By now, everyone in the digital advertising industry has heard the news: Cookies are crumbling.  

In January, Google announced that is would remove third-party cookies from its Chrome browser.  Over the next two years, Google will phase out all support for cookies, while developing new ways to address the “needs of users, publishers, and advertisers.”   

This move comes amid other big changes in the way ads are being bought and sold, due to new privacy regulations.  Over the past couple of years, the European Union’s Global Data Protection Regulation and more recently, the California Consumer Privacy Act, have forced the industry as a whole to reexamine methods of targeting consumers without violating their privacy.   

Other browser’s like Apple’s Safari and Mozilla’s Firefox have already dropped their support for third-party cookies. However, Chrome is the most used web browser in the world with about 69% of global market share as of September 2019, according to Statista.  This basically means Chrome’s move to remove third-party cookies will impact all facets of the ad industry.  Stuart Colman, VP of sales at InfoSum, a data technology company says, “This announcement leads to a fundamental shift in how the industry understands and activates identity, which underpins everything we do – such as planning, activation and measurement.  It is undoubtedly a watershed moment.”  

So it’s good news for the individual Internet user, as your privacy and personal data will be more protected than before.  Google is also cracking down on digital fingerprinting, which some thought would emerge even more as a workaround to Google’s changes.  

But now what?  Cookies have long been the backbone of programmatic advertising.  How will Google’s measures really be executed and what impact will it have on the way business is conducted?  There’s a lot of ground to cover in order to fully answer these questions, as the implications could be far reaching for the entire ecosystem.  But here are just a few things that we might see change.  

Google is implementing a “Privacy Sandbox,” which it says will allow publishers and advertisers to continue to target ads to consumers without violating privacy.   By the end of this year, the Chrome team will begin trials that allow for click-based conversion measurement without third-party cookies. When an advertiser needs to track a conversion, they’ll call an API that will send the conversion value from the browser.  Individual user data would not be passed back.  Following these trials, Google will test a couple of different scenarios for running interest-based advertising without cookies. 

Publishers could potentially suffer from these changes.  Google released a study last year showing that removing third-party cookies reduced publisher ad revenue by 52%.  And they make lose money in the short term. However, making sure this change doesn’t negatively impact publishers is a priority, according to Google. The upcoming pilots will compare monetization for publishers under the new setup vs. the old one with third-party cookies in place.  Yet, some publishers are feeling like great opportunity lies ahead, as they predict a steep rise in the use and value of their first-party data.  First-party data will be critically important to the new “cookieless” world. 

Advertisers and marketers will really have to build their first-party data strategies.  Targeting and optimization will also have to be rethought.  As a result, we will probably see some old-school measurement techniques coming back to the forefront.  Think last-click attribution, panels and surveys.    

Even Google itself could be impacted, as brands may begin to shift some of their paid budgets to organic and social.  Michael Bertini, director of search strategy iQuanti, says some of its clients may direct their money toward content creation or social media marketing once Google’s change is implemented. “They could potentially see a better ROI than paid without third-party cookies.”  Yet, many just see this all working in Google’s favor and a chance for Google to grow their walled garden even higher.  “Google’s announcement will significantly impact innovation and competition in the independent ad tech ecosystem and further strengthen their own unfair position,” says Christopher Guenther, SVP and global head of programmatic at News Corp.  

We can all make our predictions and experts can tell us if they think we should panic or not, but none of us really know exactly how this will all play out. I do, however, think this will surely be an important evolution to watch unfold.  As we gain more insight, you can count on us to continue these conversations and discuss all the nuances.  There will certainly be a lot to discuss!