Analysis: Google’s privacy promise is great for consumers, but what about SMEs?

Google will not build alternate identifiers to track individuals as they browse across the web once third-party cookies are phased out. Its director of product management, ads privacy and trust, David Temkin, said in a blog post that keeping the internet "open and accessible for everyone" requires Google to do more to protect privacy.

"That means an end to not only third-party cookies, but also any technology used for tracking individual people as they browse the web," Temkin said. He added that the company remains committed to preserving a vibrant and open ecosystem where people can access a broad range of ad-supported content with confidence that their privacy and choices are respected.

The latest decision by Google comes as the advertising industry is moving away from third-party cookies to offer greater privacy, transparency and choice to consumers over how their data is being used. Google first announced its intention to phase out third-party cookies by 2022 last year as part of its open source initiative, Privacy Sandbox, launched in August 2019.

Since then, the Privacy Sandbox has launched APIs such as the Federated Learning of Cohorts (FLoC) for internet-based targeting and TURTLEDOVE to ensure it is the browser and not the advertiser that holds the information about what consumers could possibly be interested in, and that advertisers cannot combine that interest with other information about the user. Other APIs also include aggregated reporting API for consolidating information across multiple sites into one privacy preserving report, and the click through attribution reporting API for measuring and reporting ad click conversions.

Last year, 52% of US$292 million in global digital ad spend came from Google, reported The Wall Street Journal which quoted digital ad consultancy Jounce Media. Approximately 40% of that amount transferred from advertisers to publishers on the open web goes through Google's ad buying tools, WSJ added.

"We realise this means other providers may offer a level of user identity for ad tracking across the web that we will not - such as PII graphs based on people’s email addresses," Google's Temkin said. According to him, Google does not believe these solutions will meet rising consumer expectations for privacy, nor will they withstand changing regulatory restrictions. Hence, the company said it is not a sustainable long term investment.

Among the list of companies that have built their own unified ID solution include Nielsen, Verizon Media, The Trade Desk, and ComScore. In particular, The Trade Desk's Unified ID 2.0 has received support from others in the adtech industry including Criteo, PubMatic, LiveRamp, Magnite, and most recently Xandr, which also expressed support for the netID solution, and LiveRamp Authenticated Identity Infrastructure.

Meanwhile, ComScore first released its unified digital measurement in 2010 which has since focused on using first-party to calibrate event data provided through its tags. It also previously said that user profiles and identity are not necessary to offer cross-platform audience estimates.

"If digital advertising doesn't evolve to address the growing concerns people have about their privacy and how their personal identity is being used, we risk the future of the free and open web," Google's Temkin said. With the cookie-less world upon companies, Google will continue to support first-party relationships on our ad platforms for partners.

When asked about advertisers' concerns given the lack of personalisation without third-party cookies, Google told MARKETING-INTERACTIVE that advertisers know they can still achieve the personalisation aspect through first-party data relationships, automation and its privacy preserving APIs. "This shows that advertisers are going to get privacy and performance so there's not going to be any trade off. Advertisers feel confident that we are doing the right thing by the user from a privacy point of view, but also that advertisers will still be able to connect in the right moments and publishers will still be able to get fair compensation for their content," Google said.

Separately, Rakuten Advertising's SVP Asia Pacific, Stuart McLennan agrees with Google on the point that the digital advertising industry needs to evolve given the lack of consumer trust. Early research by Google shows FLoC to be highly effective across both precision and recall, as such, McLennan said it will be interesting to see what unfolds when scaled testing begins in the second quarter. 

"However, this method has provoked varied opinions as it potentially puts more power in Google’s hands by basically eliminating competitors who had relied on data captured through cookies," he said.

Also weighing in was Laura Quigley, SVP APAC, Integral Ad Science who said in an era of the consent economy, first-party data consent will be an effective solution to then layering that information in a strategic manner to make powerful engagements with the consenting consumer base. "It is going to become more fragmented an understanding and obtaining first-party data with consumer consent will be critical," she said.

Will startups and SMEs fall behind in the first-party data game?

Google's latest announcement reiterates the importance of first-party data and how consumer trust and privacy are moving to the forefront of marketing, Martin Sorrell, founder and executive chairman of S4 Capital said. 

"In the coming years, digital consumer relationships will be earned by customer experience and value exchange. With Google Chrome removing support for third-party cookies by 2022, the time for marketers to start investing in the future is now," he said. 

Last year, S4 Capital merged with cookie-less measurement firm Brightblue and launched its global data practice to help clients make informed decisions with machine learning technologies that drive the use of first-party data and analytics. According to Sorrell, it has also prepared brands such as Mondelēz to leverage first-party consumer data to plan, personalise, and optimise its digital media and content.

The growing emphasis on first-party data will indeed benefit large firms with plenty of data set in that aspect. Startups and SMEs, however, might fall back in this area as some might lack the tools and resources to build up their first-party data reservoir.

In response to this, Google said its announcements will be done in phases and as such, companies have the time to build a good first-party data strategy and search for relevant partners.

"If they are just building [their first-party data] now, this is going to be phased out in time. Fresh data is better data, it's a more recent relationship. So this is why we are making these announcements now so that the industry and partners can prepare and take the necessary steps," the tech giant explained to MARKETING-INTERACTIVE.

Meanwhile, CEO of Aqilliz Gowthaman Ragothaman said this boils down to how much advertisers know their consumers to be able to address the first-party data and meaningfully enrich it with other partners in a privacy compliant manner. For companies that do not know they have first-party data, including SMEs, Ragothaman said they will have to engage with respective closed marketplaces such as Google, Facebook and Amazon.

"However, they will not be able to stitch up a unified consumer journey, which means there will be some level wastage to marketing investments due to duplication of efforts," he added.

On the other hand, Rakuten Advertising's McLennan, said this is not a pronounced shift to first-party data, but rather a move away from ads being sold based on individual-based web browsing history and replaced by FLoC.

"Businesses will still be able to leverage interest- and intent-based targeting, albeit based on a small group rather than at an individual level. SMEs and startups are already in the process of building their own first-party data set as a priority to help their businesses grow," he added.

More walled gardens in the open web?

Unlike cookies, which is not owned and managed by a single authority, APIs such as FLoC are owned by Google. Should FLoC become mainstream, Aqilliz's Ragothaman previously predicted that the open web will gradually subsume into a bunch of walled gardens, each having its own methodology to safeguard privacy. This time round, he said with Google committed to upholding consumer privacy, this also means it "will gradually become a closed marketplace from a walled garden". 

Google, however, said FLoC was built in the Privacy Sandbox, which uses the World Wide Web Consortium as a forum to discuss its proposals, and it is also participating in wider industry conversations with players such as the Interactive Advertising Bureau. "In the wider industry conversations we have had, other browsers are also part of the conversation as we look at industry standards and what we need to do going forward. Other browsers are also deprecating the importance of third-party cookies," the company explained. Rivals Safari and Firefox announced in 2017 and 2018 respectively that they are removing third-party tracking cookies.

Andy Monfried, CEO of Lotame, however, remains unconvinced. He said that Google "uses privacy as a shield to weaponise its moat", adding that the moat represents YouTube and Google Search. "Almost everything else is a rounding error. Make no mistake, Google is now going to brand themselves as a 'privacy concerned'' company for consumers. Don’t fall for it," he added.

Google's commitment to privacy will lead to a shift from audience data to contextual targeting, IAS's Quigley said. Quoting its latest Power of Context report, Quigley said Asia Pacific consumers are extremely receptive to contextually relevant ads, with 96% in Indonesia and 91% in Singapore preferring digital ads to appear alongside relevant content.

While marketers are better off advertising in environments that are contextually relevant and use that as a proxy for the audience, Quigley said this will create some short-term confusions and advertisers may turn to walled gardens simply because they think it is easier to address audiences.

Moving forward, privacy controls are also expected to tighten up around in-app advertising, Quigley said, especially with Apple's IDFA, which is also a step towards consent-based targeting. "Reaching the right audience in the right environment on mobile is critical and contextual has a role to play in in-app too. Device or audience tracking won’t have longevity and will risk regulatory scrutiny in the age of tighter privacy regulations," she explained.

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