, that brands are allocating advertising dollars from other buckets to take advantage including their national branding budget.
While Amazon and Walmart fight with the digital giants for budget, most retailers haven’t figured it out yet, and so there is a lot of room for growth. If more retailers could offer a platform to capture national budgets and meet the needs of the long tail of advertisers with a package of data, reach, technology, and service like one of the current walled gardens, then brands selling their products through retailers would have a great option to the other walled gardens.
Another category that could give rise to a new walled garden powerhouse is TV. Recent reports show that Netflix accounted for half of the 6% decline in cable viewership last year. While Netflix doesn’t sell conventional advertising, it does a hefty business in product placement. With a few moves, such as by enabling “click to buy” software for products placed in their shows, Netflix could get into the commerce game, creating a premium TV offering that would give them a unique differentiator to Facebook’s and Google’s video ad products.
The big cable companies are also fighting for a place in the walled garden hall of fame. Companies like Comcast and Verizon are not only buying up digital data companies, they’re aggregating set-top box data, smart TV data and information from digital video to create a cross-channel targeting product that has the scale of walled gardens today, along with new and innovative audience segmentation. Advertisers that once complained about lack of granular targeting afforded by GRP [Gross Rating Point, a measure of TV viewership] level demographic targeting on TV could soon target specific individuals within a household on both TV and mobile simultaneously. Retailers could use more accurate location data and targeting to ensure that viewers see a commercial for the nearest store, or show a co-branded ad for a brand that they know the viewer is currently in-market for or purchases regularly.
The rapid increase in mobile use worldwide is also creating space for new data-driven walled gardens to emerge. In China, WeChat has 700 million monthly users, mainly on mobile, and they interact daily with businesses using chatbots, even paying for goods through the platform. Whoever figures out how to get consumers in the U.S. to adopt mobile payments and offers a retail-driven data targeting opportunity could take serious market share.
Mobile is growing so fast, that new players could capture market share and create walled gardens we haven’t even though of yet. Pokemon Go’s wild success that came seemingly out of nowhere highlights just how quickly and easily a company can capture the attention of millions of people as they use their phones to interact with a brand. Pokemon is already indicating that it will be offering advertising opportunities, and local retailers are already purchasing the ability to lure players into their stores.
Imagine a screen-enhanced loyalty shopper platform like Pokemon Go, which finds its way into consumers’ everyday lives. For example, a retailer or even a network of retailers could combine loyalty data with virtual reality technology to create an augmented reality app with deals “hidden” in their stores. Once the player finds the deal, they could see something on their screen similar to finding a Pokemon character.
Additionally, location-targeting will increase significantly in the coming years as technologies like beacons and geo-fencing improve and get connected to other forms of advertising. We are not far from having digital advertising platforms that offer the chance to target audiences at the U.S. Open or the Mall of America, which advertisers could bid for on a programmatic exchange in real time or even as a group to be targeted when the consumers are no longer at those locations. A brand like Nike could show mobile ads to everyone attending a soccer game at the same time, and then follow up later with targeted coupons. The Gap could text a personalized offer to everyone as they enter a mall, and then advertise to them later on their computers.
Malls and department stores are already experimenting with beacon technology and QR codes to enable early versions of location-targeted advertising. Companies such as Unacast are attempting aggregate all of these targeting opportunities into a single platform, helping brands achieve scale with location data.
The winners of tomorrow don’t have an easy road in front of them, but with the media and technology markets changing so quickly, the platforms that can best combine valuable data, scale, quality and usability could also gain traction.
12 Digit Marketing operates a digital advertising marketplace that leverages shopper data from large retailers.