\n<\/p>\n
Can it be that it was all so simple then? Mozilla deprecated third-party cookies in its Firefox browser in 2018; Apple did the same for Safari in 2019.<\/p>\n
In January 2020 Google announced it would deprecate cookies in the Chrome browser, and here we are, more than four years later. Deprecation has been postponed again and again. It\u2019s now set to happen in the second half of this year \u2014 and indeed one percent of Chrome\u2019s 2.65 billion default users have already been permitted<\/a> to opt out.<\/p>\n It\u2019s been one step forward, two steps back all the way for Google\u2019s Privacy Sandbox, the initiative intended to devise new and privacy-compliant ways for digital advertising to operate on the open internet. Remember FLoC<\/a>? <\/p>\n <\/p>\n The latest steps back have featured an evaluation of the proposed Privacy Sandbox protocols by the IAB Tech Lab. It was not friendly<\/a>. \u201c(T)he changes mandated by Privacy Sandbox will require substantial development and infrastructure investment costs for both buy and sell-side technology companies. Additionally, operational, business, financial, and legal processes for brands, agencies, and media companies will need extensive reworking.\u201d<\/p>\n Perhaps more threatening to Google\u2019s roadmap, the U.K.\u2019s Competition and Markets Authority (CMA) has said that Google must not deprecate third-party cookies<\/a> until their concerns about competition have been resolved.<\/p>\n Where exactly are we with Privacy Sandbox? Can we take the looming deadline to find alternatives to third-party cookies seriously? And do we need to care anyway? We spoke with a number of interested parties, including the IAB Tech Lab, some of them on background, to figure out the lay of the land.<\/p>\n There\u2019s a sense that brand marketers, still able to run cookie-based campaigns, are shrinking from the realization that the day will come when they just can\u2019t do that anymore. Agencies too are likely to wait until their clients demand action. Generally, the agencies will entirely rely on tech companies doing something; but many say that\u2019s not unexpected.<\/p>\n Marketers have other priorities \u2014 that\u2019s perhaps an understatement. In some ways, it\u2019s GDPR all over again, with a last-minute scramble once the regulation actually came into force. In comparison to managing the digital advertising ecosystem without cookies, however, GDPR seems to have been relatively straightforward.<\/p>\n There\u2019s an argument to be made that people should already be managing without cookies, because they\u2019ve already gone from other browsers. However, it appears that far less money is spent on Safari today because the CPMs are much less than Chrome\u2019s. If all of the inventory became worth much less than it is now, many independent publishers will suffer.<\/p>\n With inventory from independent publishers becoming less valuable, where could budget be redirected? The answer is, perhaps, obvious: the walled gardens. That means money for Meta, of course, but also for Google. Google derives revenue from advertising on the open internet, of course, but they also own and operate two of the world\u2019s foremost advertising properties in Google Search and YouTube \u2014 completely immune from any changes in how the browser works. <\/p>\n The opportunities with Google\u2019s walled garden perhaps needs to be qualified. \u201cWhile Google is obviously huge and gets a lot of the media spend,\u201d said president and co-founder of analytics firm ChannelMix, Michelle Jacobs, \u201cthey\u2019re not always the top performing. We see great click-through rates and conversion rates from Bing. As an advertiser, you don\u2019t want to just be in the Google world, paying whatever premiums they are going to slap on things.\u201d<\/p>\n \u201cWhen I\u2019ve heard people say this advantages Google,\u201d mused Ken Weiner, CTO at contextual advertising platform GumGum, \u201cI get the sense that what it means is, everybody else has to use this privacy sandbox but Google itself. With all its extensive reach and publisher properties, it hasn\u2019t lost the ability to cookie people. You can still have first-party cookies, so a publisher can still target and build profiles against its own users.\u201d (Weiner is an IAB Tech Lab board member but is not involved in the Privacy Sandbox evaluation process.)<\/p>\n For Bosko Milekic, co-founder and chief product officer at Optable, it\u2019s better for independent advertising that there is an alternative to third-party cookies. \u201cGoogle has access to more user data than the average independent advertising player, so in a world where there are no third-party cookies \u2014 and no alternatives, they\u2019re actually better positioned than everybody else. The fact that there is an alternative being created, in spite of its utility imperfections, is certainly better than nothing.\u201d<\/p>\n There are operators in the advertising ecosystem who have already weaned themselves from third-party cookie reliance. GumGum, with its stake in contextual advertising, is one. Another is marketing analytics firm ChannelMix. \u201cWe have a solution that doesn\u2019t rely on cookies,\u201d said Jacobs, \u201cso it doesn\u2019t really matter to us what Google ends up doing.\u201d Nevertheless, she views the Privacy Sandbox proposals as a step backwards. \u201cMarketers aren\u2019t going to be able to execute media like they\u2019re doing today.\u201d<\/p>\n Jacobs\u2019 co-founder and ChannelMix CEO Matt Hertig believes that \u201cstraight-line attribution\u201d based on cookie-tracking has actually been dead for years. \u201cWe\u2019re excited because this is forcing the industry to adopt practical measurement strategies based around first-party data.\u201d<\/p>\n Another agnostic player is Optable, the data collaboration and clean room vendor that was created in conscious anticipation of the deprecation of third-party cookies on Chrome. \u201cWe created Optable specifically to make it possible to do relevant advertising effectively without third-party cookies,\u201d said Milekic.<\/p>\n The protocols in the Privacy Sandbox became available for testing in January this year. The problem that some experts see is that it requires large scale adoption within the ad ecosystem for the results of the testing to be reliable. While it may be possible to test whether something technically works on this scale, it\u2019s hard to evaluate the effects it would have when adopted across the ecosystem.<\/p>\n Said Weiner, \u201cSome people have prototyped it and what I\u2019ve heard is, it\u2019s kind of working but the CPMs are lower. But when more people adopt it, we might get back up to normal levels.\u201d<\/p>\n Milekic\u2019s Optable has a direct integration with Privacy Sandbox and is one of the organizations involved in testing its capabilities. \u201cWe have some sense that it works for audience targeting; it\u2019s designed to enable that kind of campaign to continue to run once cookies are gone. It\u2019s still difficult to draw conclusions on performance, the reason being that the amount of inventory currently available to bidders such as Optable through the Privacy Sandbox mechanisms is quite limited.\u201d<\/p>\n Optable is finding that the targeting and measurement mechanisms work. \u201cBut it\u2019s still to early to draw definitive conclusions as to broad performance,\u201d said Milekic.<\/p>\n By Q3, the one percent testing period will be over and Google will be able (CMA permitting) to roll out cookie deprecation everywhere without a clear idea of what will happen when it goes from one percent to 100%.<\/p>\n Mozilla and Apple didn\u2019t seem to have much trouble with regulators when they decided to deprecate third-party cookies. Maybe Google, and in particular Chrome, are just too big to avoid scrutiny. It was at the beginning of 2021 that the CMA began to take an interest in FLoC, the now discarded Privacy Sandbox alternative to cookie-tracking. <\/p>\n \u201cThe CMA was concerned that, without regulatory oversight and scrutiny, Google\u2019s alternatives could be developed and implemented in ways that impede competition in digital advertising markets.\u201d <\/p>\n CMA website<\/a><\/cite><\/p><\/blockquote>\n By summer of that year, Google had agreed to work with the CMA to develop a series of commitments<\/a> that would guide Privacy Sandbox developments. How did that pan out? In February, the CMA published a report detailing its ongoing competition concerns regarding Google\u2019s Privacy Sandbox, including:<\/p>\n There will be an update on this at the end of April. The good news for Google is that at least the optics would be better if the CMA were responsible for moving the deprecation deadline back again.<\/p>\n ChannelMix\u2019s Jacobs sees positive aspects to CMA oversight. \u201cThe fact that Google is being held to a standard and there is oversight there; the CMA is saying, what you\u2019ve done so far puts you at a competitive advantage and we can\u2019t have that. I think we\u2019re going to see a trend of big media companies being held to higher standards, and that will lead to a better experience for users.\u201d<\/p>\n Of course, it\u2019s also not too late for other regulators to step in, of course. It may be that the European Union is in wait-and-see mode.<\/p>\n Most discussion around cookie deprecation has focused on advertisers losing the ability to track and target individuals (and publishers\u2019 inventory, as a result, becoming less valuable). There is a dawning realization, spurred by the Tech Lab\u2019s critique, that there are deeper problems. Measurement, for example, is likely to be upended by these changes.<\/p>\n It seems clear from the Tech Lab\u2019s report that some of the features and protocols are not working as intended. It may be that some of them haven\u2019t been adopted at a level that would be necessary for them to work as intended. The Tech Lab is focused on the need for solutions that allow funds to continue to flow effectively and measurement to be possible.<\/p>\n We spoke with Shailley Singh, EVP Product and COO at IAB Tech Lab, to get a better feel for what had happened.<\/p>\n The task force to evaluate Privacy Sandbox convened some time last summer, the APIs and definitions having reached what Singh viewed as a fairly stable state. \u201cThe first objective was to evaluate the Privacy Sandbox capabilities against day-to-day business use cases. We filtered out the use cases we knew would not be possible under the new privacy paradigm \u2014 like cross-site tracking. We also decided we would not hold Privacy Sandbox to a higher standard than what programmatic currently allows you to do.\u201d<\/p>\n Google has a long track record of IAB Tech Lab board membership and working group participation. Singh said that some of the task force\u2019s work took place without Google\u2019s participation as it was important that members be able to speak freely, but that Google will participate going forward.<\/p>\n Google pushed back firmly<\/a> against the Tech Lab\u2019s initial assessment. \u201cWe have just started reviewing [the response],\u201d Singh said. \u201cWe gave this report to Google two weeks before we released it; we thought they could give us clarification before we published, but it\u2019s a big report. We wanted to keep to our timeline, given the timeline that\u2019s laid out for cookie deprecation by Google and the CMA. They responded pretty quickly afterward because they already had it before.\u201d The task force will now review feedback from various sources, including Google.<\/p>\n Singh described the Topics feature<\/a> in Privacy Sandbox as a challenge. \u201cYou can\u2019t just shoehorn or plug in your current audiences. You will be required to do a lot of rethink on how you build those audiences, what kind of data is going to be available and how you measure performance. These aren\u2019t simple things you can figure out in two weeks; it\u2019s going to take some time.\u201d And yet he views Topics as one of the simpler APIs.<\/p>\n Could marketers just run away from these challenges and look at opportunities with alternative identifiers or contextual advertising? \u201cThat is already happening,\u201d said Singh. \u201cA lot of companies have come up with innovations like these ID solutions and data clean room solutions where you can activate matched audiences. Contextual advertising has always been there, but now there\u2019s a need to use it. Publishers of a critical size can use their own audience segmentation.\u201d The latter approach would leverage first-party data.<\/p>\n \u201cThe cookieless world will being a portfolio of solutions,\u201d Singh said. \u201cThere\u2019s going to be some degradation,\u201d said Singh, initially at least. \u201cID solutions may not have the same scale third-party cookies have. But we\u2019ll have to see what happens.\u201d<\/p>\n The IAB Tech Lab is also cognizant of the regulatory issues raised by the CMA. \u201cWith Sandbox, there\u2019s an ad seller and an exchange built into the browser which means that you\u2019re not just getting a simple feature, you\u2019re actually getting into the layer of the application itself, especially with the exchange which will control the financial transactions and make decisions on winning an auction. These things are typically governed by contracts with sequential liability, so what is the alternative to that? Even reporting is now going to be done through the browser.\u201d<\/p>\n From the perspective of Optable\u2019s Milekic, the Tech Lab sought to test whether the Privacy Sandbox protocols could achieve the same outcomes as third-party cookies; and that was unfair. \u201cIt\u2019s a radically different mechanism by design. If you\u2019re trying to protect users privacy through technical means, part of doing that requires you to limit the purpose for which data is used. What\u2019s really important for the industry is whether the Sandbox mechanisms enable fair play and fair competition.\u201d<\/p>\nWhy aren\u2019t marketers prepared yet?<\/h2>\n
Some don\u2019t care<\/h2>\n
The inadequacy of the testing period<\/h2>\n
Policing by the CMA<\/h2>\n
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Criticism from the IAB Tech Lab<\/h2>\n
The nuts and bolts<\/h3>\n