As Google Chrome crumbles the third-party cookie, what's next for adtech?
For 25 years, third-party browser cookies have tracked the journeys of internet users. These maligned lines of code are unlikely to celebrate a 30th anniversary, however, with Google revealing plans to block them across its Chrome browser by 2022.
Given Chrome's mammoth 66% monopoly on the browser market, the move has raised big questions about the future of cross-site tracking, retargeting and ad-serving for the adtech industry.
Right now, hundreds of third parties track people every time they hit a domain. Privacy laws, including the EU's General Data Protection Regulation (GDPR) have already turned the tide against mass-surveillance and now Google will effectively crumble the third-party cookie when it rolls out its Privacy Sandbox API.
Justin Schuh, director of Chrome engineering, outlined his intent to “render third-party cookies obsolete” in an announcement on the news. This single API change is likely to alter the fabric of adtech as we know it, having ramifications for digital marketers across the globe. The tech giant will be working over the next two years to iron out some of the creases emerging from the obsolesce of the cookie.
So what happens next?
The early indications are not encouraging for adtech companies.
Immediately after the announcement Criteo's stock crashed, as did other vendors in the space that have built up cookie-reliant audience databases.
Greg Paull, co-founder and principal at consultancy R3, said "retargeting focused adtech companies" such as Criteo were most likely to face instant obstacles.
"They have to adapt by fundamentally changing their business and moving away from the third-party data ecosystem," said Paull. "There might be an immediate loss of some programmatic revenue which is third-party cookie reliant, which could be a big hit for some publishers, but in the long-term it improves their bargaining position."
However, the play from Google is far from a shot out of the blue. Browsers including Safari and Brave beat Chrome to the punch, and the industry has had time to come to terms with the fact its main source of data collection was being phased out.
But that doesn’t mean Google is killing adtech. Signals such as clicks or conversions will still be stored in its browser instead of being broadcast to third parties, all in a bid to anonymise user data.
Writing in AdExchanger Ari Paparo, chief executive of Beeswax said view-through attribution, third-party data, DMP and multitouch attribution will be “dead” under the proposals. We’re now facing a world with significantly less measurement and targeting.
Nonetheless, Paul Gubbins, programmatic lead at video adtech company Unruly branded Google's a “positive step forward for consumer privacy” that will force a restructure of the industry. He believes it is time to build a joint-up ID solution to fill the void.
“We may end up at a point in time with so many fragmented identifiers and methodologies that we struggle to still deploy the practice of data-driven advertising such as real-time bidding.”
Ben Gott, senior vice-president, analytics leader EMEA of Merkle, predicted that Google will introduce an ID solution to replace the cookie, which "could be a new ecosystem that they could own.”
There is also a feeling that Google is pulling up the ladder after itself.
Johnny Ryan, privacy advocate and Brave browser thought leader, said that the change will be good for the web, but was critical of the two year gestation period. He doesn't think it is a selfless act from the tech giant.
“Google is building a moat. It doesn’t don’t need third-party cookies to track people. It has code live on virtually every single website and app.”
As a result, we’re going to see a lot of consolidation repositioning and new product offerings in adtech. Gubbins joked that execs are quickly brainstorming contextual ad plays after years of leaning into microtargeting.
Many existing products will simply fail to work without the third-party cookie, said James Parker, chief solutions officer of data and planning at Jellyfish.
"There's going to be a limited amount of platforms where you can join all the data together. We are kind of going back to the days of media mix modeling.”
Google will continue to generate all the first-party data it needs to assure market dominance, particularly on YouTube. Matt Keiser, founder and chief executive of LiveIntent thinks the move will benefit the triopoly.
“In this new world, companies like Facebook, Amazon and Google will continue to thrive because they continue to have access to first-party data. However, you know who else has access to first-party data? Anyone who drives audiences to their websites: Publishers and advertisers.”
There is an opportunity for bigger publishers – think the size of WarnerMedia – to capitalise by building upon actionable profiles on loyal, engaged audiences – essentially building their own walled garden.
The larger the audience, the more appealing the proposition. Those who can deliver sophisticated targeting, actionable insights, and a brand-safe environment alongside quality content could benefit. Smaller publishers who can't deliver on this may struggle as an emphasis returns to contextual placements.
Keiser said: “The agencies and ad-tech providers and those who have been mastering third-party data will lose their privileged position in this new world. You used to have the power if you sat across many publishers and brands like an agency or an ad-tech provider but now: it’s the first-party data owner who chooses whether to share.”
Scott McDonald, president and chief executive of Advertising Research Foundation is “sanguine” about the announcement. He doesn’t really believe “multi-touch attribution ever really worked the way it was promised”.
Marketers had “false confidence” in the third-party data solutions they’ve been relying on for the last few years in his opinion, McDonald said.
We’ll likely see a return to brand awareness and direct response campaigns. A return to the traditional cornerstones of advertising where every movement and action of the consumer isn't attributed to single ad.
"This notion that every single thing could be accounted for through a clickstream, it's kind of tempting and it's kind of acted like a drug and intoxicated many marketers that should've known better," McDonald said.
He concluded that advertisers will be informed of how many people clicked on their campaigns. What'll be fuzzier is who did it, and where. But that is OK for McDonald, he’s happy that the “illusion” of the medium's effectiveness is being reduced.