The Arrogance that Paid Off for the Walled Gardens

It turns out "Buy it or don't" works sometimes.

Arrogance is digital’s original sin, but sometimes arrogance is good for business.  Especially when it leads to a high-stakes game of chicken between digital media and advertisers, and advertisers blink first.

In 1996, I was managing a digital ad campaign for NYNEX, selling its high-speed data access products to people within its New York footprint.  At the time, most people accessed the Internet at home through dial-up.  NYNEX was New York’s phone company, and it promised home users it could give them Internet access at home without having to tie up their phone line.

It was faster than dial-up modems, too.  The catch was that you had to live within NYNEX’s geographic footprint.  If you lived across the river in New Jersey and saw an ad for NYNEX ISDN, you might get excited, head over to their website to fill out a contact form, only to be greatly disappointed to find out you were outside NYNEX’s service area.

Our campaign was driving ISDN’s uptake, and it had to do so without overwhelming NYNEX with a bunch of unqualified leads from outside its target geography.  So at the agency where I was working, we had to get really good at figuring out how to do geotargeted advertising.

Getting smart about targeting

Turns out, publishers and ad networks had a number of different methods for figuring out whether somebody lived within NYNEX’s footprint or not.  Data Management Platforms (DMPs) didn’t exist yet, and the targeting methods relied mostly on what we would think of as first-party data today.

The methods ranged all over the place, from placing an ad in content meant to appeal only to New Yorkers, to using subscriber data.  Some methods spilled into adjacent areas pretty heavily and gave NYNEX a bunch of junk leads, so we had to be very careful with our buy.  That meant having discussions with ad sellers about what methods they were using.

One such partner was The New York Times.  Not only could they scale an audience of New Yorkers, but they also were able to serve our ads only to subscribers within a specific list of ZIP codes we gave them.  They keyed those ZIP codes to data they were getting from subscribers who were paying them for access, so the data points were pretty accurate.  For their accuracy, we paid a higher premium to them than we did to other partners.

What’s the point?

Why does any of this matter?  Because being a digital media buyer in 1996 meant being intimately familiar with how your ads were targeted, including knowing where the targeting data came from.

Can today’s media buyers make the claim that they know this?

They can’t with a straight face.  Most of them buy segments or check boxes in self-serve ad platforms without knowing much about what lies under that checkbox.

And it’s all because digital media’s arrogance forced it into a game of chicken with advertisers – a game that it won.

Advertisers blinked first

Last week, we touched on the overwhelming percentage of media spending that is allocated to walled gardens, but we didn’t talk much about why they’re called “walled gardens” to start with.  It’s because targeting details are obfuscated.  (For that matter, so are success measurement details – we’ll get there.)

Digital ad companies decided that advertisers knowing too much about how they target ads was a drag on their business.  Meta, Twitter/X or Google wouldn’t dream of having conversations like I had with The New York Times back in 1996 – not to chase a $50,000 media buy, anyway. 

Instead, they arrogantly hid important details behind a curtain on their own and told advertisers they could buy it – or not.  Advertisers blinked first.

And now, our second deadly sin

That is digital’s second deadly sin – Obfuscation – the idea that the people buying the ads ought not to know too much about how the sausage is made. 

Curiously, arrogance and obfuscation have paid off for the walled gardens, and even to an extent for advertising on the open web.  They control the lion’s share of digital ad spending, leaving the open web to fight over what amounts to scraps.

But it can’t last.  Next week, we will talk about why.