Google is not killing ID solutions, but has succeeded in sowing doubt

Google has announced that it will not use email addresses or other identifiers to track users across the web within its ad products once Chrome has phased out third-party cookies.

It means that advertisers that use Google's demand-side products (Google Ads and DV360) to purchase ads across its owned and operated properties, such as YouTube, as well as its AdX ad exchange to target and measure ads beyond Google properties, will not be able to use cookie-replacement identifiers such as Unified ID or LiveRamp IdentityLink.

Instead, the company is pushing advertisers towards cohort-based targeting, and specifically the FLoCs (federated learning cohorts) developed out its Privacy Sandbox initiative, which will be available for public testing this month.

But Google's surprise announcement overnight has been misinterpreted by many, who believe that Google has blocked or banned anyone from using any independent ID solutions—essentially rendering them obsolete. In reality, while Google itself will not take part in industry initiatives such as Unified ID 2.0, everyone else in the industry can continue to use hashed email addresses and other identifiers if they want to.

"[The announcement] has been taken as a direct shot against UID 2, which it is not," Tom Kershaw, the chief technology officer of Magnite and chairman of Prebid.org, which is the operater of Unified ID 2.0, told Campaign Asia-Pacific. "The interpretation that this is Google versus LiveRamp and The Trade Desk is not accurate. The effect on UID 2 is zero." 

Google's decision, announced late on Wednesday (March 3) Asia time, tumbled the share prices of several adtech firms including The Trade Desk and Magnite by 12.8%. Kershaw is convinced the share price will self-correct "as knowledge of the situation corrects itself".

However, Kershaw believes that Google may have purposefully obfuscated the true meaning of its announcement in an attempt to undermine confidence in such initiatives.

"They are trying to make a statement in favour of the Privacy Sandbox and against the user login initiative that the industry is pursuing," he suggested. The announcement was not explicity clear and "there is still a lot to unpack", he said.

Kershaw was under no impression that Google would ever take part in Unified ID 2.0. In fact, he said that Google has a pattern of "obstructing adtech industry initiatives".

"This is nothing new to us," he said. "What happens in adtech is the entire industry agrees on a solution, and Google does something else."

That said, Kershaw views Wednesday's announcement as "entirely positive", as it makes clear that Google will not force one thing on the industry and do something else itself.

"We in the industry have been berating them for about a year about this topic, asking them to clarify whether they intend to use Privacy Sandbox," he explained. "Keep in mind Google has 80% of their users logged in. They have a huge advantage. The concern we had in the industry was, they are going to make us use Privacy Sandbox while they use logins. So finally a year later they have clarified their stance."

First party data will be 'most important solution'

Google still has a significant advantage in that it can continue to target individuals across its owned properties when those individuals are logged into their Google accounts, as this counts as first-party data.

The tech giant encouraged brands to build up their own first-party data in the announcement.

"Developing strong relationships with customers has always been critical for brands to build a successful business, and this becomes even more vital in a privacy-first world," wrote David Temkin, director of product management, ads privacy and trust at Google, in the blog post.

Publisher first-party will be the most comprehensive solution to targeting users in a post-cookie world, Kershaw believes. User logins through initiatives like Unified ID 2.0 will offer "the most effective monetisation" but will have the smallest scale. FLoC "is far less effective" as a solution, he believes, since it is limited to the Chrome browser.

"FLoC has extreme limitations because it is controlled entirely by the browser and to run an auction in a browser is much more complicated than Chrome is giving it credit for," he commented. "There is a lot of merit to what Privacy Sandbox is doing with anonymised cohorts. The only difference is we believe publishers should control that process, not Chrome."

S4 Capital executive chairman Sir Martin Sorrell released a statement saying that Google's decision "reinforces the importance of first-party data", suggesting the industry is moving into a world of "at least 25 big walled gardens". 

"CMOs should take note that this reiterates, once again, the importance of first-party data and how consumer trust and privacy are moving to the forefront of marketing," he said. "In the coming years, digital consumer relationships will be earned by customer experience and value exchange."

Is this really about privacy, or is it monopolistic behaviour?

Google said its decision not to support alternate identifiers is designed to protect user privacy. In the blog post, Google's Temkin said the company does not believe that many post-cookie user tracking solutions, like PII graphs based on people’s email addresses, "will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions".

But some in the industry believe Google's incentives are more self-serving. Andy Monfried, the CEO of data management platform Lotame, which has its own ID solution, issued a statement saying that Google uses privacy as a shield to weaponise it's "moat", which is YouTube and Search.

"Make no mistake, Google is now going to brand themselves as a 'privacy concerned' company for consumers. Don’t fall for it," he said.

Others believe Google's privacy-first vision is genuine, even if forced by regulation.

"I don’t think this is a dominance move for a monopoly," Magnite's Kershaw said. "They believe in what they are doing and they are announcing their support of it."

Fionn Hyndman, Asia managing director of adtech firm Blis, told Campaign Asia-Pacific that Google is being proactive. "It appears that Google is genuinely looking to protect consumer privacy whilst also looking to futureproof against current and future privacy regulations, and so the industry will have to accept that individual targeting looks like it will be a thing of the past," he said.

Hyndman aded that re-targeting consumers based on their actual behaviour "now seems like a fairly redundant industry". 

"I think that those in the industry who thought we’d be allowed to replace cookies with biscuits were pretty short-sighted," he said. "Why would you get rid of one way of tracking, if you were instantly going to replace it with something with the same attributes?"

Instead, he suggested targeting consumers based on behaviours and look-a-like characteristics, by layering multi-dimensional consumer behaviours, attributes and characteristics without personal information, seems like where the industry is heading.

"That doesn’t stop ad firms from understanding consumer behaviour and building groups of consumers with similar attributes and behaviours who they can then target, like Google themselves have done with FLoC-based categorisation," he added.

Integral Ad Science's SVP APAC, Laura Quigley, told Campaign the industry will witness a huge shift from audience data to contextual targeting. "Marketers are better off advertising in environments that are contextually relevant and use that as a proxy for the audience, rather than having to support all the data management and privacy regulations that go along with capturing and using personally identifiable information," she said.