23 Media Audits offer our views on Google Chrome’s recent decision and its potential impact on the Adtech market.
What has happened?
Google flexed their considerable muscles in the browser market this month with the announcement that they plan to block all third-party cookies across its Chrome browser within two years.
This development has its roots in Google’s launch of the Privacy Sandbox back in August with a view to championing user privacy online and enhancing end-user and advertiser transparency.
Google is not the trailblazer here, with both Safari and Brave already making similar noises. But crucially they are the biggest with a commanding 66% of the browser market. So when Justin Schuh, the director of Chrome engineering, proclaims an intent to “render third party cookies obsolete” it makes the Adtech industry worldwide sit up and take notice.
The much-maligned cookie has been a cornerstone of online marketing for a quarter of a century and allows for third parties to track consumer domain hits. However, increasing societal and commercial concerns around data privacy have weakened its hand significantly and this announcement from Chrome will almost certainly sound the death knell for the ubiquitous cookie.
In the blog post ‘Building a more private web’ Justin Schuh states,
…We want to find a solution that both really protects user privacy and also helps content remain freely accessible on the web.
and of course the obvious winner from this move is the end-user. However, the potential commercial impact is less clear as Adtech companies look to realign and in some cases fundamentally change their business model to survive.
The Association of National Advertisers and American Association of Advertising Agencies (4A’s) have made their dismay at the decision clear with a joint statement:
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…
The biggest challenge in this adapt or die environment will almost certainly be faced by programmatic platforms who are heavily reliant on third-party cookie databases for their revenue. Tellingly many of the bigger players saw their share prices plummet in the aftermath of Chrome’s announcement earlier this month.
The demise though is set to be a slow one, with Chrome looking to phase them out completely over the next two years, which gives the Adtech world some time to regroup and get to grips with the big questions that this departure raises.
This two-year window has however been greeted cynically in some media circles with the suggestion that, far from Google offering the market a soft landing, the prolonged end date allows them to fortify its market position safe in the knowledge that it doesn’t rely on any third-party cookies for its tracking.
However, whilst this shift will potentially result in obsolescence for third party data, Google has not delivered a coup de grace to adtech as a whole. Its browser will still record conversions or clicks but to retain a veil of privacy for the user they will just not be passed onto third parties.
What does the future hold?
Whatever their reasons Google has fired the starting gun on a period which is sure to see intense jockeying for position, potential consolidation and almost certainly new and innovative product offerings as players large and small try and capitalize on the vacuum this move has created.
However, although this is a time of potential uncertainty for digital marketers and advertisers alike, we at 23 Media Audits pose the question whether the Adtech industry should really mourn the passing of third party cookies at all?
We expect to see the move from data relating to the user and less to the device. As advertisers now focus more on the customer journey and how each media & their chosen digital platforms connect with their own customers via first-party data:
For 2020 we expect to see:
- Facebook, Google (DV360) YouTube, Amazon will thrive and become even stronger as they all have 1st party data.
- There will be limited programmatic platforms where you can get the level of data currently available (we await to see how these companies evolve their business model)
- We expect to see larger companies/advertisers with 1st party data create their own “walled gardens” with their own 1st party data.
- Publishers & advertisers (with websites) will have a stronger hand as they also have 1st party data so we will see larger publishers working in conjunction with individual advertisers and rates/quality levels being negotiated for specific inventory.
What we may also see in 2020?
Marketers have been developing an overreliance on third-party data and the change could well herald a return to a more strategic advertising approach based around direct response and brand awareness campaigns.
Consequently, we believe the biggest casualties will be sustained by the programmatic platforms who, starved of their third party data oxygen source, will become increasingly sidelined and ultimately lose their (often undeserved) influence in the market. It is ‘do or die’ time for these companies and it will be interesting to see if and how they can evolve over the next two years to stay relevant.
Undoubtedly the big will continue to get bigger with the likes of Facebook, Amazon and Google themselves able to consolidate their iron-clad grasp on the market because they have access to first-party data. However, they are not the only ones. Larger publishers and advertisers also have access to vast amounts of first-party data mined through their websites.
This, we believe, will pave the way for a new eco-system where the tables are turned on the previously all-powerful agencies and ad tech providers. First-party data owners will now be able to create their own ‘walled gardens’ of data, ensuring they now hold more of the cards in any negotiation and can ultimately forge closer direct relationships with advertisers to agree on rates for specific inventory.
As with any power shift, there will be winners and losers. The media monoliths such as Warner Media or Hearst will no doubt be able to capitalize on this situation but unfortunately smaller publishers who don’t have the audience span or the ability to deliver sophisticated targeting may well suffer.
At 23 Media Audits we have always been fairly circumspect about the value of third party cookie data and so see this move by Google Chrome as more of an opportunity than a threat to the digital marketplace.
Whilst it will inevitably lead to an amount of short-term uncertainty, we believe the evolution it will bring will see a long-overdue step-change away from the necessity of every single customer move being fitted back to a specific ad – it will simply become one part of the customer journey and follow more of the traditional metrics on offer.