Google’s Death Knell For 3rd-Party Cookies: What Comes Next?

Credit: Illustration by Tam Nguyen/Ad Age

Google’s announcement to stop supporting 3rd-party tracking cookies in its Chrome browser has rustled some advertisers’ feathers recently, but is there more to the story?

Most, but not all, 3rd-party cookies are used to track users across the web. If disabled in order to stop tracking, then all 3rd-party cookies that are not used for tracking will also be affected. In place of these cookies, Google plans to implement the privacy sandbox, a rich API that advertisers will instead be able to use to distribute their ads to their target audiences. Some of the ideas they’ve proposed include:

  • A mechanism called federated learning of cohorts (FLOC), which will employ machine learning software directly in your browser to assess your interests instead of collecting your data. This information will only be shared with advertisers if large groups of people (“flocks” 🐑) with a certain interest are identified — which means advertisers targeting niche audiences will be at a disadvantage. It’s also unclear whether users will be able to opt out of the FLOC mechanism like they can reject 3rd party cookies on GDPR-compliant websites, for example.
  • A trust token integrated with the browser itself which will segment trusted and untrusted users based on their behaviour to help prevent ad fraud. This idea is modeled after Privacy Pass, a browser extension enabling anonymous user authentication for supporting websites. Users could still feign bot behaviour to be segmented as untrusted if they wanted to disrupt advertisers, however.
  • A click-through conversion measurement API which would track low-level events, in this case conversions attributed to an impression that was clicked. This would, of course, not be able to support such rich data conversion measurement that’s practically become standard in adtech. An alarming, potential competition killer, however, is the fact that Google would then be able to track and measure everybody’s ads — or at least all those displayed to Chrome users, anyway.

83.9% of Google’s total revenue in 2019 came from advertising[1], so the company clearly has a strong incentive to keep online ads as profitable as possible. It’s still early days, so we won’t see the impact of their privacy sandbox for some time. With digital publishers’ display ad revenue stalling, ad blocker usage on the rise, and privacy concerns becoming more vocal (and supported by regulation) than ever, the adtech landscape is poised for change.

The concern that brands will no longer be able to execute their own in-house analytics and measurement is not completely unfounded. Those most impacted will not be the Amazons and Alibabas of the world, companies with massive tech teams developing their own solutions for measurement. No, the losers of these changes will be the small businesses who simply lack the skills or funds to develop their own proprietary analytics, thus being forced to use out-of-the-box solutions like Google Analytics — solutions they pay for by feeding the Google behemoth with their own business data.

Is the inevitable decline of behavioural advertising a bad thing? Not necessarily, a recent study suggests. As reported by WSJ, n one of the first empirical studies of the impacts of behaviourally targeted advertising on online publishers’ revenue, researchers found that publishers only get about 4% more revenue for an ad impression that has a cookie enabled than for one that doesn’t. You may also consider the findings of a 2009 study stating that advertisers were willing to pay 2.68 times more for a behaviourally targeted ad than one that wasn’t. The good news is that privacy-oriented companies like DuckDuckGo, a search engine that only sells advertising based only on keywords, are already proving by example that it is indeed possible to be profitable without being creepy.

Entrepreneur, Economist & Marketing Specialist 🦉 Challenger, Independent Thinker 💭 Geek & cat person 🐾

Entrepreneur, Economist & Marketing Specialist 🦉 Challenger, Independent Thinker 💭 Geek & cat person 🐾