Behind the Curtain – The Structure of Digital Ad Inventory

Often hidden from marketing and advertising discussions is the structure of the actual programs and platforms that get used every day. Billions are spent in these platforms and its worth pulling back the curtain to understand the structural differences, opportunities, and limitations of each model. The two prevailing approaches companies or Supply Side Platforms (SSP) take to selling their available inventory to advertisers is the "walled garden" and "open internet".

No, we're not talking about secret flower gardens, although that sounds like a good topic for another day! We're talking about the digital advertising world that is behind the curtain but shouldn't be. There are pros and cons and it's extremely important that marketers and advertisers understand the pros and cons of the publishers or SSP's that provide the inventory for today's advertising marketplaces. Marketers want to have the most efficient use of their financial resources and the divide between Walled Gardens and Open Internet has real world implications on results.

Let's start by defining the walled garden and open internet approaches to digital advertising.

A Walled Garden is when a company that has some advertising inventory, usually a destination, wants to sell that inventory but also have people only buy that inventory through them. In this model the business is also representing all the buyers of that inventory themselves. Making themselves the buyer and the seller in ad inventory transactions. Does this sound like any company you might know? If you said Google or Facebook, you would be correct. They are, by this definition, Walled Gardens.

Walled Gardens come about as companies grow and get leverage. Becoming so big that advertisers cannot not use your platform has its advantages. 'If you want this inventory you must go through us and buy on our terms and our rules'! Additionally, the data pulled for optimizing and reporting is only from these platforms own inventory and performance.

Open Internet is when companies bring their inventory to a central source for advertisers to purchase. They are leaving the buying open to another party, thus representing just one side of the equation. Demand Side Platforms (DSP), like Data Fusion Marketing, are then able to comb through this inventory and make purchase decisions, which allows advertisers to understand a more wholistic view of their marketing activities.

Now that we have both defined, let's look at six benefits and limitations of these models.

1. Walled Gardens, being both buyer and seller of the inventory presents a conflict of interest
2. The Internet is big! No matter the size and leverage of a single company there is more out there available. So, in a Walled Garden you're never looking at all of the inventory. While the Open Internet approach aims to eliminate this, it too is also affected as it's harder access the inventory of walled gardens.
3. The ever-dangerous Siloing of advertising budgets tends to dilute reporting and hinders agility. Just looking at one platform's inventory limits the managing and optimizing reach and frequency, limits the ability to know which users are the same across campaigns. When inventory is connected across tactics it's less about how much to spend on display or video, or audio, and more about how many ads does the user need to see and where is the right place and time for them to see them to drive the action desired.
4. Audience redundancy can happen and will happen. If your tactic is silo'd in a walled garden, then you're not open to the same audience parameters. Your audience is defined by that source (Google, Facebook) and only pertains to that platform. An exception to this is your own 1st party data like customer lists. 1st party data is extremely important for many reasons but being able to carry the audience from walled garden to open internet advertising has its advantages.
5. In an era where platforms rely heavily on machine learning, if you only look at data from your inventory or bias toward your inventory because its more profitable, advertisers will miss information and data points available outside the walled garden. The Open Internet works to eliminate this machine learning bias not just across inventory but across tactics. If all the search, social, display, OTT, streaming audio data points are available, then machine learning can gravitate truly toward what is most optimal to the advertiser's goals.
6. Objectivity Loss is real with Walled Gardens. Important in media buying and execution and when you limit your view to silos it's harder for machines to be objective and you could be making less-effective decisions because of the disconnected tactics. Open inventory or open internet can increase objectivity in machine learning.

When you can understand the performance of all the inventory available across all tactics, that's when advertisers can do their best work for clients. Data Fusion Marketing by SilverBack Advertising is a part of the open internet and as an independent programmatic platform aims to bring all the inventory together so that machine learning and human powered learning can make the right decisions with all available data. Walled Gardens are not going away, it's too profitable for these large companies and their products are important in the customer journey, but that will not stop us at SilverBack from chasing what's right for the advertiser.

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