Digital Transformation Procter & Gamble (P&G) Walled Gardens

Facebook, Google & Amazon need to adopt a Walled Garden 2.0 approach or they will face a decline in ad revenue

By Wayne Blodwell | head of programmatic

January 31, 2017 | 8 min read

Reflecting on the hard line metric requirements laid down by Procter & Gamble’s (P&G) marketing chief, Wayne Blodwell, chief executive officer at The Programmatic Advisory, argues this could really move the needle in the online advertising industry by disrupting the ‘monopolistic’ practices of the ad industry’s walled gardens.

Pressure grows on walled gardens

The world's single-largest advertiser P&G is the latest player to mount pressure on walled garden players

Marc Pritchard, chief brand officer at the world’s biggest-spending advertiser P&G, spoke this week at the IAB Leadership Meeting in Hollywood, Florida, and announced that the brand was not going to buy from any media from partners who are unable to implement their chosen MRC accredited viewability and verification solution.

P&G represents circa $7bn of the $500bn spent on marketing globally, so a significant statement from the world's largest buyer. For those who have not heard of the MRC, or the Media Ratings Council, it is the industry’s leading organization for vetting the quality of third-party measurement solutions. Yet for years the walled gardens, ie players like Facebook and Google, etc, have felt above this and been happy to ignore the vendors who have this hard to attain independent accreditation.

This statement from P&G is fantastic, we need more marketers (and their industry representatives) to take such a stances.

Those who follow my posts will know of my dislike towards said walled gardens, the practice of hoarding data and inventory into buying platforms owned by media companies (see a short video here) that has led to an erosion of plurality in the online media space.

The most notable walled gardens being Facebook and Amazon where you can only leverage their data (such as: likes of fan page; age; gender; shopper intent; etc.) if you also procure media through their own buying platforms. Google acts similarly but with varying levels of complexity which would take a whole post to explain and would likely be outdated by the time I published it due to their ever-changing policies.

The obvious downside to this monopolistic practice is the incredible conflict of interest between buying and selling but more importantly is how sub-optimal this is for the marketer, which I have detailed before.

If we take a view of the walled gardens from a very high level, Facebook, Amazon and Google are fast becoming some of the largest employers in the world and this can act as a smoke screen for monopolistic practices (particularly with governments) such as those I mentioned above.

In many other industries monopolization is an offense under anti-trust laws, yet somehow monopolies in the marketing industry are getting away with anti-competitive practices. As a reminder, monopolization can lead to industry-wide maladies such as: price fixing; price inflation; creation of inferior products; and lack of innovation.

Not of which are great. An argument can of course be said that these walled garden products are working well for marketers and therefore they continue to gain share of total marketing spend but that's a very short term-ist view and those marketing dollars could be working so much harder than the simple bundling of budgets into walled garden products.

My dislike of walled gardens doesn’t stop at these goliaths utilizing their monopolization to enforce below par buying platforms and isolated data segments to their customers (marketers and their intermediaries). My dislike also extends to the inconsistencies around measurement. Each of these walled gardens have their own measurement tools and marketers have trusted those numbers for quite some time. It’s well known that Facebook has suffered some ill-fated measurement blunders (four times, if you’re counting) yet it has still been hesitant to enable third-party tracking on their properties.

It was great to see Snapchat break out of this mould recently and partner with MOAT (as an FYI, a great way to differentiate versus $FB and $GOOG is to exploit their weaknesses, specifically transparency and openness which marketers are increasingly putting front and center).

When I think about the ‘for’ and ‘against’ walled garden argument, I think it boils down to whether you believe these mega companies are in the right to drive their own agendas, or whether you believe they should act more appropriately on behalf of the marketer.

The easy answer is to continue with the current state of play and assume that these mega companies don’t care about what the marketer really wants (ie could just ignore P&G's demands) and won’t change the way they act but my preferred answer is for them to evolve to 'walled garden 2.0'.

Walled Garden 2.0 Recommendations

  • Allow all MRC accredited third-party measurement on all media properties
  • Allow third-party buying platforms to access all inventory
  • Allow third-party buying platforms to access all data when coupled with owned or licensed media (via Private Marketplace deals)

I would love there to be a fourth point which is de-coupled data for targeting and advanced measurement but this is heavily dependent on interpretation of data regulations such as GDPR. Something to highlight is the use of all of the above-three points in the Walled Garden 2.0 recommendations – there should not be random exclusive relationships between platforms if this is to happen successfully, for example, in the past only TubeMogul could get access to YouTube inventory (I recognize this is a contentious example) as this would remain anti-competitive. Inventory needs to be open to all buyers and therefore differentiation of technology isn’t access it’s usability, optimization algorithms, product releases, innovation and many other factors.

I would also like to think that walled garden 2.0 evolution is very positive for the walled garden's themselves! They actually have opportunities to create more revenue and operate in a much more positive way by adopting these three principals rather than having big buyers venting their frustrations and threatening to pull budgets away.

Marketers, agencies and everyone in between should continue putting pressures on the walled gardens. If they don’t, we can only hope global or local legislatures wake up and do something against these monopolistic practices otherwise it will not be a fun industry to wake up to in 2020 where we have only a handful of major companies controlling the flow, price and performance of marketing investment.

Click here for more pieces penned by The Programmatic Advisory's Wayne Blodwell

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