There’s nothing quite like an explosion of ad tech news to leave you to wonder “ergh… what’s going on here.” That’s the feeling many experienced when making sense of Google’s latest glimpse into life after the third-party cookie and the impact it could have on planned cookieless alternatives.
You might be wondering what is Google actually doing, anyhow? Here’s an explainer to make sense of it all.
OK, let’s start with the basics. What has Google done?
Google’s latest statement boils down to two things: the first is that Google won’t build any user-level identifiers to track people online once third-party cookies are blocked from its Chrome browser. Perhaps more worryingly for the ad industry, though, is that Google has said these identifiers are not a good idea. It doesn’t believe they pass consumer expectations for how their data is traded nor does it expect those solutions to meet future regulatory standards.
“I think the legal case for addressing individuals on a one-to-one basis based on their external web browsing/content consumption is indefensible to start with when relying on third-party infrastructure for identity matching based on personal data, whether it’s hashed or not.” said Ruben Schreurs, group chief product officer at Ebiquity.
Wait. What is a user-level identifier?
There are many user-level IDs competing to be the next standard to the third-party cookie, but it’s more likely that there will be a set of them, with different marketers using different ones based on their needs. Many of the more popular ones don’t rely on third-party cookies. Even so, that doesn’t make them privacy-compliant, as Google’s update suggested. For example, a number of IDs are focusing on hashed emails. There’s just one snag. These solutions could be — or have the potential to be — based on a consent model that seemingly decides any user who logs into a publisher has agreed to be tracked by all companies in the large alliances and networks being assembled across the industry. Google seems to think this will be the case.
But user-level identifiers have been in the firing line ever since Google announced third-party cookies were going. Why the big fuss?
While the update made it clear what Google thinks will happen to user-level identifiers, it had scant detail on whether it would block them from its owned and operated marketplace. If it did decide to go to war with these alternatives to the third-party cookie then that could be a big problem for many ad tech vendors. Observers got a glimpse of how big of a problem it could be when The Trade Desk’s stock dropped 20% over the two days after Google updated its stance on user-level identifiers, per CNBC.
“Google is subtly warning that alternative data identification models are at risk within their ecosystem and competitors, customers and partners need to be concerned about the long term implications of that,” said Bob Regular, CEO of ad tech firm Infolinks.
Could Google really go to war with the rest of ad tech over user-level IDs?
Stranger things have happened. After all, this is the same company that decided — weeks before the arrival of the General Data Protection Regulation in Europe — it wouldn’t share log-file data with marketers, a move that effectively kneecapped those who relied on that data for cross-device attribution. Google could be just as brutal this time around. Indeed, the company has already made it clear that it will do what it can to prevent users from being targete
d in unwanted, non-first-party ways. Whether this would translate into a full-blown block on those identifiers from Chrome is another matter altogether given Google is being watched by regulators. If it did make the move then it could be difficult to defend as Google is still using its own identifier on its own properties. To turn around and tell other businesses they can’t do the same could get tricky. Still, stranger things have happened.
“If Google can find the legality to do it, then it will be actively blocking it on the browser [Chrome] side,” said an agency exec who had met with Google execs to discuss the plan. “This doesn’t bode well for companies that are relying on an alternate identifier to grow.”
Will this push the rest of the market to pivot to Privacy Sandbox?
There are a lot of questions that Google must answer before consensus is reached. Much of the uncertainty is around if and how Google will privilege its own ads business over others. Questions like whether Google will have exclusive access to certain information from FLoC (Federated Learning of Cohorts) or any other parts of its Privacy Sandbox, or if it will stop using user click data for its own targeting, are being raised in meetings behind the scenes.
Google is often accused by marketers, publishers, and ad tech vendors alike for leveraging its technology — whether it’s the buying platform or the marketplace — to actually manipulate their revenue. If companies are going to bite the bullet and back the Privacy Sandbox then Google must be more open about its intentions.
“Replacing third-party cookies via cohorts rather than universal IDs, is a positive step towards a privacy-safe future for digital advertising,” said Joe Root, CEO of Permutive. “The challenge is the chaos this will cause in the interim, Google is all in on Privacy Sandbox proposals, which massively benefit Google — I can’t see Firefox and Apple implementing it.”
So, is this about privacy or a monopoly?
In many ways, it’s about both. While Google’s update tries to prove to the world that it’s acting ethically and with consumers in mind, it’s hard to ignore the more monopolistic agenda this could point toward. Not long after unveiling its FLoC solution, it could be argued that Google is trying to nudge advertisers to switch their focus to cohort-based targeting. Is this another example of a tech giant using the death of the cookie to give its own products an advantage within its walled garden? The Competition and Markets Authority (CMA), which are already investigating Google’s Privacy Sandbox tools, will have to respond.
“What this also reminds us is that digital advertisers cannot put all their faith in ID-based solutions for the post-cookie world,” said Peter Wallace, managing director, EMEA at GumGum, an ad tech company that specializes in contextual advertising. “That’s why advertisers will have to turn to solutions that don’t rely on PII data to create a more level playing field and allow a unified targeting strategy across the walled gardens.”
Help me read between the lines here?
Google is signaling aggressively that the era of direct consumer targeting as we’ve known it is ending. It pushed some ad businesses close to the ledge and made others walk back from it. The difference between the two groups is an acceptance that they will need to build their business around the Privacy Sandbox rather than hoping to find an alternative to it. Companies can still make money this way, they just need to make peace with the fact that they may never understand why their campaign ‘works’ or not and will be dependent on Google’s technology for future success.
Getting the market to depend on Privacy Sandbox is the new monopoly for Google going forward, and it’s one with greater scale because it removes the intellectual property of targeting and data knowledge, from the market and everyone else.
Why are marketers in a tizzy?
As it stands, there’s no strong solution for user-level attribution when third-party cookies go away. Sure, there’s a part of the Privacy Sandbox that’s focused on post-click attribution, but it hasn’t gotten very far. The hope had been that Google would be open to the idea of an alternate identifier being linked to its own identifier. However, that’s not going to be the case. So, it’s back to the drawing board for many marketers.
“While the news certainly created immense uncertainty, it’s clear that when it comes to attribution, the ship has sailed on many of the current granular models that were universally applied across all spend,” said Mario Diaz, CEO at contextual-targeting vendor Peer39. “We’re looking at a world where marketers will have different attribution models based on where they’re running. This also paints a clear road ahead for marketers to start looking at alternate data solutions that can survive these challenges, and still be universally applied.”