Online marketing has become ever more complex since cookies lost their power to track consumers from website to website and since device identifiers started disappearing, thanks to actions from companies such as Apple to stomp out “surveillance advertising” on iPhones. Apple has even made its pro-privacy push the foundation of its market messaging.
The party is over for easy internet advertising. Arun Kumar, CEO of Kinesso and global chief data and marketing technology officer at IPG, puts it this way: “Imagine you’re in a club and there is low lighting but it is consistent lighting and you’re able to see everyone in the club.” That was what it was like under the old paradigm when ad marketplaces enabled brands to sift through cookies on everyone’s web browsers and know everything about them: what they shopped for online, their interests, their internet viewing habits. Now, you’re starting to see very powerful strobe lights, but they’re inconsistent, they flash, and you can see movements of people, but you can’t see them all the time. So you have to infer.”
The Demise Of The Cookie
In 2017, Apple, the device maker that accounts for more than half of the U.S. phone market, decided that the personalized advertising industry was out of control. It started limiting the kinds of trackers it would tolerate on its iPhones. Cookies were first in the crosshairs with a program Apple called Intelligent Tracking Prevention, which limited third-party cookies through Safari web browsers.
The industry pushed back. "We strongly encourage Apple to rethink its plan to impose its cookie standards and risk disrupting the valuable digital advertising ecosystem that funds much of today's digital content and services,” declared a 2017 letter from six major advertising industry groups that included 4As, ANA, and IAB.
Since then cookies have been effectively blocked by most web browsers. Even Google has stated that it is moving away from them on its Chrome browser. Other trackers are also being neutered epitomised by device IDs known as the Apple Identifier for Advertisers (IDFA) which have been a digital advertising fundamental for some time. More recently Apple has been restricting collecting internet protocol addresses as a workaround identity data for targeting.
Is Google Primarily Focussed On Protecting Its Market Power?
Google has published a roadmap to ditch internet cookies, but major players in the ad tech industry are worried that the largest internet advertiser's strategy works against their plans for a post-cookie world. There are concerns that Google’s latest plan prioritizes its privacy kingdom while locking ad tech rivals out of crucial access to internet users for personalized advertising.
There were clues in Google's recently updated privacy timeline, that indicated it has fleshed out plans to test its cookie-free internet ad ecosystem known as the Privacy Sandbox, rewarding publishers and advertisers with early adoption, along with an experimental period that will run into 2023. However, Google’s plan appears to also penalize ad tech vendors that try to use workarounds to continue business as usual outside its Privacy Sandbox.
Mathieu Roche, co-founder and CEO of ID5, an advertising technology and identity firm, says it looked like Google was deploying the “carrot and the stick. FLoC and FLEDGE are the carrot and the olive branch, where advertisers and publishers can continue to as before. Privacy Budget is the stick that will restrict the ability for everybody else to work with user-level data. So, in contrast, Google’s user-level data assets can be more valuable.”
The so-called Privacy Budget, set to be introduced in 2023, represents one of the biggest potential disruptions to legacy digital advertisers by preventing practices like “fingerprinting” and “cross-site tracking,” which are how publishers and ad tech partners currently gather behavioural data on-site visitors. Companies developing cookie alternatives claim that Google has a transparent timeline for its pet initiatives like FLoC and FLEDGE in Privacy Sandbox, while it is still fuzzy on details about how third parties will be affected by the restrictions imposed by Privacy Budget. In many cases, the effectiveness of cookie alternatives depends on tactics like "fingerprinting" and "cross-site" tracking that Google is looking to close out.
Meanwhile, Google has provided a clear roadmap for the two key parts of post-cookie initiatives FLoC and FLEDGE, indicating plans for a transition period that could run until late 2024. FLoC stands for Federated Learning of Cohorts, which attempts to use the Chrome web browser to create large sets of people with shared interests, so they don’t have to be targeted through personally identifiable information. FLEDGE is a similar experiment, where publishers and ad tech partners create the targeting cohorts.
Google's tests have the potential to upend the entire internet advertising world, transitioning away from third-party tracking tools, which record every move a consumer makes online. Instead, it relies on private anonymous data. These changes will affect all the publishers and vendors that have evolved over decades to deliver ads within Google's platform. Some vendors worry that their tactics of tracking will be ineffectual under the new rules.
The attention of the digital advertising industry is firmly on Google as it tries to figure out how to erect and protect a privacy-focused Google's ecosystem. According to a recent report from Consumer Research Intelligence Partners Google’s Chrome web browser accounts for about 60% of internet users, and Google’s ad network serves 2 million websites and apps. Any changes to how those sites and apps can track consumers, whether through cookies or device IDs, will significantly affect the publishers, advertisers, and third parties that inhabit Google’s ecosystem. Google’s digital advertising ecosystem is huge, generating an estimated $US150B in 2020.
In our view, Google is clearly positioning itself to consolidate its monopolistic market position as the predominant provider of ad tech solutions around the world. We suggest that this is probably not a good thing for either publishers or advertisers.
Infomo’s digital ad tech platform, InfomoTEK, has been designed and developed to address this very problem by developing and utilising publishers first-party data to increase the value of publishers’ digital assets while providing superior campaign targeting for advertisers.
With thanks to Ad Age, ID5, IPG, Kinesso