How can local advertising markets compete with tech giants' hegemony?

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How can local advertising markets compete with tech giants' hegemony?

The dominance of global tech giants is a challenge for local digital advertising companies. We created the WARRP platform that supports the domestic market.

The mechanisms of local digital advertising are significantly affected by the dominance of global technology companies. They are in intense competition with local publishers, threatening the effectiveness of their advertising space and reducing the potential income. Read about the WARRP platform that supports the domestic market.

Hegemony in the digital advertising market 

As you know, Google, Facebook and Amazon are the most prominent players in the digital advertising market, which at the global level collect nearly 70% of the market revenue. In the United States alone, Google and Facebook take 70 cents of every dollar spent on digital advertising. 

It is possible because these concerns use the strategy of the so-called wall garden. It's about creating closed ecosystems in which control over all operations is in the hands of a single entity. Their dominance over advertising network makes them consume most of the revenue, thus disrupting the flow of economic value.

The share of these giants on the local online advertising markets may differ, but these big tech companies still create competition for domestic publishers. And still, in 2018 alone, they reached over half of the advertisers' spending. Such a model does not allow publishers to operate effectively and threatens the optimal use of the advertising space they offer. 

Reasons for tech giants’ hegemony

The dominance of the advertising market has two main reasons. First, online publishers mainly use global systems when selling their advertising space and less often make direct sales. And the most frequently chosen tools are those offered by the market mentioned above tycoons, who assume the function of an intermediary in the publisher-e-commerce transaction. 

The amount of data they have in their resources also determines the competitive advantage of global corporations. It guarantees optimal advertising content matching to the user visiting a given website, ensuring higher sales revenues for both publishers and e-commerce entities. 

Local advertising vs. globalisation

At the same time, the monopoly of the world's giants in the advertising market poses a threat to both publishers and e-commerce entities. And they both lose out on this. Local market publishers do not have sufficient control over the content they provide and do not obtain achievable revenue. Global tycoons take part of the revenue that could remain in the hands of domestic entities. 

The negative impact of globalisation on e-commerce advertisers: 

  • they do not use their own data properly and optimally (first-party data); 
  • they must share data about their clients that could be used to optimise the marketing activities of other entities on a given market using Google or Facebook tools; 
  • the effectiveness of their remarketing campaigns is decreasing; 
  • it significantly limits their control over the content shared; 
  • they may lose some of their customers; 
  • they lose revenue from their activities.

It is known, however, that the amount of data on users, that native publishers have, is much smaller. Therefore, there is a need to change the model of marketing activities and, thus: the distribution of revenues in the advertising industry. It is doable, however, without access to advanced tools, native publishers cannot ensure similar effectiveness of remarketing activities. 

How to build independence from global tech giants? 

Building a solid competitive position by domestic publishers is only possible if they are able to offer buyers of their advertising space effective tools for conducting marketing campaigns. 

The currently used tools are based primarily on data and tracking scripts, a common way in the advertising world to store user information and build their behavioural profiles. User targeting is done through the use of data obtained without their express consent.

Such a situation worldwide has long been a source of many contradictions and gives rise to an ever-reaching tightening of the privacy policy. And it seems that in the face of difficulties in accessing user data, any monopoly will be reduced due to:

  • limits for advertising campaigns in terms of the number of views of a given advertisement to one recipient because they will not work across domains; 
  • loss of access to data by external measurement tools; 
  • more difficult adjustment of the advertisement to the user (personalised advertising).

In the face of further legal changes, access to data (primarily third-party data – the foundation of remarketing activities) will be increasingly difficult. Blocking tracking scripts will mean that external companies will have fewer data about users and their online behaviour, making it more difficult to match the advertisement based on their browsing history.

Read more about the data access in our previous article: Effective marketing campaigns with limited access to user data.

WARRP platform – our response

Thanks to the WARRP project, it is possible to create effective recommendation and remarketing campaigns. At the same time, it makes participants of the Real-Time Bidding (RTB) market independent of global tech providers such as Google, Facebook and Amazon.

Thanks to innovative technology and appropriate tools, our tool enables direct cooperation between publishers and e-commerce. It brings measurable benefits to local publishers and e-commerce entities cooperating with them.

The main goals of the WARRP platform 

WARRP enables to conduct effective marketing campaigns without the intermediation of tech giants 

The systems on the market usually recommend products only for the most clickable products and to the most active users. This leaves much of valuable data unused – they are excluded due to the "sparsity" problem. Our project addresses this problem.

The recommendation system we created enables personalised advertising also in case of less active users and with less popular products. Thus, our system brings the advertisers additional benefits from effective use of data sources not used so far.

WARRP platform – benefits:

  • change of the online advertising spending management model, beneficial for both parties; 
  • an opportunity for direct cooperation between publishers and e-commerce entities; 
  • eliminating the user tracking method and focusing on the data held by e-commerce or the publisher; 
  • the ability to purchase individual page views addressed to a specific user; 
  • relying on advanced analysis of additional product data; 
  • basing on analysing the context of embedding prepared product recommendations and creations in remarketing campaigns. 

Summary 

The WARRP platform builds an environment to create highly personalised marketing campaigns despite of limited data and keeping user privacy. It bypasses intermediaries and gives the publishers the opportunity to work directly with advertisers.

Our system shortens the purchase process to less than a second. It also offers a large number of advertising formats and helps to reach the target group with greater precision.

Publisher, with our tool, you can achieve higher revenues from advertising space and enable your ecommerce clients to lower their ads' cost.

If you are interested in our solution, feel free to contact us.

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