1 week ago today, Google disables tracking cookies for 30 million Chrome usersThat’s just 1% of the 3 billion people using the internet’s most popular browser. By the end of the year, Google plans to completely block these cookies and replace them with a new, more private tracking system called “.privacy sandbox” It would mean the death of cookies across the web, and one of the biggest changes in the history of the Internet. Although the project is still in its infancy, one company’s data provides a preview of how the project will impact the digital economy.
According to ad tech company Raptive, revenue from new users without Google’s cookies is down 30%. But what’s really surprising is that Raptive considers that to be good news.
“If you had asked me a week ago what I thought the numbers would be, I would have said that performance for users without cookies would be 50% worse,” said Paul Bannister, chief strategy officer at Raptive. So I’m optimistic.” “The goal is to design systems that enhance privacy and help publishers continue to make money. His 30% drop in monetization feels like a hill to climb.”
The difference lies in how digital advertising works. When you visit a website with advertisements (gizmodo.comFor example, an auction will take place within minutes to determine which ads will be displayed. Companies that want to display targeted ads can set bids in advance and decide how much they’re willing to pay for a particular demographic, such as a 25- to 30-year-old Chicago resident who has expressed an interest in buying a car. For men, the maximum amount is $1. So when you load a web page, the advertising system gets a call and says, “Here’s a guy. Here are the details we know about him. Now, who would want to show him an ad?”
The problem is that cookies are one of the main ways information is collected and shared on the web. No cookiesIt’s difficult for a website to tell an advertising system anything more than “Someone is reading here.” this really great article” Advertisers don’t want to pay as much money to random internet users, so every time a page loads for a Chrome user who doesn’t use cookies, they make less money than before.
“It’s great to see enterprises starting to use the 1% Tracking Protection rollout to assess their readiness for the retirement of third-party cookies,” a Google spokesperson said in an email Wednesday. . “It is important to remember that this is a dynamic situation that will evolve over time as companies across the industry update their solutions to work without cross-site ID. Privacy Sandbox Components In parallel with other technologies and signals. And this will continue to evolve as companies optimize their services over time. ”
Things will change dramatically as advertisers, websites, and companies like Raptive adapt to the new realities of the internet. “The digital advertising industry has been around for 30 years, and right now we’re basically rebuilding and rebuilding the entire system,” Bannister said. Also, it’s still early in the process, so his 30% figure for Raptive is more of a feeling than anything close to definitive.
unknown waters
Still, even if the numbers improve, we’ll probably see a double-digit decline in ad revenue, at least in parts of the internet. It’s difficult to predict exactly how this will affect the web.
“It is impossible to rigorously estimate the average price of an ad served to 1% of Chrome users,” says Digital Content Next, an industry group representing about 80 publishers, including The New York Times and Wall Street. said Jason Kint, CEO of. Journal, and G/O Media, Gizmodo’s parent company. “Only economists with access to the complete market would be able to predict the changes in welfare due to the complete rollout. Of course, Google has them in abundance, having by far the most data on both sides of the market. That’s part of the problem here.”
However, there are reasons for optimism. While 30% may sound devastating, it’s less dramatic in context. First, Chrome isn’t the first browser to block tracking cookies (formerly known as third-party cookies). For example, Safari and Firefox have long blocked these cookies. Their numbers are a little rosy by comparison. According to Raptive, Safari users earn 60% less than the typical Internet user who keeps cookies. One reason for this is that some advertisers don’t target ads to users using Safari at all because the browser is more private. Perhaps that will change as cookie blocking becomes the norm.
This number will improve as the advertising ecosystem also adopts new tracking technologies. After all, Google is a company that makes most of its money from targeted advertising, so it’s not creating a completely private Internet. From now on, Chrome will replace his cookies with a new tracking technology in which the browser itself tracks user activity. It’s part of an overall ecosystem of new tracking tools based on Google’s Privacy Sandbox project. The company says that data is stored on your device and no one, not even Google, can use it for advertising. Instead, Chrome tells Google and other advertising companies what topics you’re interested in, but it doesn’t reveal much about your identity or your online behavior.
Google isn’t the only company building new cookie-free ways to monitor what users do online. The entire ad tech business is committed to building on a new, cookie-free internet. Some companies are coming up with new ways to identify users to circumvent Google’s privacy moves and continue tracking the status quo. Other large retailers such as Amazon, Disney, and Walmart, among others, Develop your own advertising business use They already have a lot of data have about their customers. On the other hand, what can be expected is websites on the internet They will fight to get you logged in so they can track you themselves.
But even if the numbers improve, the internet is still suffering double-digit declines in advertising revenue.
“Some ad buyers will change their strategies, while others will probably cut their ad budgets entirely,” Bannister said. “They may not spend the money at all, or they may move the money to other platforms.”
Here’s what that means: Today, most digital advertising dollars are connected to networks that display ads on one of the millions of websites and apps across the web. When cookies die, they become a little less appealing because who you are and what you’re interested in becomes less visible. But big tech companies (like Google) know exactly who you are when you use their services. Cookies are not required to collect data about you there. Instead of buying ads to be shown to anonymous internet users on random websites, you can buy ads to be shown directly on services like Instagram, YouTube, Google Search, TikTok, and more. Even on Android phones— and the big platforms are offering the exact same kind of micro-targeting that’s becoming increasingly difficult in other parts of the internet.
“That’s one of the biggest concerns,” Bannister said. “Many ad buyers will move more of their budgets to closed platforms like Google and Meta and outside the open web.”
Google, Meta, and other internet giants could probably do just fine with a cookie-free internet. Ad tech companies like Raptive also have plenty of money. Things can be much more difficult for small and medium-sized websites, apps, and publishers that make all their revenue from advertising. Websites like this…oh no.