What Google's Privacy Sandbox Means For Your Marketing - Rhea+Kaiser

Google announced it will phase out 3rd-party cookies by 2023. We’ll review what this means for brands and how they might adjust their marketing programs.

UPDATE: This post was originally published on November 9, 2020. On June 24, 2021, Google announced that they are delaying the phase out of cookies to late 2023 (rather than early 2022 as previously announced). This should allow the industry more time for both Google and the industry at large to fully roll out and test alternate solutions before cookies are removed. Rhea + Kaiser will provide additional insights and recommendations related to this news as it develops.

In a January 2020 blog post Justin Schuh, Director of Chrome Engineering at Google, announced Privacy Sandbox, a project designed to phase out 3^rd-party cookies on its Chrome browser. It will take two years, with 3rd party cookies fully phased out by 2022. In the meantime, Google is working on alternative solutions that will make consumer data more secure but still allow for targeted advertising.

With this announcement, many of our peers and clients have asked what this means for their brands, their marketing strategy, and their own personal information. We’ve outlined our take on this news here.

What does this mean for marketers?
Programmatic advertising – which helps us target the right audience regardless of where they are – relies on 3rd party cookies for targeting and measurement. We explain the difference between programmatic and endemic advertising in this Marketing to Farmers post. These cookies are designed to follow users across the internet, tracking their behaviors to generate virtual user profiles. This is a powerful and effective tool for personalized advertising and conversion tracking but created concerns for consumer privacy.

So why mess with a good thing? By eliminating third-party cookies, Google better protects user data. It’s a move that forces the industry to adapt and come up with new ways to track conversions and target users. Consumers get greater protection, and programmatic publishers get alternate means of monetization.

Google Chrome represents 69% of online activity on desktop and 40% on mobile. Given that the leading mobile browser, Apple’s Safari, already prevented the use of tracking cookies in 2018, the ability to use 3^rd-party cookies will be virtually gone when Google completes this transition in 2022.

What are some potential outcomes?

• Google’s intended outcome is that 3^rd party cookies become obsolete and replaced with a new universal solution that protects consumer data. One solution being tested: storing individual user-level information in the browser.  This allows access to certain information via an application programming interface (API), which allows apps to borrow data and interact in a specified way. This means the conversion would be tracked, but the user data would not be passed back. Several APIs have been proposed to solve for ad selection, conversion measurement, and fraud protection. One proposed API is a “trust token” designed to anonymously authenticate a user and distinguish them from bot traffic.
• Publishers will likely try to scale/monetize their 1^st-party data, through first-party cookies and by asking users to log in with an email and provide additional demographic data, allowing for more granular onsite targeting. 1st party cookies are not affected by these changes from Google, as this data is obtained through some form of consent or direct relationship with the user.
• There could be a shift towards contextual targeting. Even if behavioral targeting is lost, it will still be possible to target a user based on keywords, time, and location. It will become increasingly important to make sure that ads are tailored to that context, since they can’t be personalized directly to the user. Premium publisher content may also experience a resurgence.
• Brands may choose to leverage their email and CRM data more actively for targeted advertising.

What does this mean for our brands and yours?
The burden of finding an alternate targeting methodology largely falls on Google and a brand’s digital partners. Over the next two years, they will work together to develop solutions that allow some of the same capabilities as 3^rd-party tags (behavioral targeting, conversion tracking, frequency capping, etc.).

At R+K, we’ll address this with each of our partners to understand and evaluate the new solution that they provide. Some programmatic partners have already anticipated this cookie-less shift and have robust data sets for targeting that are not reliant on 3^rd-party cookies. Depending on the viability of these new solutions, there could be a shift in our recommendations for digital investment toward partners with robust 1^st-party data or alternate forms of targeting (in particular, Social and CTV/OTT).