The Cookies Win, Google Shifts Focus to the Sandbox
Google won't be scrapping third-party cookies after all. It plans to focus on the Privacy Sandbox to improve privacy. What does this mean for the industry?
Google has announced a major shift in its approach to handling third-party cookies in Chrome, reversing its decision to deprecate them. Is it surprising? Not really.
After a protracted four-year tragic tale filled with repeated delays, scepticism among marketers and advertisers had grown. According to Forrester’s Marketing Survey 2024, 61% of B2C marketers raised their doubts that Google would not be able to follow through on its plan to eliminate third-party cookies.
“It is ultimately a win-win for advertisers and consumers. But the multi-year journey on cookie deprecation has been tough on marketers who have been trying to prepare. After all of this, one thing is clear: relying on third parties is no longer enough. Businesses need to take control of their first-party data to get a complete understanding of their customer, especially given the level of personalisation expected by today’s consumers,” says Kat Warboys, Senior Marketing Director of APAC, HubSpot.
The reversal also came from the significant concerns raised by advertisers, who are, of course, Google’s most significant source of revenue and cannot be ignored. Advertisers argued that losing cookies in the world’s most popular browser would hinder their ability to gather data for personalised ads, thereby increasing their dependence on Google’s user databases.
Google’s Shifts Complete Focus on the Privacy Sandbox
Despite this reversal, Google remains committed to its Privacy Sandbox initiative. In a recent blog post, the company stated, “We’ll continue to make the Privacy Sandbox APIs available and invest in them to improve privacy and utility further.”
“Instead of deprecating third-party cookies, we would introduce a new experience in Chrome that lets people make an informed choice that applies across their web browsing, and they’d be able to adjust that choice at any time,” said Anthony Chavez, VP, Privacy Sandbox in a blog post. Google is currently discussing this new approach with regulators and engaging with the industry to facilitate its rollout.
This may also be a setback for the three billion Chrome users who might keep their privacy settings the same. “The vast majority of users online are already unreachable due to signal loss in the open web today, causing publishers’ OMP yields to collapse. For advertisers, this signal loss means bidding on an ever-smaller group of users, pushing up CPMs and reducing the perceived efficiency of open web buying,” says Joe Root, CEO & Co-founder of Permutive.
Also Read: The Cookie Crunch: How Brands Can Personalise Experiences When Browsers Won’t Help
Nevertheless, the move aligns with Google’s broader strategy. The decision to retain third-party cookies coincides with positive results from tests of alternative technologies conducted between January and March.
The tests demonstrated promising results: advertiser spending recovered to 89% in Google Display Ads and 86% in Display & Video 360; conversions per dollar (CPD) saw a 97% recovery in Google Display Ads and 95% in Display & Video 360; and remarketing efforts showed a 55% recovery in Google Ads and 49% in Display & Video 360, with even better outcomes for campaigns that integrated remarketing with other strategies.
These findings suggest that Privacy Sandbox technologies can help recover ad performance even without third-party cookies. But it is not devoid of challenges. “Google’s aspiration is ultimately to provide a better end user privacy preserving technology while allowing ad efficacy. Google has been very proactive with the development of the Privacy Sandbox, making a major effort to push the ecosystem to test and validate its viability,” says Roy Yanai, Vice President of Product at AppsFlyer.
“This new ‘middle ground’ is a way for Google to approve some kind of cookie deprecation with regulators and get more players on the Sandbox. Eventually, once sufficient marketplace liquidity (enough players on Sandbox) has been achieved, Google might make another move to deprecate third-party cookies altogether.”
THE BIG PICTURE: What does it mean for advertisers?
For advertisers and publishers, this pivot means re-evaluating their strategies yet again. Many tech partners and brands have already invested substantial resources in developing and launching new cookieless solutions, often at significant cost.
“There is another way for advertisers to build brand equity, grow market share and drive performance in programmatic, and it lies in publisher first-party signals and data collaboration between data owners—advertisers and media owners. When these data owners collaborate, not only is it enormously scaleable, but it is also performant, delivering increased yield for publishers, and incremental sales and reduced cost per acquisition for advertisers,” adds Joe.
Also Read: Martech Radar: Top AdTech Tools
This change also creates new challenges, as the industry must adapt to Google’s evolving privacy framework while continuing to navigate the complexities of the Privacy Sandbox.
“The work on the Privacy Sandbox has been a spectacular effort by a range of companies for over four years now. The brightest engineering minds have tried to tackle the seemingly impossible task of balancing user privacy protection with advertising utility for a thriving open web,” says Mateusz Rumiński, VP of Product at PrimeAudience.
“While today’s announcement does not undermine this effort, it will definitely discourage the broader ecosystem from embracing these solutions, which is not a good thing. Cookies will eventually lose relevance, leaving advertisers and publishers with tools less refined than they could have been.”
The future of digital advertising will likely involve ongoing adjustments as Google works to balance privacy with utility. Advertisers and publishers must stay agile and ready to integrate new tools and approaches as they emerge from the Privacy Sandbox initiative. The industry’s ability to adapt (and adjust its already re-evaluated strategies) to these changes will be crucial in maintaining effective ad performance and ensuring user privacy.
But here’s a silver lining from Jay Stevens, CCO at Permutive: “Smart advertisers are developing strategies away from cookie-based advertising to utilising publisher signals. These advertisers are experiencing two to three times the reach, increased sales, and lower CPAs, crossing the reachability chasm.”
