Google is moving ahead with its plans to end third-party cookies in Chrome. The latest news has caused a stock market crash for other advertising companies.
At the beginning of 2020, Google announced that it was working on ending third-party cookies in Chrome, the browser of its property and the most used in the world. The goal was to achieve it by 2022.
It was not an overnight decision. Apple with Safari or Mozilla with Firefox had already promoted their own mechanisms to limit these 'cookies', until now a basic element of the functioning of the web and, above all, fundamental for advertising.
When Google released that statement a year ago now, the obvious question was: is Alphabet shooting itself in the foot? It is important to note that Google makes the majority of its advertising revenue, and its ad services rely on these tracking technologies in one way or another.
However, a few days ago we learned something more about these plans that went one step further. Google will not endorse technologies that directly replace cookies after their termination. That is, they also serve for individual monitoring by user identification.
Google's bet seems a step forward for privacy, which a priori is always good news. However, it also opens the door to consolidate its monopoly. How? Promoting a successor of cookies that is of interest to you.
From third-party cookies to FLoC
The search giant has been working for a long time on a privacy Sandbox - that's what the company itself calls it - that promotes standards that replace cookies. The most advanced is the so-called FLoC (Federated Learning of Cohorts), a system that would change to track or directly track each user one by one through the websites and apps that he visits and uses -as cookies do now- to make the leap to a 'cohort analysis' system.
That is, that they no longer follow a single user, but based on the standards of what is called ' differential privacy ', they can use large data sets to identify users who are interested in buying a product and therefore show an announcement about it.
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| Charting a course towards a more privacy-first web |
The change in practice would be that, instead of identifying a user is interested in buying a vacuum cleaner because they have visited several websites that sell them, by cohort analysis they are putting this user into groups “interested in vacuum cleaners”, but also in "buying a car", etc. From the individual to the group, ultimately.
The doubts about how these changes could affect the economic ecosystem of the web have been many for a year. It could have a special impact on affiliate marketing, but also on programmatic advertising networks that, of course, are external to Google.
This is where some experts and actors involved seeing a problem that may further strengthen Google's monopoly under the umbrella of wanting to boost privacy or adapt to more restrictive regulations.
Advertising and affiliation companies, forced to move
"Google is subtly warning that alternative models of data identification are at risk within its ecosystem and competitors, customers and partners need to be concerned about the long-term implications of this," Bob Regular, CEO of the Google company, told Digiday, Infolinks ad technology.
The effects have not been long in coming. If Google carries out its FLoC as the prevailing system, many other trackers could be lost, regardless of whether they were better or worse, both in terms of privacy and benefits.
For example, programmatic advertising company The Trade Desk saw its stock drop 20% after Google's last ad. The reason? I had been working on a tracking system called Unified ID 2.0 for years that would not meet Google's new standards.
Other major players such as TradeTracker, one of the largest affiliate marketing companies, have already announced that they are changing their technology to, instead of loading third-party cookies, use primary cookies on the advertiser's target website. Along the way, yes, their campaigns would lose effectiveness. Amazon, known for example for its affiliate system, could also be affected.
In my garden, yes. Segmentation will continue to be effective in the Google ecosystem
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| Google Ecosystem |
Because although there are still many doubts about Google's plans, something we do know is that it is already announcing that, in its ecosystem, the segmentation of ads will continue to work.
Google will continue to allow targeting on its own brands when users are logged into their accounts. For example, if someone is logged into your Google account and searches for dog food on their search engine, Google could target a dog food ad to that person when they visit YouTube. A management that is much more extensive if we also take into account the capacity of Android, location by Google Maps, etc.
The problem for the rest is that no network of advertisers, apart from Facebook, have an ecosystem with which to continue 'chasing' their users under a login like Google.
One could therefore argue that Google is trying to push advertisers to shift their focus towards cohort-based targeting. Does Google want to benefit from this change? The Competition and Markets Authority of the United States (CMA), which is already investigating Google's Privacy Sandbox tools, will be the one to respond.
"Small advertisers and small networks could lose a lot with this change," wrote Jonathan Driver, an expert in digital advertising at Forbes, a few days ago. It is foreseeable that with the purpose of third-party cookies Google will also lose effectiveness in its ads and therefore money. But surely it does it much less than the rest.
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