Overview

Google recently reversed its decision to phase out third-party cookies in Chrome, a move that has significant implications for the digital advertising industry. Despite this shift, it’s important to stay focused on advancing towards privacy-safe advertising solutions. This boils down to a move from Google to avoid the regulators, but the objectives remain the same.

As the dust settles, it’s clear that a lot of posts and chatter stems from people merely reading the headlines and not the full story. Cookies are not about to make some massive comeback (some have even suggested Apple may bring them back!). The journey towards cookieless continues and the strides made to date are not a waste of time or resources. This represents the time to double down on authenticated ID solutions, ID-less solutions (like contextual) and to lean into Google’s privacy sandbox.

There’s a lot missing from the Google announcement too – the most obvious is timelines. Perhaps they have learned from the 4 year debacle around cookies, and realised they can’t keep to their own timelines anyway. The new strategy – covered below – has a lot left unanswered, the biggest in terms of impact is ‘what will the new Chrome user experience be’? This will have profound implications on the cookie landscape in Chrome and what percentage of Chrome’s users have cookies enabled post the roll-out of the changes. Will it look like Apple’s solution? Explicit opt in or out? Default in or out? How will the prompt be presented to the user?

Seemingly small product decisions on Chrome will have multi-billion dollar impacts on those using cookies to deliver addressable advertising and indeed the digital advertising market in general, across both the buy and sell sides.

Privacy and Efficiency Concerns with Third-Party Cookies

Third-party cookies have inherent limitations and were never perfect anyway – least of all for B2B. In other words, they’re under the spotlight for more than one reason:
– Synchronisation Across Domains: This causes significant latency and inefficiencies. – Poor Match Rates: Resulting in missed opportunities for brands.
– Data Leakage Risks: Leading to potential privacy violations.
– Compliance Issues: Struggling to meet legal requirements for consent and data processing.
– Browser Support: Not supported in Safari, Edge and a bunch of other popular browsers, thereby missing a substantial chunk of business traffic.

From ‘cliff edge to user choice’

Google’s decision to mandate the deprecation of cookies was meeting significant regulatory headwinds, many of which were led by the UK. Privacy Sandbox, positioned as Google’s spearhead into the post-cookie landscape had met a lot of criticism and it didn’t (and doesn’t) even play well with Google’s own tools let alone the independent adtech/martech market. Concerns extended to the near-100% increase in page latency caused by running Sandbox, and even overlooking the ad performance issues that would cause, the irony that page load speed is a key factor in Google’s own search algorithms is painfully ironic. The IAB tech lab ran an exhaustive GAP-analysis on Privacy Sandbox, spanning 6 months and 65 independent adtech participants and aimed to identify flaws in its solution. The list of concerns spanned almost every conceivable use case for the solution.

I think a considerable part of this decision links to the impact that Privacy Sandbox would have had on Google’s market share. Criteo flagged concerns that dropping cookies and moving to privacy sandbox would push Google Ad Managers market share from 28% to 83% – a 360% market share land grab for a company that already represents the dominant player in the industry. Google has still not addressed this – but we can assume the regulators were considering this factor. Dumping 3rd party cookies would have pushed Google into monopoly territory.

The key change in the plan is to move from a full cookie shutdown to user choice.
Historically, when Apple did this with iOS and IDFA’s, this has seen between 75-96% opt-out rates .This user behaviour we can assume will be repeated, and so mean very little changes with this new plan of attack. In other words, irrespective of whether Google deprecates cookies in one foul swoop or enables user choice, the impact will be similar – a dramatic drop in addressable audiences. It’s also worth noting, according to Business of Apps, that the ‘educational’ content and ‘publishing’ content that captures B2B research media has amongst the lowest opt-in rates amongst the major app niches, sitting at just 7% in Q1 2023 and 11% in Q1 2024 for educational, and a marginally higher 15% for publishing in Q1 2024. In the UK across all niches, the opt in rate is 25%.

The move enables Google to deliver cookie deprecation aspiration. Same outcome (nearly, assuming ~75% opt-out in the UK, matching the IDFA UK number) and much lower likelihood of regulatory intervention accordingly.

In essence – one relatively small update to Chrome (adding a prompt which lets Chrome users block all 3rd party cookies with one click) could lead to the adtech market [who haven’t chased cookieless identity solutions like ID graphs] being boiled like frogs in hot water – totally caught out and unable to react because they only read the headlines around ‘Google cancels plans to deprecate cookies’ and not the finer details.

The Impact of Chrome’s Consent Mechanism

Google plans to introduce a new consent approach billed as ‘informed choice’, where Chrome users will decide whether they want cookies or not. This is expected to reduce the availability of third-party cookies significantly, akin to Apple’s App Tracking Transparency (ATT) framework. The ATT framework has shown low opt-in rates, averaging around 30% in the U.S., indicating that many users are likely to reject tracking. The exact impact will depend on how Google frames this choice, with more neutral presentations potentially leading to higher consent rates, which in turn could change over time (i.e. start to lower) as the product prompting gets tweaked and sandbox matures.

Therefore, a lot will rest on the wording around the upcoming Chrome update. My view is it will be neutral, and not scaremongering in its tone around cookies, at least until the dust settles and Google has seen the impact across all stakeholders and addresses the concerns around sandbox and their market share.

Right now – across Europe (post GDPR), cookie opt in rates are ~60% but differ markedly between publishers, making an exact number hard to ascertain. Apple’s framework gets ~25% globally. I expect cookies opt-in on Chrome will land in between this with a more neutral presentation of the options from Chrome/Google. Looking at the data, around 38% of users ‘blindly accept’ cookies in the US anytime that they are prompted – perhaps representing a form of ‘target’ for where consent could land.

Based on Chrome’s global 65% market share and a 38% opt-in, we’d be down at around 25% of global users being reachable with cookies. When Google tested the privacy sandbox with Criteo, cookieless web traffic monetised dropped anywhere from 34-60% versus cookie web traffic. This is pretty much best case – so the need absolutely remains for cookieless solutions.

Imagine though if the ‘informed consent’ was presented something like ‘Good morning Mike, by the way you have 760 tracking cookies on your browser, want me to block them permanently?’ Over time the messaging in this prompt could get more ‘adventurous’ and cookieless audiences would drop rapidly.

FunnelFuel Implications

To my mind, I have not read anything that should stop our, or anyone else’s, journey towards a fully cookieless solution. Our current tools do not require cookies but benefit from them. If cookies did entirely disappear tomorrow, our analytics and ID graph would continue functioning fine. I believe smart martech companies will continue building learning and ID models using cookies as a bridge, meaning this small subset are amongst the ‘winners’ from this announcement.

FunnelFuel’s Identity Graph (ID Graph) represents a first-party cookieless data solution, utilising a carefully selected set of signals which can be mapped in the programmatic world to companies. A multi-ID, dynamic multi-browser, multi-channel buying graph is as important as ever.
Google’s decision underscores the need for continued innovation in privacy-compliant advertising. The internet and the users of it, all of us, are nowerdays increasingly privacy aware. This is not changing, and the sentiment behind the role played by cookies won’t either. The high opt out rates shows that, rightly or wrongly, people do not want them.

Market and Regulatory Landscape

Google’s pivot likely results from antitrust pressures and evolving regulatory environments. The Privacy Sandbox remains in development, aiming to balance user privacy with targeted advertising and reporting. Previous Privacy Sandbox tests indicated significant revenue drops for publishers without identifiers, highlighting the challenges ahead. Privacy Sandbox is about to add IP based data – making it relevant to us for the first time. Previously it was a stronger value proposition for performance marketing and replacing cookie based attribution. We’ll keep a watching brief around the Privacy sandbox and its usefulness for a B2B focused organisation, which requires extreme precision around hard to locate audiences versus large cohorts. We’ll take a measured (and slightly sceptical) view over to what extent Google really sees this as the solution or if something bigger is coming. We understand Google is adding IP data and other signals that can make the sandbox more viable for FunnelFuel. Our core focus is to continually develop cross device and cross browser solutions to identify B2B audiences at scale, especially where impressions can be bought at better value outside of cookie browsers, and not focus overly on single browser solutions where a common identifier remains.

Closing thoughts

Google’s decision is a redirection, not a reversal, on the path to a privacy-focused future. FunnelFuel remains committed to pioneering privacy-compliant advertising solutions, ensuring robust, effective strategies that respect user privacy and preferences. By staying ahead of regulatory changes and industry trends, we aim to support both advertisers and internet users in a transparent, secure digital ecosystem.

There are winners here, hence the celebratory posts on LinkedIn. Many brands are simply not ready for the post cookie landscape, 76% of brands use attribution modelling, which is traditionally highly reliant on cookies. 85% of brands measuring attribution use last click or first click attribution, and they can keep this model on Chrome for now. Brand spend is the lifeblood of the internet (ad funded model) and this spend is critical, giving more time to find cookieless answers. Some adtech and publishers win too, without the risk of the cliff edge drop in monetised traffic and thus revenues. The opportunity remains for the unique ID players like Liveramp and ID5 to push on, whilst cookies remain the dominant sell side identifier.

FunnelFuel’s approach ensures that our clients can navigate these changes effectively, maintaining the integrity and efficiency of their advertising strategies in a continually evolving landscape.