A Google Cookie Replacement Could Upend Online Advertising
Publishers and others worried about the decline of cookies, the web's foundational technology for targeting display advertising, may welcome an effort by Google to come up with a replacement. But such a move would also drastically grow the search giant's grasp on the industry.
Google is looking to create an advertising-specific identifier to replace the third-party cookies that companies now use to track browsing behavior across the web and target ads, people familiar with the effort said this week, confirming a report in USA Today on Tuesday. A Google spokeswoman said the company has "a number of concepts" to improve consumer privacy while keeping the web economy intact, but said they are all in "very early stages."
If and when Google advances its deliberations into a live product to replace the cookie, however, the digital advertising landscape would be flipped on its head.
Google is responding, to be sure, to a challenge that exists with or without its project. Third-party cookies are already endangered. First-party cookies come directly from the sites you visit, but third-party cookies are placed by others. The "Do Not Track" movement now causing so much conflict is predicated on making it harder for companies to use third-party cookies to follow consumers around the web and serve ads based on their behavior. Traditional cookies are also pretty much useless for mobile advertising. That has the whole spectrum of marketers, agencies, publishers and ad tech firms worried.
"The threat to the cookie isn't great for our business," said John Montgomery, COO of GroupM Interaction. "What it will force companies to do is -- it will force us to explore other solutions to getting data."
Google may well come up with such a solution. "In order to pay for a better and more expensive internet we need to continue to improve online advertising," said Zach Coelius, CEO of automated ad buying company Triggit. "There are only two ways we can do that: One is to make the ads more intrusive, bigger and in your face, or two, we can make them more targeted so that we no longer have so much waste with the wrong ads going to the wrong people. Google and most of the rest of us think the second option is much, much better."
But advertisers and ad tech companies are less rosy about Google owning that second option. While it's not clear how transparent Google would be about the data collected by its cookie replacement, anything less than full disclosure would likely draw criticism. If companies like Triggit or Xaxis, GroupM's automated ad buying unit, used Google's cookie replacement to target users, Google could have a window into those targets, the sites they're found on and the prices advertisers are willing to pay to reach them.
Anyone adopting Google's system would also have to bend to whatever terms Google sets in how that technology and the information it surfaces can be used. In this scenario, Google rises from being the biggest card player at the table to owning the casino. The ad tech companies would be playing with Google's chips.
Google might alternately limit its so-called anonymous identifier for advertising, or "AdID," to Google products as a way to funnel more ad spending its way. But that would at least leave the door open for another power -- such as Apple, Facebook or Twitter -- to build an alternative cookie replacement that would be open to others.
"I am of the hopeful opinion that Google will open this up to others in the ecosystem, as historically they have played very nicely with all of the different players in the ad tech ecosystem," said Andrew Casale, VP-strategy at automated ad seller Casale Media. "I would also argue that it is in their interest to do so, as if everyone adopts and endorses it, it will be more likely to be trusted by buyers which will help ease any transition from the comfortable third-party cookie we all hopelessly rely on today."
Google has already made some headway toward cross-channel targeting and attribution. Users of its Android mobile operating system and Chrome desktop and mobile browsers are usually logged in and can have their activities connected, especially after Google consolidated its privacy policies last year so that users' behaviors across Google's various products could be tied together. Then earlier this year Google announced Google+ as a social sign-in tool that would function like Facebook Connect, letting users sign in to sites and apps through their Google+ accounts.
But there is still cause for wider tracking ambitions. "Google can only see those people in the Googlesphere," Mr. Montgomery said. "They want to expand their business and visibility into the rest of the web. They might get that through Google AdID."
Contributing: Michael Learmonth