Sep'23·Jordi Capdevila·4 MIN
Open Web or Walled Gardens: Where should advertisers invest their ad budget?
The open web or walled gardens; an ongoing debate that has further intensified since Google’s announcement on the phasing out of third-party cookies. Before we get to what works better and what customers prefer, let’s cover the basics.
What is the open web?
Open web refers to the part of the internet ecosystem where information and resources are freely accessible to all users without any restrictions. Websites, apps, or any other online property that is not owned by a major technology company is typically categorized under the open web.
What are the walled gardens?
Walled gardens refer to closed internet ecosystems controlled by large corporations like Meta, Apple, Instagram, and Amazon without involvement from any outside organization. These big technology corporations ensure that all data, information, and technology stay within the organization, and the entity also controls user access to data, content, and services within the ecosystem.
So, what is the debate around?
For a long time, consumer trends showed a clear inclination towards walled gardens, as users spent significantly more time on platforms like Facebook and YouTube. Naturally, marketers began investing a significant part of their ad budgets in these walled gardens. However, there has been a radical shift in consumer behavior in the past few years.
According to a recent survey, 30% of people said they use Facebook less today than a year ago, while just 8% said they use the open web less than before.
What are the reasons behind this paradigm shift in consumer preference from walled gardens to the open web?
The survey revealed the number one reason cited by consumers as lack of relevance. Across Facebook, Instagram, YouTube, and Amazon, consumers felt the content displayed on walled gardens was not as relevant as it used to be before.
Another factor that marketers should pay heed to is the consumers’ state of mind. Consumers said they are more likely to be “zoning out and not paying attention” when browsing walled gardens.
Transparency is another factor that consumers stated when referring to content like news on walled gardens.
Thus, the open web is increasingly becoming the preferred choice among today’s consumers. According to the survey:
- 48% of consumers spend more than 1 hour browsing the open web, while walled gardens stand at 30%.
- Consumers are 4x more likely to say they will increase their open web usage over the next 12 months than decrease it, compared to both Facebook and Instagram where they said they will decrease usage.
- People are not just spending more time on the open web. The majority are also “curious and in a mood to learn more” making it an ideal place for advertising.
- 74% of people said they trust articles on news sites or apps more than walled gardens, and that they turn to the open web when looking for high-quality content.
The advertising landscape: Open web vs. Walled gardens
Ad budgets have been flowing into walled gardens for years now, but there seems to be a clear misalignment. With the audience revealing where their interests lie, marketers need to reevaluate their strategies. The change in audience preferences could be the reason certain campaigns don’t perform like they used to or content does not receive the same traction as it did in the past.
Marketers and brands must be more watchful of where their ad dollars are being spent, if campaigns are meeting their objectives, and what returns they are giving to brands. Today’s consumers are spending more time on the open web than walled gardens and this shift is only going to continue to widen in the coming days, putting an end to the walled gardens monopoly.
Why are marketers moving beyond walled gardens?
With the demise of third-party cookies expected to occur in 2024, marketers are exploring alternatives to walled gardens to diversify their advertising strategies and reduce reliance on closed, proprietary platforms. Also, as consumers shift their preferences, it is but obvious that marketers must relook strategies and advertise where their consumers are.
Some of the factors that are driving marketers away include:
- Marketers don’t get full visibility into their campaign performance or customer insights because these platforms keep the granular data to themselves. This takes away the opportunity for brands to dive into the details and gather more meaningful insights that can help fine-tune campaigns and improve customer engagement. Restricted access to user data and lack of transparency hinders effective audience targeting and analytics.
- The need to comply with data privacy laws has further tightened the ropes around data collection and usage, increasing the challenges within walled gardens.
- The closed ecosystem limits marketers’ visibility into ad fraud and brand safety concerns.
- Competition for ad inventory and the closed nature of walled gardens make advertising more expensive.
- These closed ecosystems limit opportunities as they restrict access to marketing content within the ecosystem and only target consumers who are active users of the platform.
Consumers are more actively exploring the open web as it provides a wider range of choices, access to varied content, and diverse opinions and viewpoints. It also gives users greater control over their online data privacy.
Striking the right balance
Consumers’ shifting preferences and marketers’ hunt for alternatives have put the spotlight back on contextual targeting. Contextual advertising is becoming one of the most sought-after targeting strategies that empower marketers to create more effective campaigns. It allows marketers to display relevant ads to the desired audience by analyzing the content and context of web pages.
Contextual ads enable brands to provide a better user experience by creating a non-intrusive campaign that does not hamper the browsing experience of consumers. AI and ML models analyze millions of web pages to determine the content that best aligns with a campaign’s messaging and context, thus placing creatives in the most optimal locations without leveraging any third-party cookies. Since the ads are based on the content of the web page being viewed, contextual targeting ensures that the ads are relevant to what users are currently interested in.
Unlike the limitations of walled gardens, contextual advertising guarantees transparency. Marketers can deliver relevant ads without needing extensive user profiling or personal data, addressing privacy concerns and regulatory restrictions. With more control over where the ads appear, contextual advertising also promises the highest levels of brand safety and suitability.
Our joint research project with Havas and Kia revealed a 70% view rate for contextual ads vs. 64% for cookie-based ads, a 43% increase in brand awareness as against cookie-based ads’ 18%, and 29% higher digital ad recall.
Get in touch to explore our contextual AI solution that is built to power new-age, privacy-first advertising strategies.