Publishers: Stop blaming Google. Examine Their Priorities and Incentives Instead.

Google's Cookie Conundrum: A Publisher's Perspective

In a surprising (?) twist, Google has decided to keep third-party cookies on the menu for Chrome users, stirring up a mix of relief and confusion among online publishers. The tech giant's schitzo pivot from its initial plan to scrap these digital trackers has left many wondering: what's cooking in the Chrome kitchen?

Google's new recipe for user privacy introduces user choice, allowing users to opt-in or out of cookies as they please. This uncertainty about how this new policy will work means publishers have to plan for everything. If the new Chrome defaults to “opt out”, this is basically putting the cookie into a vegetative state, but not actually killing it. It also makes the user the decider to deprecate the cookie versus Google being the one to do this (and face antitrust). Alternatively, if the default is “opt in”, they preserve the cookie’s continued slow decline. Finally, this à la carte approach to browsing data could see users cherry-picking their privacy settings site-by-site, potentially leaving publishers to face an inconsistent scenario when it comes to ad targeting capabilities. 

That said, the Privacy Sandbox, Google's playground for developing privacy-preserving tech, remains open for business. Some have even posited that Google’s continued lack of leadership points to the desire it has  to have more time cooking the Privacy Sandbox to improve it’s negative results and poor market uptake. Larger, richer publishers who've invested in this complex and sometimes puzzling initiative can breathe a sigh of relief—those Sandbox APIs aren't going anywhere - but half-baked proposals still remain and lack performance. 

Given the lack of any clear guidance or leadership, many have postulated that Google's latest move, position its offerings to maintain market dominance while appeasing regulators with a veneer of user empowerment. Suggestions from many publishers we have talked to seem to point to the assumption that if the user does opt-out, then the assumed fall back will be the Privacy Sandbox, where Google will look to assert advantages it may have with its own SSP (as it did prior to the advent of Header Bidding). 

The cost? The independent web is worse off again.

So, why isn't Google tossing cookies for good as planned? It seems the company is wary of anti-trust allegations, as the Privacy Sandbox has shown signs of really hurting ad revenue, with some tests revealing a 60% drop. By keeping cookies on the table and messy, Google can continue to sweeten its high-margin ventures like search and YouTube, and monetization of its own first-party relationships with users–all while theoretically keeping competitors at arm's length by empowering end users to say 'no' to cookies. The big question is if Google will pattern the user experience to opt-out by default like Apple's ATT or, default them users as opted-in by default.

Google's strategy is clever yet self-serving. By giving users the power to deprecate cookies themselves, Google can potentially weaken open web advertising, and drive more aforementioned dollars towards its own higher-margin, and more trackable platforms (YouTube, Search) and dressing up its dominance as a commitment to privacy. Remember, Google already possesses one the best first-party consented user graphs in the world, competing only with Amazon, Meta, and maybe Apple. 

For publishers, this means navigating a landscape where Google's decisions cast a long shadow. The uncertainty around Chrome's cookie consent workflow and its implementation timeline adds to the complexity of planning digital advertising strategies. Will publishers have to grovel for cookie consent, or will they be left to rely on the less palatable and poor-performing Privacy Sandbox APIs to monetize their content?

As always with Google, to answer the question of what Google wants publishers to do comes from asking what is more profitable to Google. In this case, what we are hearing from publishers is that the attitude to publishers seems to be: “If you can get third-party cookies … keep at it, we will keep taking your money (but good luck after our Chrome prompts!). If you can't get the cookie, invest resources you don't have in the Sandbox as the fall back (where we also get revenue and data) …or just give up and we’ll tell our advertisers to buy our other stuff that we control.”

The industry is now at a crossroads, with a $225 billion question mark hanging over its head. As Google continues to stir the pot, publishers must stay alert and adaptable, ready to adjust their strategies in response to the tech giant's ever-shifting game plan. One thing to never lose sight of -- regardless of antitrust, bouts with regulators, user privacy or other external forces -- their incentives never change. The future of digital advertising is still being baked, and publishers will need to ensure they don't end up with a tiny slice of a half-baked revenue pie by over relying on a vendor that is bent on taking the whole pie on their own terms. 

So where does this leave the different segments of the ecosystem?

 What Publishers Should Do Now

1. Stay Informed and Adaptive: Continuously monitor Google's announcements and regulatory developments. Flexibility and quick adaptation to new information will be crucial.
2. Invest in First-Party Data: Strengthen first-party data collection and leverage direct relationships with your audience to reduce dependence on third-party cookies and vendors whose interests are not aligned.
3. Limit investment in Privacy Sandbox.   For the moment, if you havn’t already sunk money into Privacy Sandbox, WAIT.  It is not clear what will happen, but the results so far strongly suggest to not throw good money after bad
4. Enhance User Experience: Focus on delivering high-quality content and user experiences to build loyalty and trust, which can encourage users to opt-in to data sharing.
5. Continue to Invest In Capturing and Leveraging Universal IDs.  All the data continues to support the value of UIDs.  By adding the leading UIDs into a bid request, you will see:

1. 1. 1. Bid density increases
      2. Higher eCPMs
      3. Higher CTR rates

 What SSPs Should Do Now

1. Prepare for Multiple Scenarios: Develop strategies for both cookie-based and cookieless environments to ensure seamless operations regardless of user preferences.
2. Expand Your Own ID Graph.  Standing still will not work. We have already seen those companies who invest into their own graph create new opportunities. Your relationships with your publishers have value, if you can leverage them to enhance your own ID graph.
3. Build Differentiation.  We have already seen the SSPs that are moving to build curation capabilities are growing. How else can you leverage your position to expand?

 What DSPs Should Do Now

1. Adapt Targeting Strategies: Develop new targeting strategies that leverage first-party data and contextual targeting to compensate for the potential loss of third-party cookies.
2. Educate Clients: Help advertisers understand the implications of Google's changes and guide them in adapting their strategies accordingly
3. Build More Proprietary Targeting Assets. We witnessed how DSPs are differentiating and growing market share by creating unique targeting strategies.  We see many DSPs leaning into curation activities, constructing custom audience with selected publishers and creating new targeting recipes to identify curated audiences built on publisher first-party data.

 What Advertisers Should Do Now

1. Strengthen First-Party Data: Focus on building robust first-party data assets and strategies, including CRM integration, loyalty programs, and direct consumer engagement.
2. Explore Contextual Advertising: Invest in contextual advertising solutions that do not rely on third-party cookies but still provide effective targeting. These can be blended with other targeting strategies.
3. Partner with Trusted Platforms: Collaborate with platforms that prioritize user privacy and offer transparent data practices to ensure brand safety and compliance. Also make sure you arent working with vendors that practice nefarious methods to stuff fraudulent impressions.
4. Stay Agile: Maintain flexibility in ad spend allocation and be ready to shift strategies based on evolving industry practices and regulatory changes.