What marketers should know about Google’s ‘surprising, but not shocking’ cookies about-face

Four years ago, Google said it would phase out support for third-party cookies, which log the activity of internet users across websites so advertisers can target them with relevant ads and track the effectiveness of those ads. The insights can be valuable to advertisers but have generated consumer privacy concerns.

Instead of eliminating those third-party cookies, Google will present users with a prompt to decide whether to retain third-party cookies, according to the U.K. competition regulator that has been overseeing the search giant’s plan to block cookies, leaving marketers to wonder how that will work, and how they will reach consumers if they opt out en masse.

Here’s what marketers should know about Google’s change and what could come next.

Delays have been happening for years

Google first announced its intention to phase out third-party cookies in 2020. Privacy advocates were enthusiastic, but many advertisers objected, saying Google’s plan to replace cookies would force them to shift spending to its digital-ad products.

What followed was years of delays and disagreements with the industry and regulators.

“Google was being pulled in multiple directions. The company had to thread the needle between offering a more privacy-centric approach to web browsing while not disrupting the ad tech ecosystem to the point that antitrust concerns could be raised," Raymond James analysts wrote in a research note this week. “In the end, the company seems to have satisfied nobody."

Marketing world finds this ‘surprising, but not shocking’

Following delays from Google and concerns from the U.K. Competition and Markets Authority, plans to eliminate third-party cookies have seemed less than solid, some industry watchers said.

“In the last six months, there has been a growing feeling that this was very possible," Shiv Gupta, founder of ad tech education company U of Digital, said of Google dropping its plan to end third-party cookies.

Jason Hartley, head of media innovation at marketing agency PMG, said there had been skepticism among regulators and the wider ad industry about the viability of Google’s Privacy Sandbox, which refers to the company’s set of technologies to replace ad targeting and measurement features.

“Surprising, but not shocking," Hartley said. “The issues were complex and solutions weren’t obvious. Recent tests suggested that there was still a significant gap in performance with Privacy Sandbox solutions."

Efforts to move to a postcookie world weren’t wasted

Though Google’s immediate plan to eliminate cookies isn’t moving forward, industry onlookers say efforts to move in that direction weren’t for nothing.

“I have been very vocal about saying I believe cookies are going away, and Google is going to do away with cookies," Gupta said. “My stance on that doesn’t change…The plan is still to do away with cookies. The plan is just to do it in a way that can appease people and authorities and pawn off the responsibility of cookie deprecation to users, in a way—[with] user consent."

Raymond James analysts say user choice means Google’s planning likely wasn’t in vain.

“Much technical effort has been expended and ink spilled about the preparations that advertisers and publishers were making to deal with the phaseout of the cookie. While no longer as urgent as feared, that effort may not have been for naught," they wrote.

They added that, “Depending on the alternative framework that Google will offer to users seeking privacy-first web browsing, industry participants may be able to use this work to reach these opted-out users on a contextual or cohort-based framework."

What happens next depends on how Chrome treats opting in or out

Whether consumers accept cookies likely will depend on how Google chooses to prompt them. Google in a post said it would propose an updated approach that would involve “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."

Advertising industry executives and experts say they have questions about what that will look like, and how closely prompts will resemble those from Apple to allow app tracking, for instance.

“We don’t have the details and regulators may have a say in this. If we see the type of opting out we have seen with [Apple’s App Tracking Transparency], Privacy Sandbox and other cookieless options will be important tools," said Hartley. “If not, advertisers will have to decide if cookies are right for them based on their goals, brand values, etc."

Gupta said people in the ad industry are wondering how user choice will look—whether prompts are opt-in or opt-out, what language is used, how much control publishers have over prompts, and whether prompts appear on every website or just once and apply across all sites.

No matter what the opt-out procedure looks like, advertisers should be ready to not rely heavily on cookies as time passes, some executives said.

“It’s fun to speculate what [the cookie prompt] will ultimately look like—regardless of the end result, the practical outcome here is that the cookie-addressable universe of users will be getting smaller and smaller every day," said Ana Milicevic, a principal and co-founder at Sparrow Advisers, a management consulting firm specializing in ad tech. She also serves as an independent director sitting on the board of adtech infrastructure company ID5.

Privacy remains a priority

Regardless of the cookie deadline no longer being imminent, advertising executives said marketers shouldn’t expect the desire for privacy to diminish.

“Marketers should continue preparing for a future where data privacy is increasingly prioritized," said Dimitrios Koromilas, director of platform services for Europe, the Middle East, and Africa at data-marketing company Acxiom. “Those who have been proactive in exploring alternatives will be better positioned to adapt when changes do inevitably occur, particularly given the changing regulatory landscape and shifts by other major players in the industry."

The decision to not eliminate cookies outright may provide an illusion of respite for some media owners that haven’t had resources to adopt alternatives, said Milicevic.

“Marketers need to have a resilient strategy that’s not overly dependent on a single company, a single channel, or a single piece of obsolete technology—like cookies," she said.

Smart marketers will keep trying to test different approaches to connect with consumers, said Matt Barash, a longtime ad tech industry executive.

“Change is inevitable and the most important will be how the efficacy of campaigns are measured in an undefined future state," he said. “Privacy is a consumer’s inherent right and their choice to opt in or out of personalization has historically been overly complicated by design. It’s clear that the pendulum will swing in the consumer’s favor and ad tech companies will have to continue to plan to do more with less signal."