Learn about what’s happening to third-party cookie tracking on Chrome (and identifiers on Android) and about alternative routes to personalization.
Google’s Privacy Sandbox is a space where complex proposals to protect user privacy have been developed and are undergoing (or have undergone) extensive testing. In short, Privacy Sandbox is an attempt to fill in the many gaps that will open up in the advertising ecosystem when third-party cookies are deprecated in the Chrome browser.
One key proposal is to replace tracking of individual users with Topics, assigning them (temporarily and in a way that does not identify them) topics of interest based on their browsing.
But it’s not just about the Chrome Browser or Topics. There’s also a Privacy Sandbox for Android that explores ways of preserving the app advertising ecosystem once users opt out of being tracked (as they already can on iOS).
Google has repeatedly delayed the complete deprecation of third-party cookies, although, at the beginning of 2024, it did roll out the option to opt out to some 1% of Chrome users worldwide. It maintains that cookies will be gone by the end of the year, although regulators have warned it not to act before anti-competitive concerns have been resolved.
Google’s thankless transparency
Throughout Sandbox’s multi-year lifespan, Google has—on the face of it—gone out of its way to offer transparency in its proposals and timeline (here’s the Web timeline as of April 2024). It has worked with the U.K. Competition and Markets Authority (CMA) on antitrust issues since 2021 and has collaborated with the IAB Tech Lab industry consortium to refine Privacy Sandbox proposals.
Google might feel that the transparency has not been appreciated. The CMA’s concerns have not yet been resolved, and in a scathing report released in February 2024, the Tech Lab said:
“(T)he changes mandated by Privacy Sandbox will require substantial development and infrastructure investment costs for both buy and sell-side technology companies. Additionally, operational, business, financial, and legal processes for brands, agencies, and media companies will need extensive reworking.
– IAB Tech Lab slams Google Privacy Sandbox
Google was not slow to clap back:
“(T) The analysis contains many misunderstandings and inaccuracies, which we consider important to correct in order to provide accurate information to the ecosystem. Overall, the report appears to ignore Privacy Sandbox’s broader objective of enhancing user privacy while supporting effective digital advertising.”
– IAB Tech Lab slams Google Privacy Sandbox
The ad industry is now acting
After a lengthy period of prevarication, strongly recalling the run-up to GDPR, the ad industry has begun taking steps to prepare for cookie deprecation. According to an IAB survey of 500 advertising and data experts at brands, agencies, and publishers, it is making major investments to adapt to the new privacy-by-design ecosystem.
The 2024 edition of the IAB’s annual “State of Data” report shows how the industry is addressing the new privacy-by-design ecosystem. In this ecosystem, the deprecation of third-party cookies and other privacy-protective measures is expected to lead to significant signal loss. In particular, the new environment is expected to create obstacles to targeting, personalization, and measurement.
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More than half of those surveyed anticipate challenges in tracking conversions, attributing conversions to campaign or channel performance, measuring ROI, and optimizing campaigns; almost 50% expect to struggle to measure reach.
Against this background, some 90% are shifting their personalization tactics, ad spend, and the balance of first- and third-party data in their ad strategy. Eighty percent are planning to train their staff on privacy-related issues, while many expect to create dedicated teams or employ external experts to work on these issues.
Brands, agencies, and publishers plan to grow their first party data-sets at a rate that almost doubled two years ago (71% vs. 41%). In other words, we will see an attempt to leverage first-party (and zero-party) data to replace the third-party data collected through covert tracking. There are two concerns, however. The first is that, due to the comparatively limited quantity of first-party data, this approach just won’t achieve the results seen with third-party cookies. Second, using first-party data means addressing only existing customers (or subscribers, members, etc.). Other tactics will be needed to support the acquisition.
Concerns about the adequacy of Privacy Sandbox testing
The protocols in the Privacy Sandbox became available for testing in January this year. Some experts see a problem with this: It requires large-scale adoption within the ad ecosystem for the testing results to be reliable. While it may be possible to test whether something technically works on this scale, it’s hard to evaluate the effects it would have when adopted across the ecosystem.
Ken Weiner, CTO at contextual advertising platform GumGum, said, “Some people have prototyped it, and what I’ve heard is that it’s kind of working, but the CPMs are lower. But we might return to normal levels when more people adopt it.”
Data clean room and collaboration platform Optable directly integrates with Privacy Sandbox and is one of the organizations involved in testing its capabilities. Bosko Milekic, co-founder and chief product officer, said: “We have some sense that it works for audience targeting; it’s designed to enable that campaign to continue to run once cookies are gone. It’s still difficult to conclude performance because the amount of inventory currently available to bidders such as Optable through the Privacy Sandbox mechanisms is quite limited.”
Optable is finding that the targeting and measurement mechanisms work. “But it’s still too early to draw definitive conclusions about broad performance,” said Milekic.
By Q3, the 1% testing period will be over, and Google will be able (CMA permitting) to roll out cookie deprecation everywhere without a clear idea of what will happen when it goes from 1% to 100%.
Some don’t care about cookies
Some members of the advertising ecosystem are not only resigned to the loss of third-party cookies but aren’t even mourning it.
GumGum, with its stake in contextual advertising, is one. Another is marketing analytics firm ChannelMix. “We have a solution that doesn’t rely on cookies,” said Michelle Jacobs, ChannelMix’s President and co-founder, “so it doesn’t matter to us what Google ends up doing.” Nevertheless, she views the Privacy Sandbox proposals as a step backward. “Marketers aren’t going to be able to execute media like they’re today.”
Jacobs’ co-founder and ChannelMix CEO Matt Hertig believes that “straight-line attribution” based on cookie tracking has been dead for years. “We’re excited because this is forcing the industry to adopt practical measurement strategies based around first-party data.”
Another agnostic player is Optable, the data collaboration and clean room vendor created in conscious anticipation of Chrome’s deprecation of third-party cookies. “We created Optable specifically to make it possible to do relevant advertising effectively without third-party cookies,” said Milekic.
The main alternatives to third-party cookies
Although there seem to be countless proposed alternatives to cookies, they generally fall into one of the following categories: reliance on first-party (and zero-party) data, contextual advertising, identity resolution (including data clean rooms), or purported substitutes like Privacy Sandbox’s Topics.
“I think there are going to be many different tactics to get through this,” said Tara DeZao, product marketing director for adtech and martech at Pega. “Brands that don’t have a lot of first-party data — for example, CPG brands — will rely on their retail media partners, the Targets and the Walmarts, to get them the reach they need. In terms of other industries, there are lots of first-party data options available.”
First-party (and zero-party) data
“Consumers are amenable to giving you their data as long as there’s a value exchange,” said DeZao. I think brands haven’t cracked the code 100% on what the value exchange will be.”
Closely associated with first-party data is zero-party data, data that is not personally identifying but is offered up by the consumer through engagements like quizzes. One example we wrote about was an online temporary tattoo brand that collected information about visitors’ style preferences and showed them relevant products; collecting first-party data could wait.
Contextual advertising
In a sense, contextual advertising goes back to the days of soap operas when Madison Avenue confidently identified the demographic watching daytime television dramas as the demographic responsible for buying soap powder. But there are new forms of contextual advertising out there.
“Context is going to be huge,” said DeZao. “As someone working for an AI company, we know consumers rush through all their channels and devices, so you need real-time data and information. Context is one of those categories where you can get the freshest take on what your consumer is doing now.” In other words, regardless of identity, consumers scrolling through camping websites might like to see tent ads.
Identity resolution
Many vendors today offer identity resolution solutions that—largely probabilistically—stitch identifiers like postal or email addresses to transaction activity or other trackable behaviors. Some of these solutions are interoperable—for example, The Trade Desk’s UID is interoperable with LiveRamp’s RampID. Does that bring benefits?
“If you look at our marketing stacks today, they’re so bloated,” said DeZao. “We’re using less of the stack than we ever did, but we’re continuing to add things. So I think, when a brand is looking for new solutions — and it’s going to be multiple because there’s not one solution to replace this functionality — they need to reduce the number of vendors they have versus adding. Consider technologies that are interoperable with each other.”
Google Topics
The winning alternative to cookies that have emerged from Privacy Sandbox is Topics. This browser-based approach assigns a rotating and limited number of topics to a browser based on activity.
“It’s a seven-day cadence,” DeZao explained, “and I think there’s something like 460 or 470 categories, and they’re not super granular. Criteo is a Google partner; they’ve been testing Topics, and a year ago, they found that Topics was five times less effective than cookies. Since then, they have added a hundred categories, but the granularity is not there.”
“Topics is not going to have demographic information or categories,” she said. “Your first-party data is your best bet. You’ll want that demographic info if you’re in industries like finance, telecoms, and potentially arts and entertainment.”
Suppose DeZao had to place a dollar on which solution would ultimately win. In that case, it sounds like she’d bet on contextual advertising: “Contextuality and real-time data—like, the freshest possible data.”
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What you need to know about Privacy Sandbox for Android
Most discussions of Google’s Privacy Sandbox proposals have focused on what they mean for the Chrome browser. After all, Chrome’s deprecation of cookies seems to motivate Sandbox and other proposals, such as Topics and Protected Audiences. However, it raises significant issues for mobile marketing, too.
Privacy Sandbox for Android will deprecate identifiers just as Apple’s iOS already has. “Privacy Sandbox is introducing APIs and solutions that remove the Android Advertising ID, a unique identifier at the device level consistent across all apps on that device,” said Itai Cohen, SVP marketing and strategy at Digital Turbine. It is possible to reset the ID, but Cohen expects only a minority of tech-savvy users to do that. Consent is easier on iOS, but consent rates are still below 20%.
Having already lost identifiers on iOS, mobile marketers should know what to expect. Losing the device identifier meant losing two things: The database becomes far less useful for gauging the right level of bidding, and attribution becomes highly problematic. “Once you can’t close the loop between purchase and user acquisition spend, measuring marketing efficacy is significantly hindered,” said Cohen.
The major difference between Apple’s and Google’s approaches is that users on iOS receive a prompt from each app where they can choose to actively opt-in to share their device identifier (albeit consent rates are still below 20%). In contrast, Google’s Privacy Sandbox aims to remove user-level identifiers and replace them with APIs that support various advertising use cases without relying on identifiers.
Said Cohen, “While Chrome Privacy Sandbox is challenging to implement, mobile will be a much bigger lift. The IAB strongly responded to the Chrome Privacy Sandbox, which was an easier process than the mobile side.”
