The Cookie Continuity Crisis?

The news that many welcomed, some expected and few predicted (and no I wasn’t one of them) that Google would NOT be removing 3rd party cookies from its Chrome browser, came in the early evening on Monday, 22nd July, over 4 years since Google’s initial announcement on the future of 3rd party cookies in its web browser. This marks one of the most significant reversals in position in the history of the adtech industry, with wide sweeping implications for the future of ad targeting, personalisation and measurement across the digital marketing landscape. 

The Announcement 

The announcement, shared by Google on its Privacy Sandbox website states:

“We recognise this transition requires significant work by many participants and will have an impact on publishers, advertisers, and everyone involved in online advertising. In light of this, we are proposing an updated approach that elevates user choice. Instead of deprecating third-party cookies, we would introduce a new experience in Chrome that lets people make an informed choice that applies across their web browsing”

The press release implies that Privacy Sandbox, Google’s flagship initiative to identify non-cookie alternatives to support tried and trusted use cases across ad targeting and measurement, has faced headwinds in the form of regulatory pressure and lacklustre testing adoption and performance. As a results, and in short, Google Chrome will not remove 3rd party cookies entirely, instead seeking to offer a choice to users around whether 3rd party cookies can be applied, or not.

Mixed Emotions

Although many in established adtech players will feel a sense of relief this morning, there will also be a fair share of disappointment, frustration and anxiety, on the back of the announcement. For established ad tech companies that have been slower to adapt and have continued utilising 3rd party cookies, I imagine they’ll be a sense of renewed optimism as future revenue streams that were in question yesterday, look more promising. However, for those businesses that have invested millions in reinventing themselves for the cookieless future or have accepted millions in VC funding to drive the future of addressability through ID-less capability, there might be more mixed feelings waking up this morning.

For others, it will simply be the sting of opportunity cost over the past several years, with a feeling of preparing for something that ultimately won’t come. Like undergoing a gruelling 10-week training camp for a fight only for your opponent to pull out at the last minute. The initial relief fades quickly and is replaced by the disappointment that you won’t get the opportunity to demonstrate your talents.

The Implications

The immediate message is that time and effort invested in developing non-cookie alternatives has not been wasted.

• 3rd party cookies are still not available in Safari, Firefox, and will not be available in Chrome without explicit opt-in, so many “cookieless solutions” will still be applicable

•  Much of the effort of the past 4-years was focussed on developing systems to collect and manage consent-based 1st party data assets in a customer-centric fashion. This is important moving forwards as privacy regulation continues to evolve.

• Privacy Sandbox will continue to evolve and initial tests have provided some insight into how cookieless audience activation and measurement may work in the future. Given time to organically develop, Privacy Sandbox could still represent a material source of future-proofed digital marketing capability

• Many non-3rd party cookie solutions are future-proof and scalable, and generally represent an evolution in approach, not a “neutral” side step to avoid cookie removal. For instance, Meta’s CAPI and similar server-side data collection - allowing collection and transmission of data server-side with faster page load times, better data retention. Contextual Solutions - ensuring the future of privacy compliant audience activation using real-time context and media partner 1st party data sets. Finally, SSP Curation - Inventory and audience-based curation has become increasingly popular with benefits in supply-path transparency, proximity to publishers and delivery across verified, trusted inventory sources

Making Predictions

It’s always difficult to offer predictions so soon after a major reversal in position, but, for what it’s worth, my initial instincts lead me to believe we should expect to see:

• Some divestments from contextual solutions - there has been an unprecedented shift in investment into the contextual space over the past 4 years and it has become a little overcrowded. We might see smaller players struggle to maintain position as the momentum behind contextual slows slightly.

• Cooling off on customer-based solutions – there will probably be some pressure on clean rooms, onboarding solutions, and universal ID capabilities, which all promote themselves as cookie-free alternatives. In reality, I think they’ll be little movement here in reality as the industry talk has always been well ahead of the demand and use cases as I discussed in a previous piece

• A little bounce back of 3rd party audience partners, who will be able to distribute at higher volumes via direct cookie integration in cases where that makes more sense vs. alternatives like SSP curation. It’s unlikely to be a wholesale return to 3P audience partners given some negative reputation on behavioural targeting in general, and overall success with contextual solutions.

• Advertiser reprieve on 1P website retargeting - This will be the largest impact in terms of a “sigh of relief”, with advertisers set to return (or more likely continue) use of website-based audiences vs. moving to a customer-based approach

• Some return to "traditional" multi-touch digital attribution (MTA) solutions, however on the whole measurement seems to have moved on in favour of Agile MMM based approaches.

Won’t Everyone Just Opt-Out?

Given Google is providing people the choice to opt-in to cookies, won’t people simply opt-out? Well maybe. But I wouldn’t be so sure. Many people made the same doomsday  predictions when Apple introduced App-Tracking Transparency (ATT) in 2021, however according to recent studies, opt-in rates have remained high at 15-20%. If this level of opt-in carries over to Google Chrome, there will be a critical mass scale to support the vast majority of use cases and campaigns.