Google has been teasing the prospect of third-party (3P) cookie deprecation on Chrome, the world’s most popular internet browser, for several years. On July 22, they announced the decision was being reversed.
While not totally unexpected, this move ends several years of uncertainty. The announcement breaks down into three concrete takeaways:
- Google is not deprecating 3P Cookies in Chrome next year
- Google will instead offer users a choice for cookie use via Chrome’s UI
- Google is discussing the path to roll out with regulators
This decision means Google is finally admitting the alternatives to 3P cookies are worse for targeting and no better for consumer privacy. That said, it was combined pressure from three groups—regulators, advertisers, and publishers—that influenced Google to make this decision.
REGULATORS
Recently, the UK’s Competition & Markets Authority (CMA) voiced concerns that Google’s Privacy Sandbox initiative created a risk of distorting competition between Google and other market participants. Further, the Information Commissioner’s Office (ICO) raised concerns with Google’s Privacy Sandbox, identifying possible vulnerabilities that could compromise user privacy.
ADVERTISERS
Intense pressure from advertisers probably helped push Google in this direction. For advertisers, or the buy side of digital marketing, getting rid of cookies certainly makes it very difficult to track users’ web activity for audience targeting and retargeting. “Signal loss” poses a formidable challenge to addressable media, and potentially crashes existing measurement and attribution models, driving down RoAS. Not good.
PUBLISHERS
On the other hand, one could argue that the sell (supply) side would be more severely impacted due to potential demonetization of advertising inventory. In 2019, Google ran a controlled study to “empirically quantify” the effect disabling third-party cookies would have on programmatic ad revenue for publishers. Google’s study demonstrated that for the top 500 global publishers, revenue decreased by 52% when 3P cookies were disabled, with a median decline of 64%.
Moreover, a recent study showed 31% lower CPMs for publishers in a cookieless world. This decline would take place because of the way real-time bidding (RTB) algorithms operate, resulting in fewer bids and therefore lower CPM bids for bid requests with no cookies/IDs. Not coincidentally, this drop mirrors the 30% lower CPMs seen in iOS, which has had no 3P cookies for several years.
WHAT COMES NEXT
In many ways, Google’s new approach takes a page from Apple’s App Tracking Transparency (ATT) framework by letting users decide directly on privacy settings. ATT requires that advertisers ask for user consent to access the “identifier for advertisers” (known as the IDFA), which is a random device identifier assigned to each user’s iPhone.
Currently, ATT has around a 30% opt-in rate, meaning roughly 70% of users are not allowing advertisers to track them across apps using IDFA. I expect similar results when Google makes third-party cookies opt in/out.
Lost in the discussion is that the ability to turn off third-party cookies already exists in Chrome if you go to settings. But let’s assume Google will soon prompt users to adjust their settings, which means of course you may soon get an annoying pop-up on every new website you visit—kind of what happens in the EU. But more likely, Google’s strategy will more closely resemble Apple’s approach for ATT—namely, a one-time decision when users first install or open up Chrome on a new device.
Whatever method they choose, the result will be the same: death of cookies via consent. In terms of getting people to opt in, I suspect Google’s approach may be ultimately challenged by regulators. For example, using language like “click here” to “provide a personalized experience” may sound better than “track you across the internet,” but ultimately obfuscates what the tech giant is trying to do.
UNIVERSAL IDs
One big question is what will happen to the plethora of Alternate IDs vendors have been rolling out in anticipation of the cookiepocalypse. End of the day, most were never going to survive, and Google’s announcement will just accelerate this culling process. Looking over the next year, they are probably all in jeopardy except for a few of the big identity spines. My guess is we now end up with just the walled garden IDs, plus The Trade Desk’s UID2, and LiveRamp’s RampID.
FIRST-PARTY DATA
One positive outcome from this saga is the push for both marketers and publishers to leverage more first-party data for paid media activation. Keep in mind, the current substrate of the internet is based on third-party-data-fueled audiences and targeting. With cookie deprecation approaching, over the past couple years, many organizations had been busy trying to rebuild this layer using first-party data and signals.
The good news is many of these approaches have yielded positive results, and we are seeing audiences built with first-party data frequently outperform third-party data models. This approach has also forced publishers to be more mindful of their first-party data assets—in many ways their most valuable asset. I do not think this trend will reverse or be negatively impacted by Google’s announcement—the genie has been let out of the bottle and there’s no turning back.
PRIVACY-CENTRIC MARKETING
Ultimately, regulators have been driving this process because people are unhappy with how their personally identifiable information (PII) is being handled. They think cookies, pixels, and other digital marketing tools used to collect data are intrusive… and they don’t trust Google and the tech world.
To prepare, organizations have been implementing strategies that include developing better customer data acquisition channels, building up first-party data infrastructure, and investing in new technologies to future-proof themselves. In this environment, data clean rooms have emerged as a useful tool to protect privacy and foster collaboration, while giving advertisers and publishers the ability to build models, target specific segments, and run analyses for audience measurement.
Privacy is now regarded as a fundamental right, and organizations are moving swiftly to safeguard consumer PII, with limited or no movement of consumer data and capturing of consent. Google’s recent announcement will neither slow down nor reverse this process.