The Industry's Reaction to Google's Third-Party Cookie Delay: 'It Depends on How You Feel About Purgatory

Many in the digital advertising business were not surprised by Google's decision to push cookie deprecation all the way until 2024.

According to Peter Barry, VP of addressability at PubMatic, the second delay raised "maybe half an eyebrow."

With a longer runway, advertisers and publishers will have more opportunity to develop post-third-party-cookie alternatives including alternative IDs, contextual targeting, and seller-defined audiences.

Despite the incentive to delay, publishers and technology providers told AdExchanger that they don't expect to deviate too far from the road maps they'd already developed to fulfil the previous 2023 goal.

"For the vast majority of us, this wait is a non-event," said Drew Stein, founder and CEO of DMP Audigent. "As an ecosystem, we've hit a tipping point in terms of preparing for a cookie-free, mobile-ad-ID-free, IP-address-free future." The extra time gives a safety net to continue improving technologies is already proving itself on a daily basis."

Here's a more cynical viewpoint.

"It's a never-ending purgatory," said Leaf Group's SVP of media, Scott Messer. "So it all depends on how you feel about purgatory."

The browser issue

Most big publishers have already invested heavily in cookieless targeting solutions in order to monetise traffic across Safari and Firefox, both of which do not support third-party cookies.

Investments in contextual targeting, for example, have not been in vain, according to Salon's CRO, Justin Wohl.

Safari accounts for 40 percent to 50 percent of desktop and mobile traffic for the average publisher, while total cookie-restricted traffic is closer to 60 percent, according to Messer.

"That is why my team is no longer concentrating on cookie deprecation in Chrome; instead, we will specifically target Safari solutions," he explained. "You should be fighting for solutions to the majority of your traffic problems."

Nonetheless, the fact that third-party cookies will be active in Chrome until (at least) 2024 may impede the development of new monetization alternatives for other web browsers.

"This delay will perpetuate the problem of more targeting capabilities and more advertising attention in Chrome, and fewer solutions for Safari and Firefox will come to market," Wohl warned. "Without Chrome traffic highlighting the importance of building post-third-party-cookie technology, we will not get full buy-in from publishers or technology partners as quickly as we would have otherwise."

Chrome has an edge due to the presence of third-party cookies. Because there are no third-party cookies, the average ad revenue per thousand impressions (RPM) on Safari and Firefox is lower. And it's likely that publishers will have to put up with this until Google takes a move.

Winners

However, a few stakeholders stand to gain from Google's deadline delay.

"Companies that have been cautious and flexible enough to develop systems that can still support third-party cookies, rather than embracing the notion that "addressable advertising media will no longer be performed," according to Andrew Frank, research VP and distinguished analyst at Gartner, will succeed in the long run.

However, in the short run, publishers and advertisers who have not yet adjusted to what will be "the new reality" can do well because we are still living in the status quo, according to PubMatic's Barry.

"It's a victory for the major IT providers," Salon's Wohl added, because they "can further cement their dominance and come up with solutions that keep them ahead of the pack."

The cookie exception also provides long-tail publishers with "an prolonged lease on their capacity to commercialise their media," according to Frank.

And, because long-tail publishers rely on Google for ad revenue, it's in Google's best interest for those publishers to continue monetizing at the levels they're accustomed to, according to Oscar Garza, managing partner at GroupM.

Headwinds

However, where there are victors, there are usually a few losers.

For example, some of the many alternative identities companies that have sprung up in recent years may suffer as a result of the delay since buyers and sellers may lose their feeling of urgency.

On the advertiser side, marketing managers may stand to lose the most as a result of the delay. They've presented a business case for shifting ad spend away from conventional cookie-based solutions and toward what their managers might consider riskier alternatives, with the belief that doing so will future-proof their company, according to Barry.

"I wouldn't say they have egg on their faces," he added, "but they may be irritated that redirecting those budgets has become not only futile, but less important."

Rooms that are clean

But what about all those clean room companies? They've emerged from the shadows as the focus has switched away from third-party cookies and toward first-party data.

According to Garza, Google's delay is unlikely to cause a halt in testing and deployment of clean room technology.

"We've already witnessed deterioration in access to cookies and identities over the last five years, particularly data at the impression and log level that has an ID associated," he said.. "You're falling behind if you don't already know how to work with clean rooms or have a working grasp of Ads Data Hub." The industry will need to become quite acquainted with aggregate measurement."

The value proposition for data clean rooms is also "strong beyond cookie replacement technology," according to Frank. "Advertisers have made an investment in first-party data gathering and are anticipating a return on their investment.."

Google's representative

Will Google's choice to postpone its own deadline have a detrimental influence on its reputation? It all depends on how low you already hold Google.

Even before this latest development, many in the industry, as well as regulatory agencies throughout the world, were sceptical of Google's overwhelming influence in digital advertising.

"How come cookies are Google's problem to solve?" Frank stated. "What happened to standards organisations like the World Wide Web Consortium (W3C) and the Internet Engineering Task Force (IETF) that figured out how the internet and browsers were intended to work?" You don't want a private corporation with a substantial interest in the market dictating the market's rules."

Another unknown variable is consumer reaction.

As end users become more aware (and distrustful) of the ad industry's inner workings, they may respond negatively to Chrome's continued use of cookie-based tracking, or "surveillance advertising," as critics refer to it.

"Like Apple, Google has made privacy a vital aspect of its brand image," Peer39 CEO Mario Diez stated. "Will users abandon Chrome in favour of rival browsers if they perceive the firm as failing to uphold its word? "Regardless of the state of cookies or Google's timescale, this might have a huge impact on how advertisers build their methods."