What is a walled garden?

A walled garden is a closed platform where the publisher or technology provider controls access to hardware, applications, content, and user data. In this environment, all advertising activities—from ad buying and serving to measurement and reporting—take place exclusively within the platform's ecosystem.

Advertisers must use the platform’s proprietary products, services, and technology for their campaign operations. While this setup offers valuable campaign insights without linking to a specific user or device, it also limits advertisers' ability to measure performance holistically, or across multiple platforms.

Walled gardens emerged as a strategy by major tech companies such as Google, Meta, and Amazon to monetize their vast amounts of first-party data by charging advertisers for access. The combined ad revenue of these three companies exceeds the total ad revenue generated by all other ad tech firms. These secure environments enable these companies to capture significant ad spend, protect consumer privacy, and comply with regulations. By managing all interactions within their ecosystem, they also maintain a consistent and controlled user experience. The setup and maintenance of walled gardens are resource-intensive, making them feasible mainly for large brands.

Here are some detailed examples of walled gardens:

Meta

In 2023, Meta (formerly Facebook) generated over US$131 billion in ad revenue, driven by its enormous user base of 3.98 billion monthly active users (MAU). Meta collects extensive data about its users through their activities on the platform, such as likes, shares, and posts. Advertisers can leverage Meta's data management platform (DMP), demand-side platform (DSP), and dynamic creative optimization (DCO) for ad targeting. However, they cannot access the raw data itself. Meta controls who sees the ads and how the data is used. While a company can create a targeted ad campaign on Facebook, it cannot export user data for use on other platforms.

Google

With a 92% share of the world’s search engine market and around 1.8 billion Gmail users, Google's ad revenue amounted to US$237.86 billion%20to%20web%20users.) in 2023, making it one of the largest digital advertising companies globally. Google collects data from its search engine, YouTube, Gmail, and other services. Advertisers can then utilize Google Ads to target users based on their search history, video views, and other data points. However, this data remains within Google's ecosystem and cannot be exported. Additionally, Google builds and distributes browsers (Chrome) and operating systems (Android), further increasing its command over the ecosystem.

Amazon

In 2023, Amazon reported US$46.9 billion in ad revenue, with over 230 million Amazon Prime members. Amazon collects data from user activities on its e-commerce site, including purchase history and browsing behavior. Brands can use Amazon Ads to target shoppers based on this activity, but the data remains within Amazon's environment. For instance, while a sportswear brand can target ads to individuals who have previously bought sports equipment on Amazon, the raw purchase data is inaccessible outside of Amazon's ecosystem

Apple

In 2023, Apple generated US$6.51 billion in global ad revenue by maintaining its walled garden and strict App Store environment. By designing both hardware (iPhone, iPad, Mac) and software (iOS, iPadOS, macOS), Apple ensures a seamless user experience. With features like App Tracking Transparency (ATT), which in part limit cross-platform tracking, user data stays within Apple’s ecosystem and is minimally shared with third parties. Developers must adhere to strict guidelines, which can limit app types and content, and pay a commission on sales and in-app purchases.

Let's delve into how walled gardens can be both beneficial and limiting for advertisers and publishers, starting with advantages:

1. Rich data: Walled gardens collect vast amounts of first-party data, providing advertisers with detailed insights into user behavior, preferences, and demographics. This enables highly precise targeting, allowing for personalized and relevant ad campaigns that resonate with the target audience.
2. User privacy: By keeping user data within a closed ecosystem, walled gardens ensure that personal information is not shared with third parties, which helps protect user privacy. These platforms comply with stringent privacy laws and regulations (such as GDPR and CCPA), providing a secure environment for both users and advertisers.
3. Accurate measurement: Walled gardens offer accurate and reliable metrics on campaign performance, as all data collection and analysis happen within a controlled environment. These platforms provide comprehensive reporting tools that help advertisers track campaign effectiveness, making it easier to optimize for better results.
4. Cross-device tracking: Walled gardens can track user interactions across multiple devices (e.g., smartphones, tablets, desktops) as users remain logged into their accounts across these devices. This allows for a consistent and cohesive user engagement strategy, helping advertisers understand the full user journey.

Next, let's explore some of the challenges presented by walled gardens:

1. Data restrictions and integration challenges: Advertisers cannot export raw user data from walled gardens, restricting its use across different platforms or for independent analysis. This hinders the ability to gain a comprehensive view of user behavior across different channels, resulting in a one-sided perspective on analytics. Although walled gardens offer highly targeted advertising, they also restrict the reach, transparency, and integration of campaigns.
2. Complexity: Analyzing aggregated and anonymized data from walled gardens can be complex and time-consuming, often requiring specialized skills and tools. Setting up and maintaining campaigns within these ecosystems is also resource-intensive, especially for smaller advertisers lacking technical expertise.
3. Dependency: Advertisers become reliant on the walled garden’s tools, algorithms, and reporting, leading to a lack of control over their data and campaign outcomes. Changes in the platform's policies or algorithms can directly impact strategies and effectiveness, leaving advertisers vulnerable to external shifts.
4. Limited competition and innovation: Walled gardens can prevent third-party developers from creating competing products and services. Additionally, high barriers to entry make it difficult for smaller or emerging companies to enter the market, even if they have innovative offerings.

Adjust offers tools and strategies to help advertisers in overcoming the challenges posed by these walled gardens. Here’s how Adjust can assist:

• Integrations with walled gardens: Adjust has set up API integrations with major walled gardens such as Meta, Google, and Apple. These partnerships allow Adjust to receive conversion data and campaign performance metrics in accordance with the platforms' data policies.
• Aggregated data handling: Adjust processes aggregated and anonymized data from walled gardens to provide insights and performance metrics. Our dashboard offers a centralized view, allowing advertisers to compare and analyze performance metrics across channels.
• SKAdNetwork support: Adjust supports Apple’s SKAdNetwork (SKAN), crucial for iOS attribution and measurement. Our solutions allow advertisers configure and manage conversion value schemas with ease and to analyze and optimize campaigns effectively using the aggregated data SKAN provides.
• Privacy and compliance: Adjust ensures all data handling complies with major privacy regulations like GDPR and CCPA.
• Multi-touch attribution: Despite the limitations of walled gardens, Adjust enables advertisers to track user journeys across multiple touchpoints. It allows customization of attribution windows to match different reporting parameters, ensuring accurate measurement.
• Fraud prevention: Adjust's Fraud Prevention Suite identifies and prevents ad fraud, ensuring that the data received from all sources, including walled gardens, is reliable and actionable.
• Data enrichment and analysis: While walled gardens restrict raw data access, Adjust's Datascape offers a solution by consolidating data from multiple sources in one place. This allows for comparisons across apps, custom metrics, and detailed analysis, providing a holistic view of user behavior and campaign performance. Additionally, Adjust’s cohort analysis tools measure the performance of user groups over time, even without detailed raw data.

The future of walled gardens may evolve due to several key factors. For instance, Amazon and Meta are seeking to offer advertisers more behavioral insights, which could be beneficial in a cookieless, opt-in future.

Regulatory pressures, such as those from the European Commission’s Digital Markets Act (DMA) and Digital Services Act (DSA), are also prompting  changes from platforms like Apple and Google. The DMA aims to limit market monopolization and anti-competitive business practices, while the DSA focuses on enhancing user privacy, protecting minors, and restricting advertising based on sensitive data like race, gender, and ethnicity.

AI advancements could help walled gardens retain users within their ecosystem by developing new features and improving user experience. These improvements can range from personalizing user interactions to optimizing ad targeting and refining content recommendations, making platforms more engaging and valuable for users. However, if advertisers and publishers see less value, they may explore alternatives. A notable example of this trend is the rise of header bidding. This is a type of programmatic media buying process that allows publishers to auction their ad inventory to multiple ad exchanges before making calls to their ad servers. This  increases competition and transparency, often resulting in better pricing for publishers. By bypassing the restrictive environments of walled gardens, header bidding provides publishers with greater control and efficiency in monetizing their ad space.

Emphasis on increased privacy regulations, transparency, and user consent could push walled gardens to adopt more flexible practices, potentially creating a more collaborative advertising industry.

Curious how Adjust’s advanced measurement and analytics can power your app marketing? Talk to an expert today by requesting a demo.