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OMG Google is killing off the Cookie Monster

How are my favorites advertisers going to follow my fat ass?

Google is killing cookies and an ad firm says Chrome users are already worth a lot less

A week into phase one of Google’s cookie killing project in Chrome, early tests show how it could hit the web’s bottom line

By Thomas Germain / Gizmodo

PublishedFriday 8:42AM

One week ago Thursday, Google disabled tracking cookies for 30 million Chrome users, amounting to just 1% of the 3 billion people who use the internet’s most popular browser. By the end of the year, Google will block these cookies entirely and replace them with a new tracking system that’s a bit more private called “Privacy Sandbox.” That will spell the death of cookies across the web, ushering in one of the biggest changes in the history of the internet. It’s early days for the project, but one company’s data offers a preview of how it will affect the digital economy.

According to Raptive, an ad tech firm, Google’s new cookieless users are bringing in a whopping 30% less revenue. What’s really surprising, however, is that Raptive thinks that’s good news.

“If you had asked me a week ago what I thought the numbers could be, I would have said cookieless users would perform 50% worse, so I’m optimistic,” said Paul Bannister, Chief Strategy Officer at Raptive. “The goal is to design a system to increase privacy and also help publishers keep making money, and a 30% drop in monetization feels like a hill that can be climbed.”

The difference comes down to how digital advertising works. When you visit a website with ads on it, an auction happens in fractions of a second to determine which ads you see. Companies that want to show targeted ads set up bids in advance, saying how much they’re willing to pay for certain demographics, say, up to $1 for a man between 25-30 in Chicago who’s demonstrated an interest in buying a car. So when you load a webpage, a call goes into the advertising system and says, “There’s a guy here, these are the details we know about him. Now who wants to show him an ad?”

The problem is cookies are one of the primary ways that information is collected and shared on the web. Without cookies, it’s hard for websites to tell the ad system much more than “there’s a person here reading this really cool article.” Advertisers aren’t willing to pay as much for random internet users, so every time the page loads for a cookieless Chrome user, it’s bringing in less money than it might have before.

“It’s great to see companies utilizing the 1% rollout of Tracking Protection to begin to evaluate their readiness for the deprecation of third-party cookies,” a Google spokesperson said in an email Wednesday. “It’s important to remember this will be a dynamic picture that evolves over time as companies across the industry update their solutions to operate without cross-site identifiers, using the Privacy Sandbox building blocks alongside other technologies and signals. And this will continue to evolve as companies optimize their offerings over time.”

The picture is going to change dramatically as advertisers, websites, and companies like Raptive adapt to the new internet reality. “The digital ads industry is 30 years old, and now we’re basically re-architecting and rebuilding the entire system,” Bannister said. It’s also so early in the process that Raptive’s 30% number is more of a feeling than anything close to definitive.

Uncharted waters

Still, even if the numbers get better, we’re probably looking at double-digit drops in ad revenue on some corners of the internet, at the very least. It’s hard to predict exactly what effect this will all have on the web.

“It’s impossible to extrapolate by narrowly examining the average price of ads delivered to 1% of the Chrome audience,” said Jason Kint, CEO of Digital Content Next, a trade association that represents roughly 80 publishers, including the New York Times, Wall Street Journal, and Gizmodo parent company G/O Media. “Only an economist with access to the full marketplace would be able to project the welfare shift of a full roll-out. Google has plenty of them of course and by far the most data across both sides of the market. That’s part of the problem here.”

There are reasons for optimism though. The 30% number might sound devastating, but it’s a bit less dramatic in context. For one thing, Chrome isn’t the first browser to block tracking cookies (formerly known as third-party cookies). Safari and Firefox, for example, have blocked these cookies for a long time. Their numbers are a little rosier in comparison. According to Raptive, Safari users bring in a full 60% less money than your typical internet user who still has cookies. In part, that’s because some advertisers don’t target their ads to people on Safari whatsoever because the browser is more private. That will probably change as blocking cookies becomes the norm.

The numbers will also improve as the advertising ecosystem adopts new tracking technologies as well. Google is a company that makes almost all its money on target ads, after all, so it’s not building a totally private internet. Going forward, Chrome will replace cookies with a new tracking technique where the browser itself tracks your activity, part of a whole ecosystem of new tracking tools under Google’s Privacy Sandbox project. That data stays on your device, and no one, not even Google, gets to use it for ads, according to the company. Instead, Chrome will tell Google and other ad companies about what topics you’re interested in, but won’t reveal as much about your identity or what you’ve been doing online.

Google isn’t the only company building new, cookieless ways to monitor what you’re doing online; the entire ad tech business is working to build on top of the new cookie-free internet. Some companies are figuring out new methods to identify you to skirt Google’s privacy moves and continue the tracking status quo. Others, especially big retailers including Amazon, Disney, and Walmart, are developing their own advertising businesses harnessing the mountains of data they already have about their customers. Meanwhile, you can expect websites all over the internet to fight to get you to log in so they can track you themselves.

Even if the numbers get better, however, the internet is still looking at double-digit drops in ad revenue.

“Some ad buyers will change their strategies, but others are probably going to pull their advertising budgets altogether,” Bannister said. “They might not spend the money at all, or they might move it onto other platforms.”

Here’s what that means. Right now, most of the money in digital advertising is plugged into networks that will show the ads on any one of millions of websites and apps across the web. The death of cookies makes that a bit less appealing because there’s less visibility about who you are and what you’re interested in. But the big tech companies (like Google) know exactly who you are when you’re using their services, and they don’t need cookies to harvest data about you there. Instead of buying an ad that gets shown to some anonymous internet user on a random website, I can buy an ad that gets shown directly on services such as Instagram, YouTube, Google Search, TikTok, or even Android phones—and the big platforms offer the exact same kind of microtargeting that’s becoming harder to do on other parts of the internet.

“That’s one of the biggest fears,” Bannister said. “A lot of ad buyers will move more of their budgets to these closed platforms like Google and Meta, and out of the open web.”

Google, Meta, and other internet giants will probably do fine on the cookieless internet. There’s enough money to go around for ad tech players like Raptive, too. Things might be a lot harder for small and mid-sized websites, apps, and publishers who make all their money on ads.

This article originally appeared on Gizmodo.

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