Doing Business In The Shadows Cast By Walled Gardens

walledgardenAttribution companies Adometry and Convertro are frequently linked because they were acquired in quick succession (by Google and AOL, respectively).

And the functionality they provide is increasingly important, as marketers want to justify their digital ad spend across channels and devices.

Buyers are wary when attribution technologies – which should be agnostic – are integrated into marketing stacks owned by huge advertising companies. Needless to say, Adometry and Convertro have been absorbed into very different environments.

Google makes no bones about the fact that it is a walled garden, even if it doesn’t use that exact terminology. But its actions speak loudly: It has restricted access for DMPs and outside pixels across its network.

“(Google) will be as open with their data as possible if you use their own services,” said Michael Kaushansky, EVP and chief data officer at Havas. In other words, Google’s policies incentivize (or force) advertisers to use solutions owned by Google.

Google is “a beautiful cage,” according to Andrew Bloom, Sizmek’s global head of business development, despite having the only “pure set” of cross-device data on the market.

AOL, by contrast, actively pushes messaging about the openness of its tech stack and focuses on integrating with other vendors in the advertising ecosystem. For instance, it allows third-party integrations regardless of whether an advertiser is going through a company like AppNexus or Sizmek, or has its own DMP.

These environments impact attribution systems because the stakes are really high. “If an Adometry tells an advertiser that AOL isn’t performing well, [AOL] can lose millions of dollars,” Kaushansky said.

Manu Mathew, CEO of independent attribution company Visual IQ, urges clients to partner with a data onboarder like LiveRamp or Experian Marketing Services to get an “unbiased” supply of user data. But it’s an added burden and cost for marketers, which Google can (deliberately or not) force Adometry’s competitors to overcome.

But despite the potential for serious malfeasance, Kaushansky called that kind of gamesmanship “paranoia, not a reality.” However, he said he has trouble imagining a platform like AOL leaving itself “exposed to that kind of risk” while Google is safe behind its walls. Other agency media buyers have cited restrictions in Google’s visibility on some AOL sites, so it may be neither platform likes the idea very much.

Even if marketers and competitors trust Adometry or Convertro not to skew results, he emphasized that it’s still a competitive landscape, and that for Google to tear down its walls would run contrary to its interests protecting consumer privacy and its own self-preservation.

Walled Gardens Forever?

Notably, when ad tech companies achieve massive scale, they tend to batten down the hatches.

Kaushansky pointed out that as Amazon grew into a powerhouse marketing platform, it experimented with more restrictive ad and data policies.

Will this happen with AOL, which was acquired by Verizon and entered a strategic partnership with Microsoft?

Amy Mitchell, the head of Convertro at AOL, told AdExchanger those developments are “not just about closing the gap or replicating what's out in the market already, they were about changing the conversation of what open platforms are able to do.”

It’s probably premature to look at AOL as the next Google/Facebook-sized network. Sean Black, SapientNitro’s North American media services lead, noted that despite AOL’s large tech stack, its acquisition by Verizon and its Microsoft display deal, it still “isn’t a blip” on Google’s radar.

Facebook, however, is definitely on Google’s radar. And though the ad industry widely accepts that Facebook is also a walled garden, the social media giant still tries to squirm away from that designation. It debates the semantics around what it means to be open vs. closed, maneuvering the conversation to focus on how it provides business results.

Of course, a big reason why Facebook and other companies with large amounts of user data get restrictive is out of consumer privacy concerns.

Black said it makes sense to him that Google and Facebook approach privacy and security as a primary user concern, and “you have to recognize and accept that.”

Consequently, walled gardens are going to be a key part of the ecosystem for the foreseeable future.

“It isn’t a mystery,” Black said. “Google is responding to very clear incentives on behalf of its users. … You can stomp your feet and say over and over that data fragmentation is real, but Google’s concerns are equally real.”

Black pointed to ad fraud, ad blocking and site latency as areas where Google’s walled garden policies lead to better security and user experience.

But others say this is just a convenient excuse to justify operating a closed environment. Bloom said Google’s decisions – like shutting down search keyword analytics or DMP access – that are ostensibly about protecting its users and partners ignore encryption technology that enables safe data sharing. He called the consumer privacy argument a “cover” when other solutions exist on the market.

 Whether or not Google’s and Facebook’s concerns around consumer privacy and usability are genuine, their decisions impact brands. As Visual IQ’s Mathew points out, “There’s a risk to the advertiser, who loses control of pricing and data when the ecosystem is controlled by one or two players.”

Some observers said moves by Kellogg’s and Kraft Foods to pull budgets from sites that don’t allow third-party measurement or tags presaged a broader market shift. But that shift never materialized and walled garden growth continues unabated.

Kaushansky sees plenty of space available for both sides in the open vs. closed debates, but he doesn’t expect market pressures will force Google or Facebook to drain their moats and disarm.

“It’s not like openness is some natural state of being,” said Kaushansky. “This is just companies acting in their own interest. Nobody’s going to change Google’s data practices but Google, because the data belongs to them.”

 

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