Google’s U-turn on cookie ban shakes up ad industry, but privacy remains mainstream

Google’s decision to scrap its plan to entirely eliminate third-party cookies from Chrome, originally announced in February 2020, has taken the advertising industry by surprise. The decision, after multiple delays and industry pushbacks, marks a significant shift for the advertising landscape. While advertisers can breathe a sigh of relief for now, the future of ad targeting hinges on user control and privacy-centric solutions.

As an industry-focused trade media outlet, Adgully has been at the forefront of the coverage of these developments through engaging feature stories, keeping the pulse on industry trends.

Google’s unexpected decision reverberates across the advertising industry, prompting both relief and uncertainty. For advertisers, this move could offer a temporary reprieve, allowing continued reliance on these tracking tools for precise ad targeting and user behaviour insights. However, it also postpones the industry’s shift towards more privacy-focused models, raising questions about the future of digital marketing.

As regulators increasingly prioritize consumer privacy, this decision underscores the complexity of balancing business needs with evolving privacy standards. It offers advertisers more time to innovate and adapt, yet also highlights the urgency of exploring alternatives like first-party data strategies and contextual advertising.

In a landscape where consumer trust is paramount, how will advertisers navigate these shifting dynamics? This feature delves into the implications of Google’s decision, examining its impact on market strategies, privacy concerns, and the future of digital advertising.

Privacy Sandbox

Alternative solutions like Google’s Privacy Sandbox faced hurdles; for example, IAB Tech Lab, the global digital advertising technical standards-setting body, pointed out that it suffered from a lack of transparency for publishers.

Tejinder Gill

Google has finally acknowledged what the advertising industry has been asserting for years: the Privacy Sandbox is not a good product, says Tejinder Gill, General Manager, The Trade Desk. He adds, “It fails to sufficiently protect consumers’ privacy, empower advertisers, and likely hurts publisher monetization the most. While Google spent years developing Privacy Sandbox, the advertising industry has moved on. Marketers now recognize that the fastest-growing parts of the internet extend beyond the Chrome browser. Consumers in India are increasingly embracing OTT, CTV, and music streaming platforms that operate in cookie-less environments. This shift has led to better identity solutions, like Unified ID 2.0, which represents a significant upgrade to the internet, and supports the needs of modern marketers. Now, while Google seems to have finally acknowledged that the best option is to give consumers a choice, the question remains – will Google truly offer consumers choice? Or will they make decisions on their behalf and then bury consumers’ access to change it? And will they change their minds again? Regardless, we should all continue to make the internet better and put both advertisers and publishers in control of their own destiny.”

Mathieu Roche

The ongoing twists and turns over the past four years have certainly been challenging for the industry, but they haven’t shifted the need for progress in addressability and privacy protection, says ID5’s CEO Mathieu Roche. The continuous disruptions and delays caused by Google’s shifting strategies and the Privacy Sandbox in particular have been a major distraction, especially for companies that have invested millions in testing Google’s alternative, Roche adds.

“Alternative identity solution adoption may slow down, and some players may take this as an opportunity to take their foot off the gas. We can think of third-party cookies a bit like comfort food; they may taste good but it’s unhealthy. Believing that cookies are here to stay is short-sighted. Cookie deprecation is still happening, but their removal will now take place user by user, instead of Google flipping a switch. We expect to see a progressive opt-out from cookies. The process may be slower but the ultimate destination will be the same,” explains Roche.

“Based on the information we have today, we can assume the third-party cookie opt-in rate in Chrome will be similar to Apple ATT; in 2023 the average ATT opt-in rate was about 34%. While opt-in rates from web publishers have been higher - ranging from 60-70% - due to the trusted relationships media owners have built with their audiences. We don’t expect consumers to have the same trust in browsers. The cookie conversation has gone mainstream over the past few years leaving consumers with low trust levels, so we can expect third-party cookies will not be widely available due to low consumer opt-in rates,” Roche adds.

Relief for advertisers?

Rekha Motwani

Google’s decision to reverse its plan to deprecate third-party cookies in Chrome brings relief to advertisers, allowing them to continue their current data collection and personalised ad strategies without immediate disruption, says Rekha Motwani, AVP Media, #ARM Worldwide.

This shift, according to Motwani, ensures stability and continuity in ongoing advertising efforts as reliance on third-party cookies remains intact.

However, she adds, regulatory changes, increased scrutiny, and heightened consumer privacy awareness over the past few years highlight the need for advertisers to adopt more holistic approaches that prioritise user privacy.

“Google’s new privacy-centric user choice features will allow users to make informed decisions about cookie use, reinforcing this necessity. To stay ahead, advertisers must stay agile and invest in strategies like first-party data collection, contextual targeting, and innovative privacy-enhancing approaches. This approach aligns with the findings of the Global Consumer State of Mind Report, which states that 76% of individuals believe companies need to enhance their efforts to protect data online,” Motwani explains.

“For instance, marketers relying solely on pure attribution-based media measurement have already faced inconsistencies in media reporting due to factors like ad blockers, privacy measures, third-party cookie limitations from other browsers, regulatory compliance, and the complexity of modern consumer journeys. Post this update, these inconsistencies are likely to increase as more consumers take proactive steps to limit ad targeting. Additionally, extensive data repositories maintained by industry giants could lead to more data breaches and privacy concerns. An IBM report supports this, noting that personal details like names, emails, and passwords are involved in 44% of data breaches. Savvy marketers who have started adopting advanced measurement techniques, such as unified Marketing Mix Modelling (MMM) and geo-based incrementality testing, while keeping consumers at the heart of their strategies, have and will continue to see positive outcomes and robust accountability, positioning them well for the future,” she says.

The move to retain third-party cookies underscores the critical role they play in digital advertising, points out Sharath Madhavan, Lead - Performance Marketing, TheSmallBigIdea.

“Advertisers have relied on these cookies for precise targeting and tracking, and the uncertainty of their removal has raised significant concerns. This decision provides some relief and additional time to explore viable alternatives," he adds.

Regarding the future outlook, Madhavan points out that the delay in eliminating third-party cookies signals a need for continued innovation in privacy-preserving advertising technologies. He believes that Google’s Privacy Sandbox initiative, despite its challenges, represents a critical effort to create a more privacy-conscious web. The industry must remain focused on developing robust solutions that can meet both privacy standards and advertising needs.

“While the deprecation of third-party cookies has been delayed, the shift towards a privacy-centric and consent-driven user base is inevitable,” says Umair Mohammed, CEO & Founder, Nitro Commerce. “Eventually, users will have the choice to opt in or out of third-party cookies, and as seen with Apple’s ITP, around 80% typically opt out. Companies must recalibrate to Privacy Sandbox APIs, and brands should focus on first-party data and privacy-centric tracking technologies. It's the only way forward.”

Google’s decision provides the industry with more time to develop robust, privacy-focused alternatives, opines Kritika Arora, Director - Performance and Acquisitions, Globale Media. “It underscores the importance of balancing user privacy with the need for effective advertising solutions. As an adtech company, we understand the concerns around data privacy and are committed to supporting innovations that protect consumer data while ensuring that businesses can continue to reach their audiences efficiently,” Arora adds.

Welcoming Google’s decision to delay the elimination of third-party cookies, she notes that this move acknowledges the complexity and significance of this issue for the advertising ecosystem. “Third-party cookies have been a cornerstone of digital advertising, enabling personalized experiences and effective targeting that benefit both consumers and advertisers.” Arora says.

She believes that collaboration across the industry is essential to navigating this transition. This additional time allows for a more thorough exploration of technologies like first-party data, contextual advertising, and other privacy-preserving techniques.

“It also provides an opportunity for stakeholders to work together on creating standards and frameworks that can sustain the digital advertising ecosystem in a post-cookie world. Globale Media remains dedicated to driving advancements in adtech that align with both regulatory expectations and the evolving needs of our clients. We look forward to contributing to the development of solutions that ensure the continued success of digital advertising while upholding the highest standards of user privacy and data protection,” she adds.

Neena Dasgupta, CEO and Co-Founder, Salt Inc., feels that the move is wise and in the overall interest of the internet community.
"Third-party cookies play a crucial role in content personalisation as it is the fuel that programmatic media buying runs on. Every organisation today is working on ways to enhance the user experience which is possible only when we have ways to better understand the user. Banning third-party cookies, until a more efficient, more privacy-focused alternative technology replaces it, could have severely affected the entire industry. From a consumer lens, we evidently love personalisation as it saves our time and fits our needs perfectly. Given consumers are already bombarded with irrelevant and repetitive content, consumers obviously feel more comfortable on platforms that understand their preferences," says Dasgupta.

Bhavik Mehta, CEO, Thinkin’ Birds Communications, also agrees that it is a relief for the ad industry. “On the one hand, it provides a much-needed reprieve for an industry already grappling with significant changes. This extension gives us more time to refine our first-party data strategies and explore alternative targeting solutions. However, it also prolongs the uncertainty surrounding the digital advertising landscape. Clear and consistent regulations are essential to foster innovation and trust. This period also provides an opportunity for agencies to innovate, experiment with new technologies, and develop more robust, privacy-focused marketing strategies. While this temporary relief is welcome, the industry must continue to invest in privacy-centric solutions and prepare for a cookie-less future," says Mehta.

Siddharth Devnani, Co-Founder & Director, SoCheers, is of the opinion that this is a win for all the digital ad networks. “As the top digital platform monetising internet traffic by showing ads which are highly relevant, Google is dependent on the fundamental model of segmenting users for delivering this relevancy to brands. While they announced initiatives to replace third-party cookies, we all knew it would come at the cost of a significant part of the digital advertising ecosystem. Maintaining third-party cookies within browsers such as Chrome now maintains the status quo of the industry. This is a win for all the digital ad networks. Is it a loss of user’s privacy? I don’t think so yet. The pressure will be on from all fronts: regulators, internet privacy advocates, and consumer rights activists,” explains Devnani.

This shift underscores the necessity for innovative solutions like Google’s Privacy Sandbox, aiming to maintain robust advertising capabilities without compromising user privacy, opines Abhinav Jain, Co-Founder & CEO, Almonds AI. He adds that as the digital advertising landscape evolves, it is crucial for all stakeholders to stay adaptable and informed.

“The industry is committed to leveraging such advancements to enhance our AI-powered engagement programmes, ensuring they remain effective, ethical, and aligned with the latest industry standards. We also recognize the complexities and challenges associated with balancing user privacy and effective marketing strategies. Google’s decision to enhance user control through the new feature in Chrome, while actively collaborating with regulators and industry players, is a significant move towards a more transparent and user-centric online ecosystem,” concludes Jain.

Will it reshape the industry?

Russhabh R Thakkar, Founder and CEO, Frodoh World, believes that Google’s decision to keep third-party cookies is a twist that could reshape the industry in unexpected ways. Thakkar feels that established companies that have invested in alternatives now have a unique advantage. They can continue using third-party cookies while refining their new technologies, which means they’re perfectly positioned to offer advertisers a blend of both worlds.

“This dual capability could be a game-changer, enhancing their market share and adaptability. For start-ups that built their business models around cookie alternatives, this is a crucial pivot point. The key is to reframe their technologies as enhancements, not replacements. By highlighting immediate benefits like better targeting and enhanced privacy compliance, they can turn this challenge into an opportunity. Interestingly, this move might accelerate the shift away from cookies naturally. As alternative technologies demonstrate their value alongside cookies, we could see an organic phase-out, possibly even faster than Google’s original plan,” Thakkar says.

He likens it to the early days of hybrid cars. Initially, Thakkar adds, they were seen as replacements for gasoline vehicles, but they ended up creating a more robust market. “Similarly, cookie alternatives might evolve to complement existing systems, driving innovation in ways we hadn’t anticipated. This ‘reverse disruption’ could lead to a stronger, more flexible ad tech ecosystem.”

Google’s tightrope walk

The decision by Google to discontinue its drive to remove third-party cookies points to the tightrope walk it has been as it tries to enhance user privacy while at the same time taking into account the operational needs of the advertising industry, points out Hariom Seth, Founder, Tagglabs.

For example, says Seth, in the ad tech world, targeted advertising relies heavily on this tool, as it helps optimize ad campaigns and give measurable results. Introducing User-Choice Prompt in Chrome is a positive step toward transparency, which gives users more power over their tracking options. Nevertheless, this change also shows the consistent tension between privacy concerns and effective advertising tools, says Seth.

“While continued use of these types of cookies is useful for ensuring accurate targeting and campaign effectiveness there must be strong measures taken to protect privacy so that trust can be kept intact. The sector therefore needs not only to adapt to new privacy regimes but also spearhead innovative responses that will improve user experiences without impairing advertisement efficacy. Consequently, reaching a middle ground will maintain a healthy digital advertising ecosystem where dynamism will thrive alongside ethics while preserving customer’s trust,” says Seth.

The decision by Google to withdraw its plan to ban third-party cookies reflects a fine line between user privacy and the needs of advertising industry, point out Abhishek Tiwari, Global Business Head, NetSetGo Media. “Although the new Chrome user-choice prompt is a step toward transparency, it also highlights the importance of advertising for Google. For us being a mobile ad agency, we embrace the continued existence of third party cookies because they enable us to target precisely and have effective campaigns. Nevertheless, we need to implement strong privacy measures that will guarantee user trust and data protection. The industry must prioritize innovation as well as responsibility in its evolution,” Tiwari adds.

Google’s decision to abandon the deprecation of third-party cookies in Chrome reflects the pressures advertisers face, yet it poses significant ethical concerns for Affiliate publishers, opines Rahil Khan, CMO & Director, Sellergize. “While Chrome may proceed with third-party cookies, other browsers like Firefox and Safari have already embraced a more privacy-centric approach by banning them outright. This fragmentation creates challenges for advertisers reliant on cookie-based tracking methods. Some advertisers with Affiliate Programs intentionally refuse to adapt their tracking systems. By not updating their practices, they effectively evade paying commissions on sales made through browsers that disable third-party cookies. This tactic is not only unethical but risks eroding trust between businesses and their affiliates. As we navigate this evolving landscape, advertisers must prioritize transparency and ultimately embrace universally acceptable tracking methods that will foster a more ethical and sustainable advertising ecosystem for all stakeholders involved,” says Khan.

Vaibhav Kandpal, Founder & CEO, Lead Experts, feels that backtracking on the cookie ban is a good step. As a marketer at core, he believes it is beneficial for Google to consider offering users the option to accept or decline tracking instead of banning cookies altogether, similar to practices on platforms like Facebook.

“It’s crucial to strike a balance between respecting user privacy and ensuring ads can effectively reach their intended audience. Without this balance, the fundamental purpose of advertising is compromised. Google’s previous initiatives, such as FLoC and enhanced conversions leveraging AI signals and cohorts using hashed values, have not consistently met expectations. These innovative efforts often led to suboptimal ad performance, resulting in inefficient ad spending, particularly under stringent GDPR regulations,” concludes Kandpal.