The idea of an ecosystem where first-party data gets prioritised over third-party data doesn’t seem to be a ‘pipe dream’ anymore. Since the emergence of the walled gardens, digital ecosystems are believed to have evolved, giving rise to a landscape of specialised communities and tailored experiences to develop the online experience for global users. Despite the discourse primarily centring on major multinational corporations such as Microsoft, Meta, Amazon, Apple, and Alphabet (Google), walled gardens have reshaped the digital landscape, fostering both innovation and debate surrounding the future of online paradigms. The total advertising market is valued at Rs 1,13,500 crore, with digital advertising accounting for 51% at Rs 57,885 crore, as per the FICCI-EY report 2024. Of this, Google and Meta account for 70% of the digital ad spends, amounting to Rs 40,519.5 crore. “As far as walled gardens are concerned, with users moving towards a cookie-less future, I think regulations, along with consumers’ data privacy are considered paramount. In our walled gardens, we have developed AI-based processes to monitor the amount of time spent by consumers in specific areas, to increase engagement and help serve them better,” Arun Srinivas, director and head, ads business (India), Meta, told BrandWagon Online in an interview.
Adapting to the cookie-free era
From what it’s understood, in the last couple of years, companies have gradually begun to invest in first-party data. Cookie deprecation and its implications were highlighted in the list of top marketing concerns for 2023, according to Statista, a market research firm. The report further highlighted that by the end of 2022, close to 60% of marketing professionals reported either ramping up preparations for a cookie-less future or maintaining a strong focus on it, with contextual advertising held as an encouraging substitute for third-party cookies. What backed more this development has been Google’s decision to phase out third-party cookies for one percent of its users on Google Chrome browser from January 1, 2024, onwards. Although, the company, early this year, delayed the complete removal of third-party cookies from Chrome until at least 2025. As a result, it is believed that the role of wall gardens will amplify. Moreover, 37% of marketers expressed their desire to increase investments towards walled gardens after third-party cookies were removed, from a poll comprising more than 1,400 respondents belonging to seven international markets, as per data provided by research of Lotame, a data solutions company.
When it comes to data privacy, walled gardens are well equipped to handle this, especially in the case of targeted advertising, the ‘Brands Retreat Behind Walled Gardens as Data Privacy Efforts Take Root’ report of Gartner, a technological research and consulting firm, stated. ‘Ongoing data privacy disruptions and consumers’ accelerated adoption of digital channels are upending traditional ad placements. Digital marketing leaders should prepare by exploring how leading brands are adapting ad efforts within the walled gardens of YouTube, Amazon, and Facebook,’ the report stated. “I think emerging technologies such as contextual advertising, artificial intelligence (AI)-driven algorithms, and privacy-preserving identifiers offer alternatives to third-party cookies. Brands in India advertise and market on the walled gardens’ platforms in a targeted manner, using the data available to them and advanced advertising targeting tools provided. I believe they capitalise on platforms such as Facebook, Google, and Amazon for audience targeting, ad customisation, and tracking of performance, hence getting the most of the marketing return-on-investment (ROI) in the digitally connected market,” Siddhartha Vanvani, founder and CEO, Digidarts, a performance marketing agency, mentioned.
Brands in the age of walled gardens, but open Internet?
In the current landscape, brands have seemingly started to adopt approaches, reminiscent of the saying, ‘Desperate times call for desperate measures,’ as they prepare for a cookie-less future, with walled gardens understood to be occupying a major market share. Going by market reports, brands are approaching the next era of digital advertising by bolstering their first-party data. It’s believed that brands across India are employing walled garden platforms for their advertising and marketing endeavours. One common tactic is understood to involve social media advertising, where brands create sponsored content or advertisements on platforms such as Facebook and Instagram to showcase their products or services. These advertisements can be targeted based on demographics, interests, and user behaviour, ensuring outreach to specific audience segments. Overall, brands in India are utilising walled garden platforms for advertising and marketing initiatives, encompassing social media advertising, search engine marketing, influencer partnerships, and data analytics, to connect with their target audiences and drive business growth. Reportedly, India is a walled garden-dominated market with almost 65-70% of media spending moving into them, especially with the influence of programmatic advertising. “I believe programmatic advertising, while accelerating in India, has some years before brands start to garner larger shares beyond other formats of spends. Unlike India, global markets such as the US, which is a larger market for media spending contributing $190 billion compared to four billion dollars in India, have a programmatic share of over 60% with walled gardens contributing to 30% of it,” Arvind Mathur, product and business unit head, mFilterIt, a fraud detection and prevention company, said.
(Share of walled gardens versus the open Internet in digital advertising revenue worldwide from 2017-27, by Statista)
However, open Internet is being prioritised over the convenience of walled gardens, with regard to the ‘Elevating your Digital Marketing Strategy with AI’ report by The Trade Desk, a digital marketing agency. ‘Savvy advertisers are already moving away from conventional direct programmatic deals toward modern programmatic advertising, where they have the freedom to tap in to the much larger and more diverse ad inventory that the open Internet offers. By leveraging every data point to determine the value of each ad impression, advertisers are ultimately purchasing only those impressions that reach their target audience. In doing so, brands can achieve more effective business outcomes through better precision and targeting,’ the report stated. Experts opine that first-party data can enhance a marketing strategy, increase effective targeting, reduce wasted spend, and improve the consumer experience, with access to more relevant ads without sacrificing privacy. “Research shows that users spend half (52%) of their digital media time on the open Internet, watching over-the-top (OTT) video streaming, music streaming, online gaming, and on-mobile applications. I reckon marketers are already embracing these cookie-less channels on the open Internet, which reaches nearly 600 million Indians, surpassing walled gardens by 62 million. As the shifting identity landscape moves the advertising industry towards a consent-based, opt-in environment, I think there is a demand for independent, transparent, and privacy-centric solutions that allow for unified targeting and measurement,” Tejinder Gill, general manager, The Trade Desk, highlighted.
As brands navigate the evolving digital landscape, the transition to a cookie-less future and the rise of walled gardens present both challenges and opportunities. While walled gardens offer targeted advertising solutions and data privacy advantages, brands are believed to be exploring alternatives within the open Internet to leverage ad inventory and enhance precision targeting. With the importance of first-party data on the rise, the industry is witnessing a shift towards transparent and privacy-centric solutions that prioritise user consent and enable unified targeting and measurement. The big technological companies will account for 83% of the digital ad revenue by 2027, as predicted by Statista. “In India, to navigate this terrain of walled gardens, users should prioritise compliance with data protection legislation. This means establishing privacy mechanisms and addressing content concerns to mitigate legal risks. Additionally, there should be a need to uphold fair competition standards, adhere to localisation mandates, and comply with content regulations to ensure operational integrity and avoid legal repercussions,” Prakhar Varshney, founder and CEO, Huchstar, an information technology (IT) company, concluded.