Concerns raised for embattled media industry as Google turns off third-party cookies

Google Chrome's plans to render third-party cookies obsolete within two years is welcomed as a step towards consumer privacy but a further hit to the media sector

Google's decision to make third-party cookies obsolete has been cautiously welcomed by the industry as a win for consumer privacy even as it raises significant concerns for embattled media and publishing sector trying to compete against the digital giant's ever-tighter stranglehold on advertising.

As part of its ‘Privacy Sandbox’ API initiative, first touted in 2019, Google Chrome has announced plans to render third-party cookies obsolete within two years.

Third-party cookies have arguably been the lifeblood of the marketing and advertising industries in capturing the browsing habits of Internet users to better target ads and offers.They are also crucial for programmatic advertising. 

Google said the initiative is aimed at enhancing users’ privacy. Director of Chrome Engineering, Justin Schuh, said the open source initiative's goal is to make the Web more private and secure for users, while also supporting publishers.

“After initial dialogue with the Web community, we are confident that with continued iteration and feedback, privacy-preserving and open-standard mechanisms like the Privacy Sandbox can sustain a healthy, ad-supported Web in a way that will render third-party cookies obsolete,” he said.

“Once these approaches have addressed the needs of users, publishers and advertisers, and we have developed the tools to mitigate workarounds, we plan to phase out support for third-party cookies in Chrome. Our intention is to do this within two years." 

Schuh noted users are demanding greater privacy, including transparency, choice and control over how their data is used.

"It’s clear the Web ecosystem needs to evolve to meet these increasing demands. Some browsers have reacted to these concerns by blocking third-party cookies, but we believe this has unintended consequences that can negatively impact both users and the Web ecosystem," he continued in a blog post. "By undermining the business model of many ad-supported websites, blunt approaches to cookies encourage the use of opaque techniques such as fingerprinting (an invasive workaround to replace cookies), which can actually reduce user privacy and control. We believe that we as a community can, and must, do better.”

Chrome, which has about 60 per cent of the browser usage market, will instead track conversions within its browser, and will also limit insecure cross-site tracking starting in February. To do this, it will treat cookies that don’t include a SameSite label as first-party only, and require cookies labelled for third-party use to be accessed over HTTPS.

Publishers take another hit

Yet while it sounds good in theory, critics of the policy say this initiative will only serve to enhance Google’s advertising platform stranglehold and make it more difficult for other platforms to track and target advertising. There are also reports programmatic effectiveness will be significantly reduced, as will media reach. 

Reactions from the industry have been mixed, at best.

As Gartner VP distinguished analyst, Andrew Frank, pointed out in his recent blog, cookie bans aim to restore power to individuals over their personal data by eliminating what it sees as surreptitious surveillance conducted by a shadowy network of corporate data brokers.

"But if these data brokers are its targets, its unintended victims are publishers, whose already-diminished revenue streams may diminish even more when they can no longer monetise their data for targeted advertising, and advertisers, whose promotions will lose effectiveness due to poor targeting and measurement," he wrote.

"In the case of cookie bans, it’s the giant Internet platforms that appear to be ironic winners as the only entities left capable of collecting data and user consent on a massive scale.

"Cookie curbs are driving publishers toward subscription models to replace ad revenue, reducing media access for individuals who can’t afford hefty monthly subscription fees. As the economic incentive to offer ad-supported content free to consumers evaporates, political incentives move in to fill the void."

On the business level, only the largest publishers could count on enough subscription revenue to compensate for a shrinking ad market, Frank argued.

"And only the most beloved of brands will gain enough consensual data to maintain effective direct marketing programs at scale. Of course, many expect to just game the system. The rest remain at the mercy of the data-rich Internet giants.

“[Google’s plan to phase out cookies] will undoubtably have a major impact and disrupt the operations of many ad tech vendors, publishers and advertisers. The ultimate effect, however, depends on the evolution and adoption of Google’s proposed substitute, its ‘privacy sandbox’. The privacy sandbox is currently a set of proposals being actively debated on GitHub. The outcome of this collaboration is unlikely to satisfy everyone, but there’s at least a chance that it could result in an open, industry-wide compromise that substantially improves the balance between privacy and advertising targeting and measurement,” he has since told CMO.  

IAB Australia CEO, Gai Le Roy, said this formal announcement had been expected from Google after heavy hints over the last six months. On the one hand, she was pleased the industry had been given a sensible length of time to collaboratively agree upon an alternative (or alternatives) that work for marketers, publishers and consumers which can be more effective and efficient, secure and privacy compliant. 

“The industry’s historical over-reliance on third-party cookies for analytics, campaign targeting, management and attribution across the open Internet has now run its course," Le Roy told CMO.

“While the third-party cookie changes will provide challenges for many current attribution models, hopefully over time it will improve the way we look at overall digital advertising activity [and actually all ad activity] so that it becomes be less focused on cookie history from one device and shifts to a more holistic view of the impact of the overall marketer’s media spend.”

 LiveRamp Australia and New Zealand country manager, Natalya Pollard, said the tech vendor supports the steps Google is taking to bring greater transparency and control to users. 

"LiveRamp has championed the movement towards an open and scaled identity solution and has launched multiple, complementary efforts that greatly reduce reliance on third-party cookies," she said, pointing to LiveRamp’s Authenticated Traffic Solution (ATS) aimed at helping brands, agencies and publishers operate in a post-cookie world.

"We see this decision as an opportunity for the ecosystem to upgrade beyond the cookie, and accelerate the global adoption of cookie-less solutions."

Lotame is also in the data management space. Its CMO, Adam Solomon, said the real question is whether Google's actions will speak louder than its words; namely, with all good actors being given equal opportunity to leverage tech similarly without undue advantage given to Google in the process. 

“As an independent data solutions provider, we want to work with everyone, and we do work with everyone. As long as Google is committed to open collaboration, we're more than happy to participate and help our marketer, brand, and agency clients navigate this path,” he said.

“Over the last 13 years, we've had a front row seat to and participated in seismic changes to how data is collected, connected, and permissioned across devices and platforms. We've adjusted at every turn and enabled new data-driven capabilities on behalf of our clients. This situation is no different."

OpenX has also been preparing for the demise of cookies for the past 18 months. "We have been working with our publisher partners on identity solutions that support ad relevance in a privacy-compliant way, and enable people-based marketing on an open web that no longer uses third party cookies,” the company said in a statement.

“We have partnered with Google since the inception of our company in 2008 and expanded that partnership in 2019 when we moved our entire infrastructure into the Google Cloud. We look forward to partnering to help map out the next generation of relevant, valuable advertising for the open Web."

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia. 

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