Google’s U-turn on third-party cookies: Ad world buzzes with a mix of optimism and skepticism

New Delhi: In a plot twist worthy of a tech drama, Google has ditched its mission to end third-party cookies in Chrome. This move flips the script on a years-long saga that's been rewriting the online ad playbook.  

The ad world is buzzing with a cocktail of cautious optimism and scepticism. Some advertisers are toasting to the unexpected lifeline for cookies, while others are biting their nails over the feasibility of Google’s proposed consent system. 

In 2020, Google jumped on the anti-cookie bandwagon, vowing to phase out third-party cookies in Chrome by 2022. This announcement rocked the advertising world, which depends on cookies for targeted ads. The years that followed were a rollercoaster of delays and extensions by Google, along with the rollout of the 'Privacy Sandbox,' a proposed cookie alternative. 

In July 2024, Google pulled a surprise U-turn. Instead of a complete ban, they propose a user-centric approach. Chrome will introduce a system that allows users to make informed choices about online tracking. This shift reflects the complex balancing act Google faces—protecting user privacy while maintaining a viable advertising ecosystem. 

Vishesh Sharma, a fintech marketing expert, believes Google has taken a balanced approach. "Somewhere, I believe that by not removing cookies completely and enhancing security features in Privacy Sandbox, Google has taken a more balanced approach," he said.  

Sharma highlighted the potential benefits for both advertisers and users. "With enhancements such as TopicsAPI and the Attribution Reporting API (ARA), advertisers will be able to ensure the effectiveness of ad targeting and measurement. And the privacy sandbox will also simultaneously allow customers to make informed decisions.” 

Since results from Google's tests in the US showcased a significant recovery in ad spending across various platforms, "these are encouraging numbers to begin with for a product that is still WIP [work in progress]," he added. He believes that the Privacy Sandbox will ultimately make campaigns more effective by prompting a shift towards collecting only relevant data. 

Shradha Agarwal, Co-Founder and CEO of Grapes, believes that Google's decision aims to revolutionise the advertising industry. She noted that, given Google's dominance in the search market, this move represents significant progress for online privacy and digital advertising. 

"In the absence of third-party cookies, targeted advertising would have been significantly more challenging.

Advertisers were also unprepared for service-side integration, an alternative to third-party cookies, as they were reluctant to share their data with publishers," Agarwal explained. 

According to Nazneen Joshi, VP and Business Head at RepIndia, the Privacy Sandbox presents a fascinating tightrope walk for the ad tech industry. “This isn't a dead end. We're on the cusp of a transition from a third-party cookie-reliant model to a world fuelled by contextual targeting and first-party data," she assured.

Kritika Arora, Director- Performance and Acquisitions, Globale Media, welcomed Google’s decision to delay the elimination of third-party cookies and believes the move acknowledges the complexity and significance of this issue for the advertising ecosystem.

Arora said, "Third-party cookies have been a cornerstone of digital advertising, enabling personalized experiences and effective targeting that benefit both consumers and advertisers."

According to her, Google's decision provides the industry with more time to develop robust, privacy-focused alternatives. It underscores the importance of balancing user privacy with the need for effective advertising solutions.

She also added that collaboration across the industry is essential to navigating this transition.

"This additional time allows for a more thorough exploration of technologies like first-party data, contextual advertising, and other privacy-preserving techniques. It also provides an opportunity for stakeholders to work together on creating standards and frameworks that can sustain the digital advertising ecosystem in a post-cookie world."

However, some industry leaders, like Chaaya Bharadwaj, Founder and MD of BC Web Wise, remain apprehensive about potential revenue loss and retargeting challenges. "The shift towards greater user privacy is undoubtedly going to impact ad revenue. With less precise targeting capabilities, advertisers will likely reduce spending, putting pressure on publishers' bottom lines," she said. 

Studies by the Interactive Advertising Bureau Europe (IAB Europe) suggest significant drop-off rates in opt-in scenarios. This raises concerns about the reach and effectiveness of targeted advertising in a user-controlled environment.  

Bharadwaj also raised concerns about "retargeting challenges." Without the ability to seamlessly track users across the web, advertisers may struggle to deliver relevant ads, potentially hindering campaign performance. 

Meanwhile, Joshi raised a crucial concern: Google's dominance. "The success of these new targeting mechanisms hinges on their interoperability and adoption across different browsers. A walled garden approach by Google,” where Privacy Sandbox functions exclusively within Chrome, could stifle innovation and ultimately limit user choice. 

She further added, "We need to break down silos and encourage collaboration. By working with other browser developers, publishers, and ad tech companies to ensure these solutions are open-source and interoperable, we can create a future where user privacy thrives alongside a healthy advertising ecosystem." 

Publishers, on the other hand, can breathe a sigh of relief in the short term, as they can still leverage cookies for their existing ad inventory. However, they face the long-term challenge of investing in and refining alternative tracking methods, like contextual targeting and first-party data strategies. 

Agarwal, on the other hand, recognised the overwhelming nature of excessive advertising without user acknowledgement. This is being addressed by Google’s latest move in a way that “users can allow advertisers to understand what they want for themselves. The customisation bit to privacy choices will lead us to more effective advertising.”

The invention of cookies in the 1990s revolutionised online advertising by using small data packets stored on user devices. However, as the power of cookies grew, so did concerns about user privacy. By the late 2010s, these concerns had reached a boiling point, prompting regulatory bodies like the European Union to implement stricter data privacy laws such as GDPR. Browsers like Safari and Firefox responded by phasing out third-party cookie support.

Privacy advocates worry that user consent systems can be confusing and easily bypassed, potentially undermining privacy protection. Despite these concerns, they see this as a stepping stone towards more robust privacy controls in the future.