"The Closed Garden"—Enclosed by Apps

Carat, part of Dentsu Inc. Aegis Network, has released its annual "TOP 10 TRENDS." From the perspective of one of the world's largest media agencies, it thoroughly examines emerging technologies and phenomena to determine if they are at a stage where they will significantly impact advertisers. We will introduce the trends for 2016, essential for anyone involved in communications, in a 10-part series.

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Digital media is becoming increasingly closed, creating self-contained ecosystems within apps that lock users in, transforming into "walled gardens."

Reminiscent of early 2000s portals, these "walled gardens" allow publishers to keep users within their apps longer, while users benefit from reduced time spent navigating to other apps or sites. Examples include Snapchat's Discover, Facebook's Instant Articles, Twitter's Moments, and YouTube Kids.

The impact of these "walled gardens" is becoming apparent.

For instance, Snapchat's Discover is accelerating the trend of media platforms setting proprietary formats, such as requiring advertisers to use vertical video formats that align well with its content.

Apps like Google Search and Pinterest now feature "Buy buttons" that allow users to purchase products with a single click, without leaving for a third-party site. Completing transactions within the app offers greater security compared to shopping on the open web.

Furthermore, ad blockers that interfere with ad display are less problematic within apps, where publishers hold control.

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This "walled garden" trend is likely to intensify. Advertisers will need to carefully select partners, set KPIs (Key Performance Indicators), and create content tailored specifically for apps.

Drawbacks include the need to prepare materials in various formats for each app. Furthermore, differing formats complicate automated ad trading and risk creating silos in ad performance metrics.