We posted last week about changes that are being made to Google Chrome’s privacy that will affect how cookies are used on the web. In this follow-up post, we’ll talk more about the possible impact of these changes from a publisher perspective, and look at what measures publishers can take to protect their revenue.
What was announced
This was discussed in more depth in the first part of this post, but there are three points that are crucial to publishers:
- Cookies will need to be flagged as working cross site in order to work cross site
- Users will be given control over how / if such cookies are used
- Measures will be taken to stop browser fingerprinting being used as a workaround solution
Why Chrome’s privacy changes matter to publishers
Cookies are used throughout the online advertising system. As well as being used to control things like frequency caps, they are also used to tag users by interest and to allow for re-targeting to ensure that ads shown to users are targeted and relevant. Less targeting information means less targeted ads, which reduces how much advertisers are willing to pay for those impressions. That means lower revenues for publishers.
What wasn’t announced
The announcement at IO 2019 didn’t come as a surprise to many. There had been a lot of speculation about what these changes might look like, so it is worth taking a moment to consider what wasn’t announced.
Third party cookies will not be blocked by default : The announcement discussed giving users control over 3rd party / cross site cookies rather than blocking them by default. We don’t yet know what those controls will look like, but it seems likely that this is a far softer blow than a Safari-style “block ’em all” approach.
The fact that neither of these features have been announced does not necessarily indicate that they never will be. Apple already blocks 3rd party cookies and uses a unique Advertising ID in Safari, but there are challenges to Google doing similar. Both approaches give significant advantages to the big walled garden advertising platforms. As Google is both an advertising platform and a browser maker, it would undoubtedly raise anti-trust concerns if Chrome was to do the same.
How does this compare to Safari ITP ?
The announced changes are comparable to, but distinctly different from Apple’s Intelligent Tracking Prevention. Chrome’s approach is not as severe as Safari’s, so we are not expecting to see such a sudden drop in revenue as has been seen with Safari users. However, Chrome’s market share is close over 60% globally compared to Safari’s 12% (source) so the overall impact could be far more significant. Particularly so if those controls are tightened over time.
What will the long term impact be
The scale of overall impact will depend on how the controls are implemented. If control over third party cookies is buried deep in the Chrome UI then take-up could be negligible. Alternatively, if users are presented with a hard opt in/out decision it could be very significant. Until more information is released about what the controls will looks like it is impossible to tell.
It seems unlikely that the changes will have much impact on overall online advertising spend. Advertisers will still want to reach publisher audiences and are unlikely to shift to offline channels due to these changes. We should expect changes to how that money is spent, but not necessarily how much of it is. The biggest platforms are similarly likely to feel the least impact. Google, Facebook and, to some extent, Amazon all have plenty of data that can be used without relying on third party cookies. Amazon will likely be slowed the most of the big three as the changes will likely impact the company’s ability to match it’s customer data with advertiser audiences (in fact some commentators are saying that slowing Amazon’s growth is online advertising is one of the prime motivators behind this move, although that seems overly simplistic)
Third Party retargeters are likely to be the companies most challenged by these changes if take-up is significant. If platforms like Criteo were left without cookies to identify visitors to their advertisers website, then they could find themselves with a significant challenge to justify their budgets. This would be bad news for publishers as retargeting campaigns are often some of the highest value campaigns pushing up header bidding rates. We could see retargeting focusing more on other identifiers, such as email or phone numbers, but such data is harder to acquire and it would take the industry time to respond in that manner.
Is it all bad for publishers?
Even if cookie blocking rates become very high it will not be bad news for every publisher. With less targeting data advertisers may shift spend towards contextual ads. This would benefit publishers with clearly defined niche interest audiences. Publishers with first party data will also find themselves in a better position and able to command higher rates for more tightly targeted audiences based on that data.
Neither the Chrome cookie announcements nor Apples ITP will bring about the death of the third-party cookie, but both are nails in the coffin of a technology whose days are numbered. Looking ahead, there will certainly be advantages to niche publishers with a strong base of registered users.