Inside Google’s post-cookie ad tech troubles with advertisers

Google’s new Privacy Sandbox, a post-cookie programmatic ad ecosystem meant to replace the old internet ad pipes, is being viewed more like a sand trap by the ad tech community. In recent days, major partners in Google’s Privacy Sandbox overhaul, which represents the most significant change to advertising on the open web in decades, released early reactions. Among the complaints is that Google’s products appear to increase market share under the new paradigm, although that could be related to a lack of testing from other market participants. Google is seeking to drum up more industry buy-in, a spokesperson for Google told Ad Age. Check out the latest Ad Age events and award programs The Privacy Sandbox ad platform also reduced revenue for publishers in some of the early results, according to multiple participants. Some advertisers found Privacy Sandbox does not deliver the same effectiveness as cookies, the ad trackers that are being phased out on Google’s Chrome web browser. The findings are still preliminary, and they were prompted by a regulatory review that Google is under in the U.K., which it must follow before killing cookies. Also read: How to prepare for the post-cookie internet Even so, many ad tech vendors in the program have expressed optimism that Privacy Sandbox is fixable with tweaks. Others are not so sure, and Google rivals appear to be cheering for its failure. “Google cannot satisfy, with Google Privacy Sandbox, the concerns with the current designs,” said James Rosewell, director of Movement for an Open Web, an outspoken interest group. Rosewell said he is calling for Privacy Sandbox to “radically change the design.” The Movement for an Open Web found renewed reasons to criticize Google’s effort after Criteo, a major ad tech platform and active participant in Privacy Sandbox, issued its first findings about its tests. Criteo did say it believed in the future of Privacy Sandbox, with a few alterations, but the firm’s notes were harsh. According to Criteo, Privacy Sandbox had latency issues, slowing down the loading of websites as the ad auctions occurred. Perhaps most concerning, at least for regulators looking for competition issues, Criteo found publishers were losing revenue and that Google Ad Manager’s [GAM] ad products were gaining market share in Privacy Sandbox. “GAM is the one returning a confirmation around our bid, we know we’re getting the labeled traffic from GAM and from AdX [Google’s supply-side platform and ad server] in return,” said Todd Parsons, Criteo’s chief product officer, discussing the ubiquity of Google’s ad tech in the Privacy Sandbox. “What we observe is that we’re not getting it from other publishers and from other SSPs.” Also read: Yahoo tests Privacy Sandbox Low adoption Google’s “captured share of publisher revenue” went from 23% to 83% in Criteo’s Privacy Sandbox tests, which analyzed how ad auctions perform when they incorporate different signals—auctions that include third-party cookies and ones without. Google’s market share in Privacy Sandbox could be a function of the lack of testing, with few SSPs and publishers migrating to the new system. As more ad tech providers join, Google’s share of the market will likely decrease. Google has said that its ad tech has no special advantage within Privacy Sandbox, which is a key point for the future of the project. Google’s Chrome team has been designing the new ad ecosystem, and Google’s ads teams are beholden to the same restrictions as other demand and supply-side platforms. “If you’re buying Sandbox inventory today you are buying about 80% of it from Google,” said Michael Lamb, chief commercial officer at RTB House, a demand-side platform. “The idea that this change somehow would increase their market share on the sell side, no one is saying that’s what Google is trying to do, it’s just stating that the current state of SSP adoption means AdX would take a bunch of share.” Google recently increased its outreach to SSPs to encourage them to start testing Privacy Sandbox, according to a Google spokesperson. “We expect results to continue evolving as others across the industry adopt the Privacy Sandbox APIs and optimize their usage,” a Google spokesperson said in an email to Ad Age. “[Google] Ad Manager does not have special access to the APIs, and Criteo has encouraged others in the ad ecosystem to test.” Criteo’s data on publisher revenue was also jarring. “They would lose 60% of revenue coming through our pipes and our bidding the way the system is set up today,” Parsons said. Despite seeing “some very tough results in our testing,” Parsons said that Criteo was “still committed and investing” in the tech. “It’s not possible to predict publisher performance based on effectiveness of a single buying platform, as publishers typically work with dozens of demand sources,” a Google Chrome spokesperson told Ad Age in an email statement, adding “we expect performance numbers to evolve, and they currently don’t reflect how the overall ecosystem will perform in a true marketplace, which won’t exist until adoption expands alongside third-party cookieless traffic.” Criteo’s report was the first shoe to drop. Since then, ad tech vendor Index Exchange and MiQ, a programmatic media agency, also released their findings. Index Exchange detected a 33% decrease in cost per thousand impressions (CPMs) on ads in Privacy Sandbox compared to the value of ads served with third-party cookies. The Privacy Sandbox CPMs were slightly more valuable than ads without any third-party cookies, Index Exchange said. Index Exchange also detected the latency problem, with page load times increasing 28%. NextRoll, a demand-side platform, issued its first test results yesterday and said its test included 20,000 campaigns in April and May. “While these private APIs are functional, more work is required for Privacy Sandbox to sustain a healthy digital advertising ecosystem,” NextRoll said in its blog post Monday. NextRoll said that the sandbox test did not have the same scale, generating about 65% the number of ad impressions as the average campaign, according to its blog post. NextRoll also saw the costs per thousand impressions triple and the costs per click double, which are two key metrics for the price of ads. NextRoll said the way it configured its bidding to participate in Privacy Sandbox could account for the rise in CPMs and CPCs. “The magnitudes of these decreases in key performance metrics are beyond the level that would be acceptable to the advertising ecosystem today,” NextRoll said. Still, the firm maintained that the APIs show that “private advertising is a true possibility,” and that the company shared Google’s goal of “creating privacy-preserving advertising,” with some changes it advocated. NextRoll, for instance, detected the possibility that Privacy Sandbox could open new fraud vectors for bad actors, but the company did not disclose the nature of the vulnerability, so as not to educate fraudsters. NextRoll said it was working with Google to shut down the vulnerabilities. NextRoll also asked for a firmer timeline from Google to commit to an exact cookie deprecation date; higher publisher adoption; and fixes to the latency issues that others also detected. Privacy and power In 2019, Google first announced the Privacy Sandbox initiative, and it represented a complete overhaul of open web, programmatic advertising. Since then, Google’s plan to kill cookies, and its Privacy Sandbox designs, have evolved, and there have been multiple delays. Google’s latest delay came in April, when it bowed to pressure to push cookie deprecation from this year to 2025. Google’s goal was to catch up to Apple Safari and other browsers, by dropping cookies in Chrome, which are internet trackers that help target ads to website visitors. The problem with cookies is that they are seen as invasive, following consumers as they traverse the web. Without cookies publishers, advertisers and ad tech vendors needed a new system to target and measure ad campaigns, and any change threatens to diminish the revenue of businesses that rely on the open web. Advertisers spend about $88 billion a year on open web, programmatic advertising, according to a report last year from the Association of National Advertisers. Also, Google’s Chrome has a higher than 60% share of the global browser market, and Google is a dominant stakeholder in ad tech on the publisher and advertising sides. Google had to submit to the U.K. Competition and Markets Authority to show how Privacy Sandbox would maintain fairness on the open web, not harm online business and advertising, and not unduly advantage Google. Google’s task is difficult because it not only has to satisfy the CMA’s demands about preserving competition, but it also has to comply with European regulatory concerns about privacy. Those two forces are at odds. Measuring up As for MiQ, its blog post last week showed some glimmers of success, at least for one component of Privacy Sandbox—the attribution and reporting API (ARA), which is the pipe through which DSPs measure the effectiveness of ads. Privacy Sandbox is comprised of a series of APIs that facilitate different ad functions, such as audience targeting, contextual advertising services and reporting. “In our first wave of testing, ARA reported on 84.9% of the same unique converters as cookies, with an additional 3.7% that cookies did not capture (some of which will be noise),” MiQ wrote in its blog post. “Given that event-level reports capture the same richness of data as legacy conversion pixels, this is a highly viable optimization dataset.” Attribution and measurement are an important goal for marketers. The measurement landscape has changed dramatically in recent years with the introduction of privacy measures on browsers and devices, such as Apple’s anti-tracking policies. The Privacy Sandbox’s attribution and reporting API, though, does have drawbacks, according to Justin Rau, group product manager at NextRoll. “We do have concerns about the level of noise being introduced,” Rau said. “Noise” is excess data that Google sends through the APIs to obfuscate personal data. Rau said the noise can make attribution and reporting ineffective for small advertisers. NextRoll also would like to see changes to Privacy Sandbox similar to the other ad tech vendors and commit to an exact date when it will turn off cookies, because so far it has set a vague goal of the middle of 2025, Rau said. It also needs to fix the latency issues and open up to more cloud providers, Rau said. Google has designated its own cloud and Amazon Web Services as “trusted execution environments” to handle some of the ad functionality in Privacy Sandbox. Moving parts of the system to the cloud can speed up the system, but ad tech vendors want Google to integrate with more cloud providers. The lack of scale and adoption has been another weight on testing, according to ad tech leaders. Google has indicated that many of the results the vendors are seeing will change once Privacy Sandbox is operational, but that’s a Catch-22. The vendors can’t truly predict what will happen or trust the indicators. “That’s another thing that I see as being a little bit frustrating,” Criteo’s Parsons said, “which is, well, this isn’t a functioning market yet, so how could you possibly predict the performance of it.”

Inside Google’s post-cookie ad tech troubles with advertisers

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