Google Keeps Cookies…Almost

As you have probably heard, Google has announced it will not deprecate third-party cookies. Instead, they plan to offer Chrome users a “more informed choice” over their privacy controls, while allowing consumers the option to allow both Privacy Sandbox and cookie-based capabilities.

This decision is not unexpected as several factors likely led to this decision, namely: antitrust and regulatory concerns, impact on user experience, impact on publisher revenue, and industry feedback.

Why did Google reverse course?

Antitrust and regulatory concerns: Google is already facing numerous antitrust investigations and is under scrutiny by regulatory bodies such as the UK’s Competition and Markets Authority (CMA) and the European Commission, which has an open investigation into possible anticompetitive conduct by Google.

Impact on user experience: The Privacy Sandbox proposals sought to bring much of the decisioning that formerly took place on the adtech supply chain into a user’s browser. Early reports suggest a negative impact on user experience, page load times, and latency. Criteo’s testing showed up to a 100% increase in latency, which not only impacted user experience, but also negatively impacted publisher revenue.

It’s important to remember that a reported 57% of Google’s revenue comes from search and that Chrome, which has 65% of browser market share, is the key gateway to the search engine. If consumers decide that the user experience pushes them away from Chrome, then Google risks hurting their primary income stream.

Industry feedback: Similarly, the IAB’s 106-page Gap Analysis report noted problems with advertising effectiveness and overall functionality, as well as concerns over transparency. According to The Drum, the IAB ultimately stated that, “Of the 44 basic digital advertising use cases analyzed by the IAB Tech Lab’s Privacy Sandbox Task Force over the past few months, only a small handful remain feasible using the APIs in the Google Chrome Privacy Sandbox.”

Are alternatives to cookies still important?

Yes! The industry still needs to develop alternative addressability solutions because of regulatory pressures, data loss from third-party cookie syncing, and the large number of consumers in cookie-free browsers.

Regulatory pressure: When it comes to identifiers and privacy, two types of risks affect the future of addressability, both of which result from growing consumer concern over their online privacy:

1. Platform restrictions: Changes made by tech platforms, such as Google or Apple, that limit how identifiers are used and offer more consumers more privacy control on their devices.
   
2. Regulatory restrictions: Legislation passed by governing bodies, such as GDPR and CCPA, that offer consumers more transparency and control over their personal data.

Google’s recent decision mitigates the risk of platform restrictions. However, regulatory pressure will remain constant and perhaps grow. We must be prepared for the possibility of additional regulatory restrictions on consumer data.

Match rates: So, are our addressability challenges solved now that cookies are staying? No. Data loss from cookie syncing severely limits addressability.

One of the primary flaws of third-party cookies is that data drops across the supply path. Some estimates calculate that 50-75% of identifier data is lost because of issues with cookie syncing.

Each platform on the supply chain must match its third-party cookies. Latency and the waterfall method of syncing match tables means that every time the identifier makes a hop across the supply chain (from DMP to DSP to SSP, for example) there is a chance that a cookie is not matched and the opportunity to reach a consumer is lost.

It’s important to remember that the adtech ecosystem’s effort to replace third-party cookies originated before Google’s announcement to deprecate them. For example, there were already several initiatives such as the Digitrust ID and Unified ID 1.0 that aimed to replace third-party cookies.

Although we no longer have to solve for the deprecation of the third-party cookie, we must now refocus and solve for the third-party cookie itself and its inherent weaknesses with data loss.

What is the future of addressability now?

Privacy-first solutions: The industry must continue to prepare for regulatory restrictions and develop more privacy-friendly options. Solutions such as clean rooms, contextual advertising, and alternative identifiers continue to be viable.

Common/Universal IDs to solve cookie sync issues: We can expect industry conversation to return to the subject of data loss from match rates and see many ID providers reposition their offer as a solution for this. The issue of data loss from match rates will likely return to the forefront of our industry.

Targeting of consumers outside of Chrome: Approximately 35% of internet users use cookie-free browsers (Safari, Firefox, Edge). Brands need to message these customers and publishers need to monetize them. The existing set of alternative addressability solutions can help reach these audiences. Marketers should use alternative addressability strategies to ensure they don’t miss the opportunity to reach this significant customer base, and publishers should see to monetize them.

Google’s new strategy just might fast-track cookie deprecation: Can we second-guess Google’s future actions? No. This pivotal shift that Google announced this week is that users will soon have the power to opt out of third-party cookies. Platform capabilities wil not dictate this. This “choice” gives consumers more control over their data.

However, if Google further evolves its stance to “recommend blocking” certain cookies or even adopts and opt-in strategy, it will dramatically influence the future use of cookies, irrespective of platform support. A shift to a proactive approach just might accelerate the deprecation of third-party cookies, again shaping the digital advertising landscape.

Our Point of View

We have long invested in identity solutions because we believe it is in the best interest of our clients and our industry. Regulatory concerns and inherent flaws of third-party cookies make it essential that we keep working on ways to improve addressability with an array of cookie and non-cookie-based solution types.

One significant step we’ve recently taken to stay ahead of our competitor SSPs is the introduction of a new feature: frequency capping based on alternative IDs. This feature is scheduled for release at the beginning of August and will enable all our users to manage the frequency capping of their campaigns from the SSP side, using a wide range of alternative IDs.

As we navigate the future, we are committed to developing and implementing strategies that uphold privacy, enhance user experiences, and drive success for our clients. We invite advertisers and marketers to join us in this journey, embracing innovative solutions that redefine the digital advertising landscape.

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