Google plans to stop all third-party cookies on its Chrome browser by 2022, in a move that will have massive repercussions across the ad industry, which depends on them to track users.

Google shakes up ad industry: Third-party Chrome cookies blocked in 2 years time

Instead, Google plans to create a 'Privacy sandbox' within its own ecosystem, with a set of tools that let advertisers run targeted ads without having direct access to users’ personal details.

This would mean that in the absence of third-party cookies’ presence in Chrome, the alternative for advertisers is to use Google’s first-party data within its own tools.

Google already tested a similar theory last year when it launched the Ads Data Hub; that interface now represents the only way advertisers can understand user-level information about programmatic campaigns.

Cookies are how ad tech companies communicate with one another in order to trade programmatic ads. Cookies are critical to all steps of the digital ad process, from the planning and activation of ads to the measurement of how they perform.

While the move might be bad news for third party ad technology vendors, there could be upsides for some large publishers. European publishers like TL Group and ProSiebenSat.1 Media SE are already rallying together to form login alliances that would let people use a single account to register with multiple sites.

In addition, some advertisers including American Express and ad tech vendors such as Sovrn and Index Exchange are exploring a replacement for third-party cookies by having direct access to first-party data that comes from identifiers like a login.

Justin Schuh, Director, Chrome Engineering, at Google said: "We are working actively across the ecosystem so that browsers, publishers, developers, and advertisers have the opportunity to experiment with these new mechanisms, test whether they work well in various situations, and develop supporting implementations, including ad selection and measurement, denial of service (DoS) prevention, anti-spam/fraud, and federated authentication."

"Major competitive impacts"

The Association of National Advertisers and 4A's/American Association of Advertising Agencies issued a joint statement on the move:

"Google’s decision to block third-party cookies in Chrome could have major competitive impacts for digital businesses, consumer services, and technological innovation. It would threaten to substantially disrupt much of the infrastructure of today's Internet without providing any viable alternative, and it may choke off the economic oxygen from advertising that startups and emerging companies need to survive.

"We are deeply disappointed that Google would unilaterally declare such a major change without prior careful consultation across the digital and advertising industries. We intend to work with stakeholders and policymakers to ensure that there are effective and competitive alternatives available prior to Google’s planned change fully taking effect. We will also collaborate with Google in this effort, so we can all ensure the digital advertising marketplace continues to be competitive and efficient.

"In the interim, we strongly urge Google to publicly and quickly commit to not imposing this moratorium on third party cookies until effective and meaningful alternatives are available."

- Dan Jaffe, Group EVP, Government Relations, ANA

Industry comment:

Tanzil Bukhari, DoubleVerify’s Managing Director, EMEA, commented on the plans: “This was somewhat of an inevitable outcome, and I think most people were already expecting this to happen at some point. All the efforts from all the browser vendors over the past years has been to restrict cookies and user tracking in ever-increasing degree. Whether it’s browser companies or regulators, new changes in data privacy are downscaling third-party cookie tracking and collection.

"This will have a major impact on the category. Whole industries within it have been built on cookies to do anything ranging from A/B tests to ad targeting. It will take significant engineering across the industry to adopt to these new changes and for companies to find alternative solutions to the same problems. (DV does not use cookies, nor do we track users, so we aren’t affected by the change.)

"What does matter to us is that this will shift the industry from user-level targeting -- which will become harder and harder as user tracking gets locked down by browsers -- towards contextual targeting. Rather than showing you a Nike ad because you were shopping for shoes two hours ago, you'll get a Nike ad because you're reading about the Olympics. Contextual targeting is a return to traditional online ad campaigns, where reaching a consumer meant showing up on the right article or piece of content. With that said, modern contextual targeting is more data-driven and bleeding edge. It incorporates new technologies like AI and semantic science to ensure ads run on the right website and the right page, targeting the right audience. In a way, it’s very similar to brand suitability and brand safety targeting.”

Keith Pieper, VP Product Operations, Sovrn: “Google’s decision to drop third-party cookies is expected, though clarifying a timeline was refreshing. Forward-thinking advertisers are already relying on first-party publisher data more than third-party cookies. They know publishers have close relationships with their audiences and are therefore in a good position when it comes to data collection and gaining consent from users. Now advertisers have a countdown clock when those transitions to first party data need to be complete. The latest Chrome announcement should accelerate adoption for programmatic advertising to evolve and transact in more consumer-friendly, transparent ways. More important, it will push advertisers to partner with vendors that have direct access to first-party data, ensuring compliancy with privacy regulations and prioritizing consumer-first practices.”

Stuart Colman, VP Sales, InfoSum: “Chrome’s move away from third-party cookies is indicative of ongoing changes in the wider digital sector and reflects the need for improved practices when it comes to data privacy. While there is no doubt it will have a major impact on an industry that has for years been based around the cookie, much of the negative sentiment around the announcement is misdirected. The fundamentals of what we do aren’t broken, but the mechanism we use is being taken away, so we need to reimagine the industry and embrace the change, as it offers a huge opportunity to shape a better advertising ecosystem. It will force brands and publishers to build on the relationships they have with their known, logged in audiences, create a greater reliance on rarer but better quality first-party data, and increase the demand for technologies that allow them to gain insights from this data in a brand-safe, privacy-compliant manner."

Ben Barokas, Co-founder and CEO, Sourcepoint: “We’ve closely followed the increasing threats to third-party cookies over recent years, but based on Chrome's significant market share, this announcement from Google, gives us an actual timeframe for the cookie’s demise. While the idea of the Privacy Sandbox presents some interesting concepts and we will no doubt see innovation in that area, a lot remains to be seen as to how it will evolve between now and 2022. Our industry must accelerate efforts to develop more sustainable options – such as driving for authentication and users to log-in – that will provide an alternative way to offer personalised experiences, without relying on third-party cookies.”

Adam Solomon, CMO at Lotame: “The real question is whether Google’s actions will speak louder than its words, namely all good actors being given equal opportunity to leverage this tech similarly without undue advantage given to Google in the process,” said Adam Solomon, Lotame’s chief marketing officer. 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. 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 permission-ed 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.”

Read the Google announcement here