Walled gardens are the future for brands

Digital platforms are growing ever-more influential and 2020 will see marketers increasingly tasked with building their brands within ecosystems over which they have little or no control, a new WARC report says.

Building brands in ‘walled gardens’ is the main theme highlighted in the Industry chapter of WARC’s Marketer’s Toolkit 2020, an annual report that assesses the influences on marketing strategies for the year ahead.

David Tiltman, VP Content, WARC, comments: “Customer experience (CX) will remain a priority for marketers’ time and investment and will continue to drive the digital transformation agenda, and in-housing of adtech will continue as brands take charge of their data.

“However, we see the major story for next year being the growing reliance of advertisers on ‘walled gardens’, the digital platforms that combine paid advertising and payment tech or e-commerce fulfilment.”

Amazon continues to chip away at Google’s supremacy of the search advertising market and is projected to earn $13.9bn from advertising in 2019. Advertising accounts for a fifth of Tencent’s global revenues, worth over $8bn, while Alibaba and JD.com dominate the retail landscape in Asia, with combined annual revenues of nearly $450bn.

These ‘walled gardens’ promise marketers much more visible links between marketing investment and sales performance – and they’re increasingly taking the bait, as 35% of total respondents and 23% of brand respondents to WARC’s Toolkit survey said they plan to increase advertising spend with Amazon in 2020.

Most spend on Amazon is currently linked to performance outcomes. But, as Amazon sets its sights on the brand dollars still being spent on TV media, the platform must decide the extent of compromising user experience to allow brands to engage consumers in more immersive and potentially less efficient ways.

Twenty percent of respondents (up from 17% last year) cite the dominance of Google/Facebook/Amazon as the biggest cause for concern when drawing up marketing plans for 2020.

In Asia, meanwhile, the major players will continue to aggregate shoppers and vendors on their platforms. Xian Wang, Global Content Director, Edge by Ascential, notes: “Digital ecosystems [have] become the primary place to engage with consumers.”

The sort of third-party business model offered by the likes of Alibaba, JD.com and Pinduoduo allows vendors of all sizes to reach new customers and small brands to compete on the same footing with established brands, although standing out on these platforms is difficult.

“The reach of digital marketplaces offers convenient comparisons for shoppers,” Wang observes, “meaning suppliers will have an increasingly difficult time differentiating from the high volume of other vendors.”

Sourced from WARC