Google retains cookies on menu; AdTech biz to go on diet?
When Google was restructured into Alphabet in 2015, the holding company took “do the right thing” as its motto; ‘don’t be evil’, the original motto dating back to 2000-2001, was retained as the opening of the company’s new manifesto, until it suspiciously disappeared sometime between April 18 and 21 of 2018, being relegated to a single mention in the last line of the manifesto. On July 22, 2024, Google did the right thing: for Google.
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Advertising, marketing, and technology professionals around the world were left, if not knocked out, reeling after Google announced on its Privacy Sandbox blog that it was retaining third-party cookies on Chrome browsers. The news came on the four-year anniversary of its original announcement that it would be depreciating third-party cookies as the data-tracking technology came under increased the scrutiny of governments, consumer rights groups, and industry watchdogs.
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Kartik Mehta, Chief Business Officer for Channel Factory, believes that this move might result in the Ad Tech industry becoming more fragmented, with some companies embracing Google's new approach and others continuing to develop alternative solutions. Industry media reports have already called out Google’s decision saying that the company is putting profits over user privacy. According to a Statista report dated May, 2024, “In the most recently reported fiscal year, Google's revenue amounted to 305.6 billion US dollars. Google's revenue is largely made up by advertising revenue, which amounted to 237.8 billion US dollars in 2023.” Sajal Gupta, Chief Executive, Kiaos Marketing points out that the investments that companies have made in cookie alternatives and first-party data span multiple dimensions. “Firstly, they aim to build consumer understanding and collect customer preferences, which form the basis for personalized messaging. Secondly, these investments focus on building direct relationships with customers to foster satisfaction, engagement, and long-term loyalty. Lastly, they facilitate targeted media outreach and enable an omnichannel experience.” However, the recent changes announced by Google to retain cookies with a new user-consented feature may devalue the targeted media outreach alternatives that Ad Tech platforms were developing. The major advantage Google brings is its vast reach among the digital user base. Ad Tech platforms must address this challenge or develop niche expertise. Russhabh R Thakkar, Founder and CEO of Frodoh World, agrees that Google's decision to keep third-party cookies is a twist that could reshape our industry in unexpected ways. “Established companies that have invested in alternatives now have a unique advantage. They can continue using third-party cookies while refining their new technologies, which means they’re perfectly positioned to offer advertisers a blend of both worlds. This dual capability could be a game-changer, enhancing their market share and adaptability,” says Thakkar. “For start-ups that built their business models around cookie alternatives, this is a crucial pivot point. The key is to reframe their technologies as enhancements, not replacements. By highlighting immediate benefits like better targeting and enhanced privacy compliance, they can turn this challenge into an opportunity,” he adds. However, it is undeniable that companies both large and small, both established and new have collectively poured billions into research and development in finding alternatives to cookies, investing heavily in newer platforms like Connected TV, dOOH, and others, which don’t store third-party cookies. These efforts could be said to have been in vain now, much like articles by some reporters which included lines like the ‘inevitable crumble of the cookie.’ It should also be noted that initial reactions seem split between jubilation in large media and advertising conglomerates which have the budgets for freedom of choice and consternation for many smaller players who had pivoted majorly towards third-party alternatives in anticipation of that crumble. “Despite this, most investee companies and tech platforms will continue to capitalize on opportunities in the other two dimensions: building consumer understanding and strengthening customer relationships. These dimensions are becoming increasingly important in today's marketing world,” says Gupta. It should be noted that when Google made its announcement in 2020, Safari and Firefox also said they would block third-party cookies by default. Third-party cookies are considered one of the most intractable tracking technologies, as they allow advertising companies and data brokers to collect and sell information about the online activities of consumers, especially on internet browsers, like Chrome. According to Mehta, while more stringent laws around consumer privacy as the third-party cookies will continue to exist, for newer companies it's best to keep pushing alternatives and influencing advertising industry bodies and regulators. Thakkar muses that it’s a bit like the early days of hybrid cars: initially, they were seen as replacements for gasoline vehicles, but they ended up creating a more robust market. Similarly, cookie alternatives might evolve to complement existing systems, driving innovation in ways we hadn't anticipated. This ‘reverse disruption’ could lead to a stronger, more flexible ad tech ecosystem. “Interestingly, this move might accelerate the shift away from cookies naturally. As alternative technologies demonstrate their value alongside cookies, we could see an organic phase-out, possibly even faster than Google’s original plan,” adds Thakkar. Google responded to exchange4media’s queries on the subject by directing us to the blog post published by Anthony Chavez, VP, Privacy Sandbox, which said, in part, that while Privacy Sandbox APIs have the potential to achieve privacy led outcomes and they expect that overall performance of Privacy Sandbox APIs will improve over time as industry adoption of these alternatives increases. “At the same time, we recognize this transition requires significant work by many participants and will have an impact on publishers, advertisers, and everyone involved in online advertising. In light of this, we are proposing an updated approach that elevates user choice. Instead of deprecating third-party cookies, we would introduce a new experience in Chrome that lets people make an informed choice that applies across their web browsing, and they’d be able to adjust that choice at any time. We're discussing this new path with regulators, and will engage with the industry as we roll this out,” the blog said.m