How Google’s Cookie Changes Will Impact the Advertising Ecosystem

Anyone worth their salt in the adtech space wasn’t surprised by Google’s announcement that it will remove third-party cookies from its Chrome browser by 2022. Chrome accounts for two-thirds of global internet browsing, and cookies are fundamental to ad targeting and measurement, so this is a big deal in the industry. However, many major adtech players, including The Trade Desk and LiveRamp, have been preparing for the end of cookies for the past couple of years and are well-positioned to deal with the oncoming headwinds.

Overall, Google itself will greatly benefit from the demise of cookies. It will push advertisers – who will still want highly targeted and relevant ads – away from the open internet and toward walled gardens, specifically Google (but also Facebook).

Meanwhile, publishers that have first-party data (The Atlantic raised VC money off the strength of its data) will be able to charge more for CPMs (cost per thousand impressions). Publishers with no first-party data or any real way to offer valuable targeting to their consumers will see their CPMs drop. First-party data, such as email addresses and phone numbers, will become the main currency of the internet.

With the loss of cookies, deterministic data – information known to be true – increases in value. More than ever, advertisers will want to know that they’re reaching the right person at the right time. Probabilistic data – which defines an audience group that possesses a high probability to be accurately profiled – will be harder to come by in this new world. It will also be harder to tie that data to other information. This benefits some companies more than others, particularly LiveRamp.

Here are the major players in the adtech space and how they might fare when cookies are removed from Chrome.

LiveRamp

Of all the players, LiveRamp is the best able to adapt to the cookieless world. It’s already shifted the makeup of its graph away from cookies. It has its IdentityLink system for bidstream data and an authenticated traffic solution, which it sees as an alternative form of currency for cookies. The LiveRamp ATS (authenticated traffic solution) is not built using cookies at all, which puts it ahead of other adtech players.

Generally, LiveRamp benefits from laws such as CCPA and GDPR, which protect consumers’ internet privacy. LiveRamp is perceived as a safe utility that will manage identity data in the most ethical, legal way possible. This will be even more vital within the next few years, when there will be five to 10 different state regulations that are cumbersome to comply with.

Although LiveRamp is protected from regulation, its biggest risk is consumer perception of the use of first-party data. It’s possible that consumers won’t let publishers use their data. They also may be reluctant to log in to publishers’ sites to view content and instead opt for publishers without a login wall. But since Google and LiveRamp have a pretty decent relationship, there could be a place for the latter to build more business in data clean rooms.

Criteo

Criteo is perhaps the most affected by this development, and it may be too late for it to turn things around. The company should have worked to develop a unified ID solution like The Trade Desk did. Criteo publicly talked about building its own identity graph, but now it will be difficult and expensive for them to do.

Criteo used its first-party data, along with some of its own bidstream data, to start building a probabilistic graph. But the company is in a deep hole; its business was built around the cookie, and Criteo seemed to fight the change instead of developing a solution for it.

A large advertiser or a connected TV player may possibly acquire Criteo, like how Roku bought dataxu. Hulu, for instance, could buy Criteo. Criteo portends a larger possible trend of inexpensive acquisitions of poor-performing adtech players that have tons of costs and technical debt.

The Trade Desk

Like LiveRamp, The Trade Desk has been preparing for the end of cookies for the past couple of years, but it also fought it. Whereas LiveRamp has a deterministic graph, The Trade Desk has a probabilistic graph, which has used cookies extensively. It will still identify users based on the data that they have, just not as accurately as LiveRamp. For some marketers and some types of campaigns, that’s not a problem.

Much of The Trade Desk’s growth, however, will come from connected TV, which cookies aren’t associated with. In that space, though, the company faces competition from smaller rivals, such as Amobee, which is more known for connected TV. The Trade Desk may not be prepared to compete because it spent its time, energy, and resources preparing for the end of cookies. The Trade Desk is also growing globally, and cookies are less of a factor internationally. That fact, along with its identity graph in place, means The Trade Desk is protected from the demise of cookies.

A big headwind for the company is that it’s the most significant DSP (demand-side platform) for the open internet, meaning a shift from the open internet is a shift away from The Trade Desk. Where Facebook and Google gain, The Trade Desk loses. Another big risk for the company is the regulatory environment. Whereas LiveRamp is seen as a safe place, The Trade Desk doesn’t have that reputation. Greater regulations could end up hurting The Trade Desk more.

What the Future Holds

The end of cookies will greatly benefit Google, but there may be some repercussions. One could be a federal anti-competition lawsuit aimed at Google. The other potential downside is that many advertisers already don’t like working with Google and are actively searching for other channels to work in. The cookie’s death could cause such a backlash against Google that once the open internet has any sort of viable competition, advertisers will start jumping on it.

We’re not at the end of privacy changes – we’re at the beginning of a total transformation of how the ecosystem operates. We should continue to expect more and more restrictions on how advertisers can communicate with their consumers outside of the walled gardens. But you can also expect leading adtech companies to continue finding ways around those regulations and other changes.

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About John Hamilton

John Hamilton serves as an advisor and consultant, specializing in data and analytics, revenue operations, media management, user monetization, and media performance management. He is currently the Owner of TVDataNow, advising marketers on measurement strategies for connected TV. John was previously General Manager of IdentityLink for Publishers at LiveRamp. In this role, he was responsible for the sales, marketing, and product launch of LiveRamp’s new product, IdentityLink for Publishers.

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This article is adapted from the GLG teleconference Google’s Cookie Changes and Impact on Advertising Ecosystem. If you would like access to this teleconference or would like to speak with John Hamilton, or any of our more than 700,000 experts, contact us.