Ad Tech failed in the mid-market

The biggest opportunity for ad technology today is to find a replacement for cookies and mobile identifiers. Replacing the cookie is the ultimate goal of billions in investments and millions of dollars in marketing.

But even the best of these solutions apply to only a fraction of all Ad Tech.

Independent advertising technology vs. walled gardens

Over the past five years, the combination of Google, Facebook, and Amazon has absorbed most of every extra dollar spent on digital advertising.

This is not to say that the open web is unimportant or that it doesn’t offer significant opportunities to improve ad performance. But the dollars speak for themselves: walled gardens – Google, Facebook, and Amazon – have gone digital. Everyone fights for the crumbs and the best innovations in advertising technology fight for what the oligopoly has yet to conquer.

Walled gardens have achieved their dominance by meeting the needs of medium-sized businesses. Facebook’s 10 million independent advertisers form a broad and diverse mid-market demand base.

Midsize companies represent half of the US economy and include companies with revenues between $10 million and $1 billion. The world’s biggest advertisers have recently managed to stop spending on Facebook without sacrificing oligopoly revenue.

How did this happen?

On the one hand, the walled gardens have acquired a dominant position thanks to their excellent offer. Their rich experiences provide an apparent exchange of real value and a reason to collect and validate the data themselves.

Advertising products are built on these foundations: indispensable tools for communication, collaboration, and commerce—products and services few of us can survive on. This is what makes the title premium and gives the oligopoly much of its advantage.

When it comes to commitment and time, only a few independent editors can meet this standard outside the walled gardens – and only if they find creative ways to join forces and increase supplies.

On the other hand, we cannot help but notice that walled gardens also offer excellent advertising technology. The platforms are self-service, simple and intuitive, and performance-oriented. Combining premium delivery with rich primary data, elegant technology, and built-in metrics, Walled Gardens was able to meet mid-market needs and largely exclude independent advertising technology players.

Big brands can focus on things like supply chain transparency, record-level data, or visibility and authentication; but in the grand scheme of things, these concerns are specific and marginal. The common denominator for millions of mid-market advertisers is performance, reliability, ease of use, and low barriers to entry.

Advertising technology has lost the middle market as walled gardens better meet these needs.

What is the future of independent advertising technology?

Of course, working in a walled garden can be rewarding. There will always be brands that will operate on a scale where these deviations are unacceptable. Big brands with big budgets, talented teams, and rich data assets can, should, and will invest in independent technology. And in turn, there will always be advertising technology companies that cater to the needs of these sophisticated advertisers.

Think of it in terms of the auto industry. To compete with Ford, GM, and Chrysler, advertisers must respond with Toyota or Honda, something that competes on reliability, economy, and performance.

Today, much of the independent advertising technology model is designed to make Ferraris and Lamborghinis, custom builds and fun solutions for the select few. The market exists; it’s real, but it can’t be scaled and it’s a market where buyers will always have an advantage.

A new era of digital advertising is fast approaching and the question is whether we have learned our lesson over time.