Spending Spotlight: Why Advertisers Target Walled Gardens
/Digital advertising is booming, and companies are working tirelessly to reach their intended audiences. Advertisers constantly compete to captivate the world’s 4.66 billion active internet users.
With print media withering further due to COVID and eco-consciousness, apps and websites are now center stage. Worldwide users spend a whopping 6 hours and 55 minutes daily on their smartphones, tablets, computers, TVs, and more.
Image courtesy of Adem AY, via Unsplash.
The Giants of Ad Tech
Where are online users going? Here are 2021’s top global websites, by total visits:
Google.com – 45.39 billion
YouTube.com – 14.12 billion
Facebook.com – 11.15 billion
Aajtak.in – 10.78 billion
Wikipedia.org – 5.84 billion
Amazon.com – 2.99 billion
Search, entertainment, social, and eCommerce garner overwhelming web traffic. Let’s particularly analyze Google, Facebook, and Amazon. The “Big Three” offer today’s leading advertising platforms by a mile.
The Google Display Network reaches 90% of all internet users. Over 10 million businesses have used Facebook ads. Amazon Ads, meanwhile, have recently skyrocketed in popularity. What’s the underlying significance?
Understanding the Walled Garden
Nearly 70% of American digital-ad spending goes towards Google, Facebook, and Amazon. Their websites and services draw users like moths to flame. However, advertising success doesn’t come freely.
Facebook, Google, and Amazon are closed advertising ecosystems. They maintain their own services, plus restrict access to key metrics, user data, and reporting tools. They control how ads appear alongside first-party content, and enforce advertising guidelines.
Essentially, advertisers are forced into a box. They must use specialized advertising stacks. Additionally, behemoths like Google, Facebook, and Amazon oversee a staggering amount of data. It’s a proprietary treasure trove for companies seeking impressions, user behavior patterns, and optimized marketing strategies. Platforms also restrict data outflow and external data ingestion. This is the walled garden.
Why is spending so high?
User engagement opportunities within walled gardens are incredibly abundant:
Google.com receives 5.6 billion searches per day, while its Chrome browser captures over 92% of the global search-engine market
Facebook has roughly 1.93 billion daily active users
·YouTube has 122 million daily active users
Amazon has 300 million active users
The average ad conversion rate across major industries is 3.9%, so you can probably spot the revenue potential. Advertisers know that even small successes can be profitable. At worst, their offerings will enjoy exposure and generate buzz.
Many such platforms are all-in on mobile development. Nearly 70% of online traffic is mobile, and Google accounts for 96% of mobile search traffic. There are 4.28 billion unique mobile internet users globally, and walled gardens “own” much of that activity. Google is ubiquitous, and Facebook has a dominant presence across 130 countries. Amazon thrives primarily in America—where shoppers have the disposable income to make secondary purchases.
Walled gardens are user account driven. Users stay signed in across devices—making them easier to track and convert.
It’s also suggested that walled-garden advertising stems from peer pressure. If one company partakes, then why shouldn’t competitors? For example, Purple amplified brand consideration by 34.6% via YouTube advertising alone.
Motives are clear, yet there’s another factor: expense. Copious research and A/B testing are needed to target users effectively—since privacy practices safeguard customer data. Additionally, these platforms are upping prices in lockstep with demand. It’s understandable why $1 billion annually shifts away from the open internet.
Walled gardens are tough to crack, but advertisers aren’t cutting bait. An intriguing challenge awaits, and potential rewards remain undeniable.