Ad ecosystem breathes a sigh of relief at Google delaying cookie wipe-out to 2024

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Google is delaying the deprecation of third-party cookies to the second half of 2024. This comes slightly over a year after it first announced that the move will be delayed to mid-2023. Anthony Chavez, VP, Privacy Sandbox, explained that the most consistent feedback it has received is the need for more time to evaluate and test the new Privacy Sandbox before deprecating third-party cookies in chrome. "As developers adopt these APIs, we now intend to begin phasing out third-party cookies in Chrome in the second half of 2024," Chavez added. Google is also expanding testing windows for the Privacy Sandbox APIs before it disables third-party cookies in Chrome. The Privacy Sandbox APIs are expected to be launched by the third quarter of next year and will also be available in Chrome.

Last year, Vinay Goel, Chrome’s privacy engineering director, said in a blog post that while there has been considerable progress with the Privacy Sandbox initiative, “it has become clear that more time is needed across the ecosystem to get this right”.

Google first announced plans to phase out third-party cookies in 2020 with the initial timeline set for 2022.

Last year, the Privacy Sandbox introduced the Federated Learning of Cohorts proposal (FLoC) which it claimed can be an effective replacement for third-party cookies. According to CNBC, the company said then that it was "extremely confident" about the progress on the proposals and tests. In January this year, Google rolled out Topics, a new Privacy Sandbox proposal that replaces FLoC and is touted as the solution to the phasing out of third-party cookies.

Google's wipe-out of the cookies has been a hot topic of conversation between advertisers and agencies alike, given the potential implications it might have on a company's revenue. Lotame's report published last year titled "Beyond the Cookie" found that 57% of marketers expect the deprecation of third-party cookies to reduce ad targeting opportunities, with 66% expecting a 10% to 25% dip in revenue as a result. On the publishers front, 57% of them expect to have to reduce their workforce due to revenue loss brought on by the deprecation of third-party cookies.

Safe to say, this latest delay can once again be thought of as an extended lifeline for the industry that is still trying to figure out a suitable alternative to cookies. "Advertisers have obviously been on the quest for what eventually fills the cookie void, but they have not potentially been moving quickly enough because it was also tempting to continue to profit from using individual user-level data," Stephen Li, advisor at The Scale Factory and former APAC CEO for OMD, told MARKETING-INTERACTIVE. He added that hopefully, this new delay will be more of a catalyst for innovation and for a much harder look at not just “What’s the new cookie?”, but also AI-based targeting for instance.

The delay will also help its Privacy Sandbox team. According to Li, Google seems to be buying time for its Privacy Sandbox team to strengthen its privacy-centric APIs, which he said is not surprising considering the company's desire to still try to be at the head of the pack. "The fact that no one else has yet found an ideal alternative solution means the race of very much still on," Li added.

Google recently reported an increase in ad revenue from US$50.44 billion to US$56.29 billion during the second quarter. Search revenue jumped US$35.85 billion to US$40.69 billion, while revenue for YouTube ads rose to US$7.34 billion from US$7 billion. While Google surpassed expectations in terms of search revenue, the Wall Street Journal reported that overall revenue for the quarter still missed Wall Street expectations by nearly US$190 million.

Li remains unconvinced that the latest move was just a knee jerk to the results since Alphabet's final performance was closer to target than expected. Likewise, Serm Teck Choon, co-founder and CEO of Antsomi, said Google has enjoyed its revenue trajectory for the last 13 years. At some point, it would slow down as its revenue model relies too much on brands’ advertising expenditure, while it also faces other challenges such as the strength of the dollar and other competitors such as TikTok. "This is the same reason Alphabet has tried expanding into other businesses all these years while it was aware of this is coming," he said.

On the other hand, Hemant Menon, client partner and performance marketing lead, media group, dentsu Singapore said the delay of third-party cookie deprecation becomes imperative in view of Alphabet's recent results as it would help prevent any leaks in the form of antitrust legal costs or if advertisers start shifting budgets to more flexible open internet ad tech companies.

A smart move by Google?

Google's move to delay the deprecation of third-party cookies also offers companies such as Meta, Snap, and Twitter a breather as these companies have felt the impact of Apple's iOS privacy changes over the past few months. Meta's CFO Dave Wehner said in its latest second quarter earnings call that the company continues to face targeting and measurement headwinds such as Apple’s iOS changes, which it believes are contributing to the growth challenges across the digital advertising industry. Earlier this year, he said Meta expects to lose up to US$10 billion in revenue as a result of the iOS privacy change. Last year, Snap, Facebook, Twitter, and YouTube lost about US$9.85 billion of revenues in the second half of 2021 following the change in privacy settings, Financial Times reported.

Dentsu's Menon said this is a very smart move as deprecating third-party cookies could increase Google’s dominance further in the digital advertising industry, which might not be the best play, especially at a time when the big tech giants are facing antitrust scrutiny. But this also gives an opportunity to advertisers to strategise even further and be ready with the consequences of the demise of cookies on ad targeting and measurement, he said, echoing Li's sentiments.

Most advertisers dentsu Singapore works with today have already started splitting budgets broadly into the walled gardens and open internet. Additionally, dentsu has also consulted plenty of them on the design and implementation of their data infrastructures, such as DMPs, CDPs, and data lakes, to further enhance data connectivity to fuel their ambition of making the most of their owned customer data, Menon said.

"Advertisers with small investments have taken a flip approach of putting in place frameworks which help them to evaluate the authenticity of data sources they use and, up to a certain extent, even use their ad servers to collect and measure the entirety of campaign level data," he explained.

Similarly, PubMatic's senior director, product marketing, Alena Morris, said this news gives the industry more time to refine technical approaches and drive greater adoption prior to the transition. "Among the confusion over the impending changes, we have seen an influx of new targeting methods and signals being created and tested – with impressive results for publishers and advertisers," she added.

According to Morris, the industry must continue to work together and test privacy-first solutions that will enable safe, data-driven advertising into the future. "The move away from third-party cookies is in line with broader global trends around consumer data protection. While Google’s timeline is changing, it won’t impact PubMatic helping the industry in developing new ways to deliver personalised advertising and a better consumer experience," she explained.

With the added time, more companies are expected to continue diversifying their marketing mix, creating partnerships with affiliates or influencers that focus on building direct customer relationships and expand their first-party data ecosystem," Antoine Gross, GM of impact.com Southeast Asia, said. Nonetheless, brands in the region have been taking active steps to shift away from third-party data. According to Gross, more brands in Southeast Asia have been focusing on marketing activations that don’t rely upon third-party data over the past 12 months.

3 tips for navigating the cookie apocalypse

While there might be varying degrees of readiness among advertisers and agencies when it comes to third-party cookie wipe out, Kenneth Wong, CEO at Adminer and Trapper Interactive, dished out three ways companies can prepare themselves.

1. Consent and unification: Invest to gain user consent which essentially builds brand compliance and trust. Then unify their data so that they can use tools like lookalike, contextual behaviour and predictive modelling to find more targeting opportunities.

2. Channel and data partners: Our media and data partners will play a key role in the post-cookie world as they’re amongst the first to apply data consent across their assets. Doing this ahead of time has allowed them to collect a massive database of highly accurate and relevant audience segments.

3. Tagless remarketing: Adminer and Trapper Interactive are working with multiple partners that have tagless remarketing tools and technologies. There are limitations but as with any technology, a combination of tech stacks and expertise will usually prove successful in how we can deploy it to our clients’ advantage.

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