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Big tech needs big brands: What does this mean for walled gardens?



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February 10, 2022 | 5 min read

The S&P 500 illustrates a lot about what’s going on in digital media these days

Thirty years ago, the most valuable companies in the S&P 500 were GM, Ford, Exxon and Walmart. There were a few tech companies on the list like IBM and HP, but not many, and one company didn’t materially sway the entire index.

Today the top companies on the S&P 500 are all tech. The top 10 companies make up 40% of the entire index. That’s a massive concentration of capital and influence at the top.

It’s the same lopsided story when you look at the S&P 500 and digital media. Google, Facebook and Amazon take in 70 cents of every dollar spent on advertising. That’s astonishing. No other industry has that kind of imbalance at its core.

Why is this? Because Google, with a 90% share of global internet searches, has the best intent data at scale ever seen. With over 2 billion verified IDs in its social graph, plus the behavioral data from Instagram, and WhatsApp, Facebook has the best interest data at scale ever seen. And Amazon, with over 40% of eCommerce in the US, has the best purchase data at scale ever seen.

On top of that, they’ve built their own reporting, measurement, analytics, and ROI optimization engines. They’ve acquired third-party ad servers and created the ultimate machines for leveraging this data for online advertising – completely collapsing the entire advertising supply chain into a credit card and a login. They have the best data, the most scalable premium inventory, and the elegant, easy-to-use technology that has made it as accessible for small-to-medium sized businesses as it is for Fortune 2000 brands.

That’s the key point. The tech giants have built these businesses not on the major advertisers or brands like Pepsi and P&G, but with hundreds of thousands of small-and medium-size businesses. That’s allowed them to grow to incredible heights while mostly ignoring the interests of big-budget advertisers.

Until now.

The next phase of growth

The big tech platforms (Google, Facebook, Amazon) are in a new phase of maturity. They’ve stopped growing at the breakneck pace that Wall Street has come to expect. They’ve loaded up their experiences with as many ads as they can reasonably take. Alternative channels, from programmatic to CTV, have matured over the past few years and now offer increasingly competitive inventory and access. In this context, winning big brand dollars offers one of the clearest paths to incremental growth.

There’s a lot that needs to change before that can happen.

In a world where privacy and transparency matter, Fortune 2000 brands need to control the buy side. Big brands need metrics and accountability. They demand jurisdiction of their data across walled gardens and ecosystems, across channels and platforms. They are much less tolerant of the data silos and black boxes that are core to the walled garden advertising model. Big brands are not inclined to let big tech companies grade their own homework and refuse the accountability of third party oversight. These tradeoffs may not have mattered as much to middle-market advertisers, but for big brands and agencies spending billions on advertising every year, the stakes are higher and the need for transparency is greater.

No waiting around

Advertisers need better options than simply waiting for the walled gardens to open up. According to recent surveys, a “staggering” 76% of advertisers are not satisfied with the level of transparency in the current supply chain. It’s time to pull back control and add efficiencies to the buy side of the market. Brands and agencies need oversight of their data and they need a 360-degree view of customers to act in real-time. And unless they get it, these challenges will continue to throttle the growth of our industry.

Bill Wise is co-founder and CEO of Mediaocean, the mission-critical platform for omnichannel advertising.

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