Welcome to the 'walled garden' era of ad tech

The dais at the Interactive Advertising Bureau’s (IAB) Annual Leadership Meeting in Phoenix served as a platform for industry luminaries to expound on any number of challenges. Viewability and ad fraud were chief concerns, and the proliferation of ad blockers — specifically among millennials — would need the same amount of attention in the near future. The IAB’s newly elected board chairman David Morris even insinuated that the digital video market might be glutted.

But away from the stage — in the hospitality suites, at the cocktail hours and around the dinner tables — digital media executives of all stripes were discussing a rarely-broached but troubling concern: The rise of the so-called “walled garden” era of ad tech.

That is, marketers are concerned about platforms — namely Facebook and Google — restricting third party ad tech companies from operating on their networks. It raises questions about whether Facebook and Google’s ad tech products can be trusted to function objectively, or if they’re merely being used to funnel ad spend through their respective media networks.

Terry Kawaja — founder of Luma Partners, an investment bank that specializes in digital media — applauded Heineken’s recent decision to select TubeMogul as its provider of video ad buying technology over Google’s DoubleClick Bid Manager, saying it was a sign brands are finally wising up to the conflict of interest inherent in using a company’s technology to purchase their inventory. In this case, that would mean Google using its ad bidding technology DoubleClick Bid Manager to direct ad spend to its video ad platform YouTube. In a negotiation last fall, Google used access to YouTube inventory to incentivize snack brand Mondelēz to use DoubleClick Bid Manager.

Google did not return a request for comment at press time.

AOL CMO Allie Kline echoed Kawaja in a separate conversation, saying the growing skepticism was a result of marketers becoming more sophisticated about programmatic ad-buying. The complexity of ad tech meant that marketers were for years content with using just one company for all their programmatic needs. Now, marketers understand the risks of only using only one company, such as not being able to retain their data if they switch data or attribution providers.

Google’s lack of openness is why Kellogg doesn’t buy any YouTube ads, Jon Suarez-Davis, vp of global media and digital strategy, said in a previous interview.

These growing concerns have motivated AOL to keep its network “open” and integrate with third-party ad tech firms instead of pressuring marketers to only use AOL-owned products, Kline said.

She added that AOL is having ongoing discussions with Google about Google restricting data management platforms from operating on its ad network, a decision that, once enacted, will affect AOL’s data management platform.

But marketers should be concerned about Facebook and whether its Atlas ad server will provide objective tracking results, or whether it will trump up the effectiveness of Facebook’s mobile ad network, Kawaja said.

Facebook, for its part, has maintained that Atlas will be wholly objective. Atlas is only serving or measuring ads that appear on other websites, and not for any ads on Facebook proper or its mobile ad network, according to Facebook spokesman Tim Rathschmidt.

“We are remaining agnostic and working with a number of agencies and other partners. We’re pushing an open ecosystem rather than a walled garden,” Rathschmidt wrote in an email. “Partnerships are important to us because, like Facebook, Atlas is a platform company – they help us globally scale our solutions much more quickly to help marketers achieve success with people-based and cross-device marketing.”

And considering three agencies (Omnicom, Havas and Merkle) have already signed on to use Atlas, the industry seems open to the DoubleClick competitor.

Still, Kawaja and others have predicted that the programmatic industry will soon bifurcate: Marketers will use DoubleClick’s ad serving and demand-side tools when executing Google buys, and Atlas when purchasing Facebook inventory. (Facebook has reportedly been building a real-time bidding feature for Atlas, but it has not yet commented on those plans.)

Agency executive have said that digital video will diverge along similar lines, with marketers using Facebook and YouTube’s video players alongside one another.

The irony in having these systems operate parallel to one another is that ad servers and demand-side platforms were intended to be neutral, allowing marketers to track and execute ad transactions, respectively, across multiple websites.

Kawaja speculated that this would possibly give rise to a new layer in the already complex ad tech ecosystem, ad tech companies that would provide serving and real-time bidding software to work across all servers and walled gardens.

“When you close systems off,” AOL CEO Tim Armstrong said last month, “open systems will continue to leapfrog closed systems.”

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