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Google Deletes Cookies, Shaking Up the Ad Revenue Game

On Tuesday, Google announced they would be phasing out their third-party cookies over the next two years, allegedly allowing users to browse Google more securely per their announcement. This is something that has been in the works for a while: last year, Google set up a privacy sandbox and opened it up to the industry for suggestions. It was a way to get a preview as to how companies could target advertisers without the use of third-party data.

This is a curious move: Google’s digital advertising business is the biggest in the world, and many digital tech companies that rely heavily on ad revenue could see a big drop in profits. In fact, the effects are already taking place: early last year, tech company stocks fluctuated in anticipation of a Google privacy announcement. More recently, the shares of the French adtech company Criteo plummeted to a 52-week low just hours after the announcement.

Market turbulence aside, Google’s new policy may get the attention of antitrust regulators, because Google’s first-party cookies aren’t going to be affected. Does this mean that Google’s ad business won’t be impacted by the lack of cookies? Is there going to be a wall between Google’s ad business and Google Chrome? There haven’t been any details about this yet.

“What [Google’s announcement] doesn’t include is activity happening in app environments that use different identifiers — Android Google device, Apple device…and [it] also does not make reference to first party cookies, which are only set and accessed by particular domains,” said Adam Solomon, CMO of Lotame.

Solomon took the time to explain to me the difference between first and third-party cookies. First party cookies function like a lockbox that can only be opened by code from that website. For the purposes of this article, what goes in the lockbox is an ID that corresponds to an individual user. A third-party cookie can be “accessed by multiple domains by the company that issues the cookie.” So if a company uses third-party cookie to track behavior across multiple sites or understand how an advertisement is performing, they won’t be able to track an ad’s performance, making any kind of data impossible to get.

“If you don’t have access [to third party cookies] then you have no idea whether this particular individual has seen this ad before, or how many times, or what they’ve done. So the advertiser is completely blind to any frequency analysis,” Solomon said.

So, what does this mean for customer experience? Won’t it be difficult to give them personalized experience without cookies?

For companies like Lotame, they promise business as usual. But Lotame has spent well over a decade in the marketplace.

It looks like Google is trying to position itself as a leader in data privacy, but is that really what is going to happen? At this stage, especially given the two-year time horizon, there seem  to be more questions than answers. It’s unclear whether the playing field will be even, but it has certainly changed, and may be harder for up-and-coming solutions-oriented tech companies in the near future.        

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