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Google gives up trying to eliminate cookies
Source: Axios
July 22nd, 2024
Summary: Google shocked the ad industry yet again Monday by throwing in the towel on its plan to deprecate third-party cookies in Chrome. The years-long effort to move beyond cookies will instead resemble Apple's controversial App Tracking Transparency (ATT) policy by shifting the decision to users. Rather than deprecating third-party cookies in Chrome outright, Google will create a "new experience" that lets users make an "informed choice" about whether to allow cookies, with the option to disallow them at any point. Google is in talks with regulators like the UK's Competition and Markets Authority (CMA) about this pivot and will engage the industry as the new plan is rolled out.
As Google outlined in a blog post, the transition to a cookieless future will need significant work from all corners of the ecosystem. The company will continue investing in the Privacy Sandbox APIs, which will still play a critical role in advertising to users that opt out of cookies. Google also said it will introduce IP Protection in Chrome's Incognito mode to mask user IP addresses.
Also on Monday, Google published the results from its own Privacy Sandbox testing for display ads. The numbers came in (unsurprisingly) higher than the testing done by others, including Criteo. Here's a snapshot:
• For advertiser spend—a proxy for scale—Google’s tests showed an 89% recovery in Google Display Ads and 86% recovery in DV360.
• For conversion-only campaigns, there was a 97% recovery in conversions per dollar—a proxy for ROI—in Google Display Ads and a 95% recovery in conversions per dollar in DV360.
• In campaigns using remarketing audiences only, there was a 55% advertiser spend recovery in Google Ads and 49% in DV360.
• Ad revenue fell 34% for publishers using Google Ad Manager without third-party cookies or Privacy Sandbox APIs, and by 20% for publishers using Google Ad Manager with Privacy Sandbox APIs but no cookies.
Opinion: WHAT?! Google is reversing course AGAIN? What about all the time and effort and resources we've already invested? IT’S ALL GONE TO WASTE! Cookie D-Day was going to be OUR DAY OF VICTORY! WHAT WILL WE DO NOW?! WTF!?!?
This is how some are reacting. On the opposite end of the spectrum, others are breathing a heavy sigh of relief (see: Criteo investors) because they believe third-party cookies are now here to stay. But here’s the thing: This news doesn’t actually change much. We're still probably losing third-party cookies in Chrome. Maybe a bit slower, and maybe not 100% of them. But most of them.
We’ve been saying all along that we believe Google is highly motivated to get rid of third-party cookies, because it needs to compete with Apple on the privacy front to retain market share and keep privacy advocates happy. And because it knows cookie deprecation will help its ads business. None of this has changed. But deprecating cookies outright was becoming a seemingly futile endeavor, especially with CMA oversight. The CMA was never going to greenlight cookie deprecation because it would unquestionably hurt Google’s competition, regardless of how effective the Privacy Sandbox APIs could be. (newsflash: they were never getting close to cookie-level effectiveness.)
With this move, Google very elegantly clears its path towards achieving its goal:
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Pawn off the “choice” of cookie deprecation to users, instead of being seen as making a unilateral decision on behalf of users and pissing everyone off
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Get the CMA off its back
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Clear the path to getting rid of cookies once again
The 🍒 on top: Google now has a great story to tell in the upcoming digital advertising antitrust case!
Well played, Google.👏
So what’s next? Here’s our handy little guide on how to think about it:
Open Questions:
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For Google:
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What will “user choice” look like?
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Opt-in or opt-out?
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Browser level or website level?
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What will the messaging be?
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How much control will publishers have?
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Will there be phases to the rollout?
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What is the timeline for the new rollout?
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Will there be a testing phase to gauge cookie loss and its impact?
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How will Privacy Sandbox APIs change, if at all, given the new direction?
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What are the long-term plans for MAIDs, IPs, and other identifiers? Will they also require user consent, or something else?
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For The CMA
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Will they still have oversight over Google’s new rollout?
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If yes, what will oversight require of Google?
Future Likelihoods:
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Google will continue to clamp down on traditional identifiers (like cookies, IPs, MAIDs, etc.) in a variety of ways, in the mold of Apple.
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First-party data, data clean rooms, Privacy Sandbox APIs, alternative IDs, and ID resolution services will still be very important and serve as much-needed “future-proof” solutions that will be required to fill addressability gaps.
Future Possibilities:
Google will spin off cookie-reliant and sandbox-reliant ad tech products as a result of antitrust, and live that good, O&O, walled-garden life.
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