Conversion APIs: Convenience or Compromise? Why Advertisers Should Question the Trade-Off
In the world of advertising walled gardens1— like Meta (Facebook, Instagram), Google, TikTok, Snap, and others—have become central players. They offer unparalleled reach and performance, but they also control the rules of engagement. Advertisers are encouraged to share their data freely, yet the same transparency isn’t reciprocated. It’s pretty much like a one-way!
This dynamic raises important questions: Are advertisers getting a fair deal? Is the exchange of data truly collaborative? Maybe it’s time to rethink whether the current model is sustainable.
Walled Gardens’ Data Dependency
Advertisers of all sizes are pouring their budgets into walled gardens. It’s not because these platforms are cheap—they’re not—but because they deliver results. Advertisers see real revenue from their ads.
So, what’s the secret sauce behind their success? It’s a two-ingredient recipe:
Data collected directly by the walled gardens from users consuming their platforms.
Data from advertisers’ own websites, which provides additional insights into customer behavior.
When you mix these two datasets with the walled gardens’ highly sophisticated algorithms, you get an advertising powerhouse.
However, as privacy regulations tightened, cracks began to show in the walled gardens’ foundation. The pixel—a piece of code also known as a cookie—deployed on advertisers’ websites was under threat. Between ad blockers and browsers phasing out third-party cookies, the walled gardens’ ad business faced a real challenge.
Fear not, they found a solution in the name of Conversion APIs or, as the industry likes to call them, CAPI. Conversion APIs are solutions that allow advertisers to send conversion data directly from their servers to advertising platforms. Walled gardens essentially told advertisers, “If you want to keep your ads performing like rockstars, send us your first-party data directly. Oh, and the more, the merrier!”
Walled Gardens Keep Their Data Locked
Here’s the irony: while walled gardens welcome all the data you’re willing to give, good luck getting anything in return. They got their name by protecting their own data like an impenetrable fortress.
To address the challenge of measuring ad campaign performance, advertisers were offered an alternative: data clean rooms. This emerging technology enables data collaboration between advertisers and walled gardens without exposing the underlying raw data. Think of it as a secure, neutral space where both parties can derive insights while maintaining strict control over their respective data.
Two Opportunities to Explore for Advertisers
Are advertisers being misled? Should they continue sending their valuable data to walled gardens without question? Over the past few years, the industry has emphasized the importance of keeping data secure, centrally governed, and minimizing unnecessary copies across internal tech solutions. As brands mature their first-party data strategies, they have an opportunity to reduce their reliance on walled gardens’ datasets.
Instead of blindly sending precious data to walled gardens, advertisers should consider setting their own terms for collaboration. It’s time to shift the dynamic and require collaborating on your own terms.
Data Clean Rooms for Privacy-Preserving Collaboration
Rather than sending and exposing their raw conversion data, advertisers could require walled gardens to access insights through a data collaboration environment (e.g. a data clean room). The downside risk: ad performance on these walled gardens may decline without the detailed data.
Synthetic Data, Digital Twins
To address this challenge, brands could explore the use of synthetic data or digital twins—simulated datasets that mimic the characteristics of real consumers without revealing sensitive details. This approach allows advertisers to protect consumer privacy while still providing the insights walled gardens’ algorithms rely on.
The Current Reality of Conversion APIs
So far, there has been little pushback against Conversion APIs (CAPI). In fact, they’ve become a common practice, making it easier for brands to send their data directly to walled gardens. But this raises an important question: when will organizations start challenging this practice?
Sending valuable datasets without control contradicts the broader effort to reduce data copies and maintain governance. It’s time for brands to rethink their approach to generate revenue from ad campaigns.
🔑 And the less you depend on walled gardens’ algorithm for segmentation and decisioning, the less data and insights you will have to open up outside your business.
A walled garden in advertising refers to a closed ecosystem where a single company or platform controls the content, data, and advertising opportunities within its environment.