Walled gardens, friend or foe?

Monopoly. It’s all fun and games until someone owns nearly all of the houses on the board, they’ve put a hotel on Mayfair and have collected all of the train stations.The game, that has lasted over three hours, is over in one round; all but one player is left bankrupt. Thankfully, Monopoly is only a game (remember that during the family feuds). However, Monopoly is much like the digital advertising world.

There is a ‘duopoly’ comprised of Google and Facebook that is dominating the online ad market with walled gardens, meaning that third party advertising technology companies aren’t allowed to operate or bring new formats onto their network.

These two huge companies are controlling a lot of premium inventory, and therefore, are generating a lot more money, leaving the smaller players worse off, without even a look in. If this continues, and the Google/Facebook duopoly ends up controlling nearly all of the ad market, they’ll have no competition and will be able to charge a premium.

Brian Golbere, GM of Emerging Technology at IPONWEB told Video Ad News that, “walled gardens get a bad reputation. The advertiser will have a goal and expectation and a lot of that can be lost in translation. Most advertisers only care about meeting the goals and objectives of that campaign. The big challenge for moving towards more programmatic or automated systems…is a much simpler business model.”

Although walled gardens do have a simpler business model, this can be achieved outside the walled gardens. Closer collaboration between partners can help achieve the reach that marketers want and simplify business on both sides. Seven companies have recently collaborated to create a programmatic consortium that share all the supply- and demand-side cookie IDs. AppNexus, MediaMath, LiveRamp, Index Exchange, Rocket Fuel, LiveIntent and OpenX are the partners that are trying to fight against the dominating duopoly.

Keith Petri, Chief Strategy Officer at Screen 6, told AdExchanger, “It is a nice change of pace to see so many leading companies bonding together to address an industry wide problem which cannot and will not be solved without collaboration.” So, although walled gardens do have some concepts we could all learn from, this doesn’t have to be achieved in an exclusive business environment that shuts out innovative ideas. The ‘frenemy’ approach is the best way to survive the hazardous game of ‘Duopoly’.

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