When you’re in a garden with high walls, you can enjoy the benefits within, but you can’t see beyond them or take anything out. In many ways, walled gardens are like the “luxury gated communities” of digital advertising: controlled environments with premium audiences, yet limited transparency and flexibility for advertisers outside their ecosystem. Walled gardens are giving advertisers prime opportunities… But at what cost?
In digital advertising, a “walled garden” is a closed platform in which the company has control of all data, tools, and access. Advertisers can only use that specific platform’s tools and can’t take the data out to use anywhere else. This exclusive control puts walled garden platforms in charge of what advertisers can or cannot do, meaning that while they may get access to high-quality data and audiences, they will not have the same level of flexibility. These environments restrict the flow of information and prevent third parties from accessing user data and ad performance metrics.
Major platforms such as Google, Facebook, and Amazon are prime examples of walled gardens. They collect massive amounts of first-party data and give advertisers a way to reach their audiences through highly targeted ads, but the information is locked in the platform.
So, how do they restrict access to their data and inventory? Walled gardens restrict access to data by keeping all user interaction and behavioral insights within their own system. Advertisers can see their campaign performance through the platform’s performance tools, but they can’t take that data out or independently verify it. This limits broader cross-platform insights and data portability.
Why do companies create walled gardens?
There’s a reason why large platforms like Google have embraced this model… it benefits both their business operations AND advertisers. But how? Walled gardens offer complete control over user data… and user data is powerful. It’s the key to precise targeting and driving conversions. Without it, how would you know anything about your audience? With control over user data, walled gardens collect vast amounts of valuable information on user behavior, preferences, and demographics, all of which can be leveraged to enhance user experience and personalize ads. Having this level of control is the golden ticket to gaining a competitive edge, since these companies can protect proprietary data from competitors and better serve their advertisers.
Walled gardens keep a closed ecosystem, which leads to a monopoly over ad inventory and placements. This gives them the power to dictate pricing, optimize ad formats, and guarantee visibility through ads, ultimately maximizing revenue. Take Google, for example. When was the last time you used a search engine that wasn’t Google? Major platforms such as Google,Facebook, and the likes have become dominant players in digital advertising precisely because they can control where and how ads are displayed within their walled gardens, driving revenue from both sides: advertisers and users.
Furthermore, walled gardens ensure higher ad relevance. Proprietary algorithms play a key role in ensuring that ads are highly relevant to individual users. With control over their own data and algorithms, walled gardens can match ads to users with incredible accuracy, significantly increasing the likelihood of engagement. This enriches user experience and adds value to the platform for advertisers, who see better returns on ad spend from increased relevance and targeting precision.
How do walled gardens impact advertisers?
Now, let’s put ourselves on the other side of the equation, in the shoes of advertisers looking to target ads with efficiency and minimal effort. To advertisers, the walled garden tends to have a more negative meaning, referring to the restricted access they have to platform-specific performance data.
A major consequence of the walled garden is the difficulty in tracking users across different platforms. Since walled gardens keep data confined within their environment, it’s harder for advertisers to gain a full understanding of campaign effectiveness since they can’t track success across multiple ad channels.
Another unfortunate consequence of walled gardens is that once in a walled garden, advertisers are confined to platform-specific analytics. In recent years, this reliance has sparked talk of a “biased view” of performance, since each walled garden reports metrics using its own standards, limiting comparison across other platforms.
Lastly, it is important to note that the high demand for premium audiences on walled garden platforms can lead to inflated ad prices, particularly in competitive sectors. Similar to a saturated real estate market, the scarcity of alternative ad spaces among these ecosystems drive costs up, giving advertisers no other choice than to spend more in order to see results. Considering these tech conglomerate’s presence (Google, Meta, AWS, etc), it is important to note the ease at which they can systematically monopolize the ad buying space, resulting in a position where they can relatively demand any sum of money from advertisers. This, in turn, can lead to inefficient spending and higher overall costs, as it causes advertisers to rely more heavily on expensive walled garden ad placements.
Can advertisers break free from walled gardens?
The answer is yes, advertisers CAN break free from walled gardens by utilizing programmatic advertising on open web platforms and adopting new strategies that provide greater control and transparency. Platforms like The Trade Desk offer access to inventory across the open web, enabling advertisers to target users through first-party data and contextual targeting. Third-party ad tech companies play a big role in helping advertisers bridge the gap between walled gardens and the broader digital ecosystem. These companies, such as Liveramp and Neustar, give advertisers tools for data integration, cross-channel measurement, and audience targeting solutions that work independently of walled gardens.
Other emerging alternatives, such as Unified ID 2.0 and “data clean rooms”, offer new ways for advertisers to maintain targeting capabilities outside walled gardens. Unified ID 2.0 provides a privacy-compliant tracking solution across the open web, while data clean rooms enable collaboration between advertisers and publishers in a secure, privacy-safe manner. These solutions, along with OpenRTB and contextual targeting, are reshaping the programmatic landscape, allowing advertisers to operate freely without the constraints of the closed ecosystems of walled gardens.
This being said, however, it is highly unlikely that most advertisers will ever fully leave walled gardens, despite the growing interest in alternatives. Google, Facebook, and Amazon offer unparalleled scale, precise audience targeting, and robust data. Aspects like these are so valuable to advertisers that, especially for brands with smaller budgets and narrower target audiences, walled gardens are a turnkey solution that is difficult to replicate elsewhere. In the long term, the balance may shift toward a more hybrid approach, where advertisers use walled gardens for their scale and data-driven targeting but also invest in open web solutions to regain control, improve transparency, and explore innovative alternatives.
How do walled gardens affect user privacy?
Often overlooked is the impact walled gardens have on user privacy due to their substantial control over data in closed ecosystems. This concentration of information raises concerns about user privacy, since these platforms dictate how data is extracted, stored, and used, oftentimes staying consistent with limited transparency for the user. Conversely, these platforms argue that walled gardens are more secure environments, where user data is kept within a closed loop and cannot be shared with external parties.
The balance between privacy and personalization within walled gardens is delicate. While these platforms provide personalized experiences—such as tailored ads, recommendations, and content that users often prefer—they require significant data collection. Walled gardens attempt to balance these competing interests by offering users some control over their data (like ad preferences), while also complying with increasingly strict regulations. The challenge is to maintain the convenience of personalization without compromising user privacy, a challenge that will continue to evolve as global privacy laws tighten.
What are examples of walled garden ecosystems?
Google Ads:
Google’s ecosystem is one of the largest walled gardens in digital advertising, encompassing search, display, video, and mobile ads. Through Google Ads, advertisers can access the entire Google ecosystem, including Google Search, YouTube, and the Google Display Network. One of the key features of Google Ads is the extensive use of first-party data, allowing for highly targeted and personalized advertising. Advertisers can leverage user intent from search queries, YouTube viewing habits, and browsing behavior across millions of partner websites.
For example, Google’s performance-driven ecosystem has proven successful for brands like Sephora, which used Google Ads’ remarketing features to target users who had visited their website. By leveraging Google’s first-party data on user search intent and browsing history, Sephora saw increased conversion rates and a significant return on ad spend (ROAS) through more personalized and timely ad delivery.
Facebook Ads (Meta Ads):
Facebook’s ecosystem (now Meta) includes Facebook, Instagram, Messenger, WhatsApp, and the Audience Network, creating a massive closed-loop system for advertisers. The platform gathers extensive user data points not only based on engagement (likes, shares, comments, time spent on specific content) and personal information (demographics, interests, behaviors), but also data from other apps and sites visited via tracking capabilities after using the platform, making it one of the most powerful tools for hyper-targeted advertising. The platform’s lookalike audiences feature allows advertisers to expand their reach by targeting users with similar characteristics that are aligned with their existing customer base.
For example, Airbnb used Facebook Ads to drive traffic for its “Experiences” service, targeting users based on interests and behaviors collected across the Facebook platform. By testing different ad formats and leveraging audience data through the platform, Airbnb reported a 3x return on ad spend and 47% lower CPAs in 2017, significantly increasing bookings for its service using the dynamic ads objective.
Amazon DSP (Demand-Side Platform):
Amazon’s DSP allows advertisers to programmatically buy display, video, and audio ads within the Amazon ecosystem, including on Amazon.com, Fire TV, and Kindle, as well as third-party websites. Amazon’s unique advantage lies in its vast troves of shopping and purchase data, enabling advertisers to target users based on actual buying behavior. This ecosystem is especially powerful for product-focused ads, allowing brands to engage consumers at various stages of the purchase funnel.
For example, Reckitt Benckiser, the parent company of brands like Lysol, used Amazon DSP to target audiences based on shopping and browsing behaviors. By utilizing Amazon’s purchase data to re-market to shoppers who have previously purchased Reckitt products, the campaign achieved a 346% month-over-month increase in the number of Subscribe & Save customers for their brand.
It is evident that understanding the walled garden meaning in digital advertising is crucial for businesses looking to optimize their strategies. While walled gardens offer advanced targeting and far-reaching audiences, they also come with limitations such as restricted data access and a lack of transparency. By exploring alternatives like programmatic advertising and partnering with third-party ad tech providers, advertisers can find ways to balance the benefits of these platforms with the freedom of the open web, allowing for a more tailored approach and greater campaign adaptability.