Third-party cookies continue to crumble after Google said it will begin phasing them out within two years from its popular Chrome browser, the company announced today.
The move comes as digital advertising is seeing significant change in how ads are bought and sold. Privacy regulation is already in full swing both here with the California Consumer Privacy Act and abroad with the European Union’s Global Data Protection Regulation. Meanwhile, other popular browsers, such as Apple’s Safari, which commands nearly 52 percent market share on mobile, have already implemented similar measures to prevent tracking users all over the web. Google's cookie pledge comes six months after it announced its own solution to replace third-party cookies, called "Privacy Sandbox," which it says will allow publishers and advertisers to continue to target ads to consumers while without violating privacy.
Google Chrome has a 69 percent market share on desktop and 40 percent on mobile, according to StatCounter data. Given its large presence, Chrome’s move to remove third-party cookies will surely impact all facets of the ad industry, says Sturat Colman, VP of sales at InfoSum, a data technology company.
"This announcement leads to a fundamental shift in how the industry understands and activates identity, which underpins everything we do – such as planning, activation and measurement,” Colman says. “It is undoubtedly a watershed moment.”
Google says it wants to arm its users with privacy control, but at the same time, doesn’t want to gimp publishers from generating ad revenue and brands from targeting consumers with so-called relevant ads.
“Users are demanding greater privacy — including transparency, choice and control over how their data is used — and it’s clear the web ecosystem needs to evolve to meet these increasing demands,” Justin Schuh, director of Chrome engineering, said in a blog post Tuesday. “Some browsers have reacted to these concerns by blocking third-party cookies, but we believe this has unintended consequences that can negatively impact both users and the web ecosystem.”
He continued: "By undermining the business model of many ad-supported websites, blunt approaches to cookies encourage the use of opaque techniques such as fingerprinting (an invasive workaround to replace cookies), which can actually reduce user privacy and control. We believe that we as a community can, and must, do better."
Cookies were once the bedrock of targeting users through programmatic advertising, but the rise of ad blockers and the practice of consumers clearing their cookies hindered their effectiveness. The ad tech industry soon found a workaround through device "fingerprinting." The practice involves taking what browser a person is using and coupling that information with the person’s unique browser settings in an effort to build a unique profile about who they are without cookies. These settings include using the person’s IP address, what extensions, fonts and plugins they have installed. This information is then used to create a profile on the user, which in turn is used to target them with ads through programmatic without the need of cookies.
Impact on brands, publishers and ad industry
Google says its Privacy Sandbox solution avoids fingerprinting. “The Privacy Sandbox builds measurement natively into the Chrome browser in order to provide user anonymity,” says Michael Neveu, senior technical solutions engineer at MightyHive, a media consultancy owned by S4. “The Privacy Sandbox moves away from individually identifying information of third-party cookies and uses an API in Chrome to centralize data and ensure it’s only accessible to marketers when Chrome determines user activity will be anonymous.”
Neveu suggests Google is implementing this change because both consumers and lawmakers are demanding privacy. “Where the EU led with GDPR, others like California quickly followed. Technology companies, such as Apple, Google and Mozilla are also answering these calls for privacy through these changes to their software.”
Google says it is confident that Privacy Sandbox “can sustain a healthy, ad-supported web in a way that will render third-party cookies obsolete.” But some industry players suggest the move will only strengthen Google’s so-called walled garden.
“Chrome says it will make cookies ‘obsolete,’ but behind it there is the message that Chrome wants to come up with an industry mechanism for targeting and measurement that works for advertisers, publishers, consumers and other browser providers,” says Alex White, chief operating officer at Peer39, a contextual data provider.
“For brands, this is a final curtain call on their ability to execute in-house analytics and measurement,” says Jeff Greenfield, chief attribution officer at C3 Metrics. “Come 2022, brands of all sizes will need to work with external independent platforms who either have relationships or can navigate this brave new world of walled gardens."
According to Google, providing some sort of solution is critical to both users and companies. Last year, the company said removing third-party cookies would reduce publisher ad revenue by 52 percent. “Our goal for this open source initiative is to make the web more private and secure for users, while also supporting publishers,” the company says.
It may also impact Google’s own ad business, says Michael Bertini, director of search strategy iQuanti.
“Google needs to be careful with moving away from third-party cookies,” says Bertini. “Advertisers may end up shifting some of their paid budgets to organic and social.”
Bertini says some of its clients spend millions each month, but may take a fraction of that money and direct it toward content creation or social media marketing once Google’s change is implemented. “They could potentially see a better ROI than paid without third-party cookies,” he says. “Not having third-party cookies would change the game entirely.”
