Google’s U-turn on third-party cookies: What next for marketers and advertisers?

After years of industry hand-wringing, debates over alternatives, stats about marketers’ relative levels of preparedness, and stock imagery of biscuits, on Monday Google delivered the news that it would not be going ahead with plans to deprecate third-party (3P) cookies after all.

In a blog post entitled, ‘A new path for Privacy Sandbox on the web’, Google’s VP Privacy Sandbox, Anthony Chavez, wrote that Google is “proposing an updated approach that elevates user choice.” 3P cookies won’t be phased out in Chrome – instead, Google will “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.”

Google already gives users the ability to disable 3P cookies within the browser, but it could do a lot to make the option more visible. Chavez has said that Google is “discussing this new path with regulators, and will engage with the industry as we roll this out”.

Other than the bombshell announcement that 3P cookies in Chrome will not be going away, Google’s update was light on details about what comes next, including a timeline for implementing the new controls – something that prompted Digiday’s Kayleigh Barber and Seb Joseph to comment that Google had “learned its lesson from the numerous delays to its cookie-killing plans”.

However, the future may not be as murky as it seems. Let’s look at what we know about the prospects for advertising in the wake of Google’s news, and whether marketers should be doing anything differently.

Could Privacy Sandbox offer an alternative to 3P cookie signal loss?

Although Google’s refinement of its Privacy Sandbox solution, conceived as a substitute for cookie-based targeting and measurement, is less urgent without the pledge to deprecate cookies by a certain deadline, Google has assured the industry that Privacy Sandbox will not be going away.

Google’s Antony Chavez said that, “We’ll continue to make the Privacy Sandbox APIs available and invest in them to further improve privacy and utility.” Google has also pledged to make additional privacy controls available, which will include extending IP Protection to Chrome’s Incognito mode.

How will Google’s IP Protection impact ad targeting and measurement?

At the same time that Google revealed its plans to keep 3P cookies, the company released its own testing results for Privacy Sandbox. The testing phase for Privacy Sandbox had involved deprecating third-party cookies for an initial 1% of Chrome users in January and measuring the impact on advertising.

Google analysed the impact of removing third-party cookies on advertisers’ programmatic revenue in both Ad Manager and AdSense, and compared this to the impact with Privacy Sandbox available as an alternative. According to Google, removing 3P cookies on their own would result in a 34% dip in programmatic revenue for advertisers using Ad Manager, and a 21% dip for those advertisers using AdSense. By enabling Privacy Sandbox APIs, revenues reportedly only dipped by 20% (Ad Manager) and 18% (AdSense).

Of course, this is still a drop in revenue that most advertisers would rather not see. But Google’s argument is likely that in a world where 3P cookie signal loss is happening anyway – not just as a result of future moves by Google, but due to blocking in browsers like Safari and Firefox and users’ own choices to protect privacy – it is better to have Privacy Sandbox than not have it. Google has stated that it expects the performance of Privacy Sandbox to “continue to improve over time” as publishers, advertisers, and adtech partners adopt and optimise it.

Google’s prognosis about Privacy Sandbox is markedly more positive than the results released by ad platform Criteo, which conducted extensive testing of Privacy Sandbox across the majority of its 18,000 advertisers and 1,200 publishers between 18th March and 12th May. Criteo concluded that publishers could stand to lose, on average, 60% of their revenue from Chrome if 3P cookies were deprecated and Privacy Sandbox implemented as it currently stands. The ad platform also raised concerns about the impact of latency on ad rendering.

Google had responded to the testing results by pointing out that performance numbers “currently don’t reflect how the overall ecosystem will perform in a true marketplace – which won’t exist until adoption expands alongside third-party cookieless traffic”. Without the deprecation of 3P cookies, advertisers will have more of a choice about adopting Privacy Sandbox – but will need to make up their minds as to whether they think it will be beneficial.

What next for marketers and advertisers? We asked the experts

In the wake of Google’s news, we reached out to a number of experts to get their initial take on what this means for the wider marketing and advertising industry – and whether marketers need to adapt their approach.

Duncan Smith, Global CPO at agency Journey Further, wryly calls Google’s U-turn on cookies “the biggest tease in the history of digital marketing”, but adds that it might have been inevitable as technological and revenue challenges came into stark focus.

However, while the change of heart “provides some short-term stability for businesses relying on cookie-based technologies”, Smith is at pains to point out that the situation hasn’t changed that much in the long run. “[I]t doesn’t address the underlying shift towards a more privacy-centric web. This move buys the industry more time, but it’s crucial to remember that other major browsers like Safari and Firefox still block third-party cookies by default.”

Andrew Hood, Founder and CEO at independent analytics consultancy Lynchpin, remarks that he has some sympathy for Google “being somewhat caught between two regulatory forces – privacy versus competition – with ultimately different objectives.” With that said, “I’m also sure there’s a clear commercial benefit to Google effectively declaring stalemate in that context while conveniently protecting some rather valuable established revenue streams.”

Hood points out that when it comes to the rules of engagement for tracking and measurement, “we have for some time had multiple internets in play: most significantly iOS/Safari vs Android/Chrome/Edge. They already operate differently – third-party cookies have been disabled by default in the Apple world for some time, and their intelligent tracking prevention curtails a broader range of measurement and targeting.

“So, it’s also important to view these ongoing industry developments through the lens of browser and device market share – which can be very different for different brands depending on the demographic of their audience. Marketers will need to look at the context of what their addressable audience is or isn’t via third-party cookies and weight their plans accordingly.”

Wes Parker, Co-Founder and Managing Director at DemandMore, calls the development “good news for advertisers”: “It will end the uncertainty they have been facing and allow them more options when targeting ads.”

Additionally, “With the onus put on users to enable third-party cookies or switch to a technology like Privacy Sandbox in the Chrome browser, [this move] should promote user privacy.”

In practice, however, Parker has some doubts about how effective Chrome’s new cookie experience will be. “In reality, I expect it to work more like cookie consent banners, where if promoted, users will opt-in with little understanding of what they’re signing up for and how cookies are used to collect data about them to target ads.”

First-party data will still be crucial

Journey Further’s Smith says that marketers “should view this as a temporary reprieve rather than a reason to abandon privacy-first strategies. The quality and reach of third-party cookie data continue to degrade, especially in our multi-device world, making it an increasingly unreliable foundation for media strategies.

“While cookies remain a tool in the arsenal, brands should prioritise first-party data collection and invest in cookieless measurement solutions to future-proof their analytics and ensure they can reach premium, representative audiences across all browsers.”

The question of “what is your consented first-party data strategy?” is ultimately still the most important one to focus on strategically.

Hood agrees, pointing out that, “a third-party cookie is typically just a technical mechanism for sharing data, and the global regulatory tide for data sharing is still clearly tending towards more protection in terms of transparency and explicit consent for end users.

“The question of “what is your consented first-party data strategy?” is ultimately still the most important one to focus on strategically. And, critically, first-party cookies are likely to continue to form a key element of this for digital platforms.”

Alex Peacock, Head of Technology Strategy & Transformation EMEA at RAPP, predicts that, “This might not be the end-of-the-end for the cookie: legislation is going to continue to evolve. […] Regulators, including the EU, will continue to evolve their positioning on consumer data privacy, especially with a view on generative AI, so we’re likely to see more legislation providing consumers greater control in the coming months.

“Marketers shouldn’t shift their focus entirely away from first-party data; the investment is still needed. And we know that the use of first-party data and insights increases media performance and efficacy. We’re still seeing a degradation in addressable media audiences, from the proliferation of privacy-based browsers to enhance user control over third-party cookie consent. First-party data will continue to have a growing role in maintaining media performance.”

We’re still seeing a degradation in addressable media audiences … First-party data will continue to have a growing role in maintaining media performance.

Peter Bell, VP of Marketing EMEA at Twilio, agrees: “However Google decides to move forward, there are still compelling reasons to make the move to first-party data now. Third-party cookies often suffer from low match rates … and have a short shelf life – customer profiles stored in a customer data platform are a better foundation for building great customer experiences.

“Data given directly to brands by their customers or generated by their interactions with them provides the most valuable, relevant, and accurate insights when building engaging, personalised experiences. … Added to that, the provenance of the data and the associated consent is known and managed in-house, making customer privacy and data protection easier.”

“The overwhelming sentiment in the industry … is for privacy-first technology”

Kevin O’Farrell, Vice President EMEA at Analytic Partners, speculates that Google’s new cookie experience “could be similar to what Apple did years ago when they blocked cookies and gave consumers the choice to opt in and out.” However, he points out, “Google will need to discuss the proposed new approach with regulators – and we know that Meta’s ‘pay or ok’ policy was turned down by them, so nothing is final here.

“What we do know is that the overwhelming sentiment in the industry, among consumers and among regulators is for privacy-first technology and that’s not going to change. Attribution alone is still broken. For brands continuing to rely on cookies for their targeting and measurement, this approach will mean huge gaps in their data.

“They should finally make the switch to a more future-proof and privacy-safe solution like Commercial Analytics or MMM [Marketing Mix Modelling]. The cookie may not crumble after all, but it’s incredibly stale.”