The Walled Gardens of AdTech [infographic]

AdTech Industry, AdTech Platforms

The Walled Gardens of AdTech [infographic]

We like to think the internet is an open and free space where everyone is equal and no one is restricted in any way – at least that’s how many envisioned it. A closer look at the online advertising industry, however, quickly reveals its many similarities to a game of Monopoly.

Our Monopoly: Walled Gardens Edition infographic is a game where four major AdTech players fight for dominance in an increasingly competitive industry by properly leveraging the concept of a walled garden. The winner takes it all…

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Amazon

E-commerce Platform

Amazon’s ecommerce platform accounted for almost 50% of all US online retail sales in 2018 — just think about all that purchase data Amazon has in its systems. Google and Facebook know what online users search for and click on (with some purchasing data thrown in), but Amazon owns the game when it comes to knowing what people buy, who they buy it from, and how often. This alone makes the company a very attractive option for retailers.

Devices

Amazon devices like Kindle, Fire TV Stick, and Echo help boost Amazon’s overall revenue. Amazon’s hardware strategy has been to sell at break-even prices and then upsell other Amazon purchases. St atistically, Amazon hardware owners spend twice as much on Amazon as other shoppers ($1,450 per year compared to $725), according to a Consumer Intelligence Research Partners study published earlier this year.

Analytics

Amazon’s Brand Analytics tool displays the conversion and keyword data for its own wildly popular Amazon Basics product line. There’s nothing like opening the kimono a little, especially when some merchants accuse Amazon of manipulating product reviews to gain traction for their own private label brands.

Advertising Products

Amazon’s DSP allows advertisers to efficiently reach Amazon shoppers on Amazon sites, across the web, and in mobile apps. Amazon was originally known for keeping its proprietary shopper data secret. However, by making this data readily available to a large volume of merchants, Amazon is partly looking to soften its anti-competitive image. But the more compelling reason to share this important data with brands is to compel them to ramp up advertising spend on Amazon.

Sizmek

Amazon’s acquisition of Sizmek’s ad server and dynamic creative optimization (DCO) tool further strengthens its position as a possible third contender to the duopoly of Facebook and Google in terms of advertising. With Sizmek technology, Amazon will enable brands and advertisers to display personalized messages to consumers across the web based on their search and purchase history on Amazon.

Amazon Web Services

Amazon’s cloud business, Amazon Web Services (AWS), has emerged as a popular option for AdTech companies. AWS is used by startups, big companies, and government agencies. It works in the shadows as the backbone of most leading online services today: Netflix, Instagram, Spotify, Vine, Instagram, Airbnb and many, many more.

Facebook

Social Media Platform

Facebook possesses and stores information about users’ actions and can reuse it later for his own audience segments, recommendation engine, and lookalike models. Facebook owns the platform where its ads are displayed, which means it doesn’t have to share profit with other publishers. Facebook has full control of the price of their ad slots. It’s like having all the cards in hand when playing poker.

Facebook Ad Manager

Facebook’s Ad Manager programmatically sells only Facebook inventory – based on advertising formats that only appear on Facebook. Facebook does not provide any DMP or DSP integration capabilities (and no cookie matching), meaning advertisers can only purchase Facebook inventory via Facebook. This seems to be a deliberate choice to keep their inventory and audiences inside their walled garden.

Facebook Audience Network

People don’t always realise it, but Facebook runs a very precise and effective marketing network. Audience Network allows advertisers to show their ads on mobile apps and websites outside of Facebook, enabling them to reach the same audience on a larger scale. It is very effective as it uses the same people-based marketing across the Internet as it does in the Facebook News Feed. It matches ads with its audiences’ interests using very accurate first-party data.

Instagram

As one of its acquisition success stories and with around 1 billion monthly active users, Instagram is a huge ad revenue generator for Facebook. Brands and advertisers can run ads on Instagram via Facebook’s Ad Manager.

Devices

Facebook does not manufacture any devices of its own, but they don’t really have to. Most people use the Facebook app on almost every device they own. This helps boost Facebook’s ad revenue by displaying more ads and collecting data about users across different devices.

Apple

Safari

Apple’s web browser, Safari, is the second-most popular web browser, holding a global market share of around 15%. Unlike Google that has Chrome and Search, Apple does not own a search engine. Google is the default search engine on iPhones, and Apple charges Alphabet a percentage of the revenue to keep it that way. In 2014, that percentage reportedly amounted
to $1 billion.

Operating Systems

Apple is known to produce very polished, powerful, and reliable operating systems (macOS, iOS, watchOS, tvOS) for their many devices, but it comes at a price — they are designed to tie you to the ecosystem. Because Apple’s devices come packed with their own applications and services, using an
Android tablet or a Windows PC alongside your Apple devices will be unnecessarily hard in terms of user experience.

App Store

Unlike its walled-garden counterparts, Apple does not drive its revenue through displaying ads, but it’s trying to do so to at least monetize the huge traffic on its App Store. When available, Apple Search Ads appear at the top of the search results listings, which is useful if they are well-targeted – there is little point offering a game to App Store customers seeking productivity apps. Search Ads have a light blue background and an icon that lets viewers know they are looking at an ad.

Devices

Apple’s family of devices has close-ended architecture, allowing the company to control who can write apps for their OS’s, and who can produce devices that actually run the systems (er, that would be Apple). The Apple ecosystem is designed in such a way that each new Apple product seamlessly integrates with the other products you already own and improves the overall user experience.

App Analytics

App Analytics is Apple’s own analytics platform. It lives right inside of App Store Connect. Announced at the WWDC in summer 2014, it launched finally in spring 2015 and just recently added new metrics about the discovery of developers’ apps.

Google

Chrome

Google Chrome is the most popular web browser worldwide, with a market share of around 65%. It’s no surprise that the default search engine on Chrome is Google Search. This allows Google to show more search ads to users, and improve search results by collecting and storing search data from Chrome users.

Android

Google’s operating system for mobile devices, Android, boosts Google’s revenue via advertising and mobile app purchases. Although it’s free to use for device manufacturers (e.g. Samsung and HTC), Android requires users to log in using a Google account to download apps from Google Play and use the many Google apps, like YouTube, Maps, and Gmail.

Google Account and Applications

Advertising accounts for around 84% of Alphabet’s total revenue. Just like any good advertising business, Google needs user data to power its ad products. It does this via its Google Account and consumer-facing applications. Because many people regularly log into various Google services, Alphabet collects data associated with their behavior across websites and its own applications, like Google Search, YouTube, and Maps.

Advertising and Marketing Products

Google’s dominance and presence within the online advertising and marketing industry is what really gives Google its walled garden status. Data collected from various Google products and services fuels their advertising and marketing products. It’s estimated that Google holds a 36% market share of total US digital ad spend, which represents a large stake in what is a highly competitive and fragmented industry.

Devices

Google is increasingly spreading its tentacles into other areas, such as hardware. By offering hardware products in categories like phones (Google Pixel) and speakers (Google Home) and incorporating them with Google services, Google makes it more likely that an Android mobile phone user will choose to remain in the Google ecosystem instead of purchase a competing device (e.g. Apple iPhone or Amazon Echo).

Search Ads

Ads from Google Search are a big contributor to Google’s ad revenue. Every query done on Google search is another ad they can potentially show you. Users can change the default (Google) search engine in Chrome, but few actually do.

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