Sundar Pichai

Google is rolling out changes to its Chrome browser that have some advertisers worried about how they will use data to target users.
The move has big implications for how publishers and ad-tech companies make money from web surfers.
Given their clout, Google and Facebook could be the biggest winners, while publishers that have first-party data could benefit.
Companies that focus on retargeting and attribution could take a hit, and consumers could end up seeing junky ads even as they get more control over their privacy.
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Google's decision to add more privacy tools to its Chrome browser while cutting back on cookie-based ad targeting is sending ripples through the ad-tech world.

On Tuesday, Google announced that it would let consumers block and choose how advertisers use third-party cookies to target them with ads. Google didn't say when these tools would be available, but that it would limit how ad-tech companies use third-party data to serve ads. Specifically, Google will restrict fingerprinting, where advertisers use information like consumers' location or device type to target them with ads, even if a consumer has opted out of third-party tracking.

Google also said that it plans to roll out a browser extension to let consumers see the data that's used to serve them ads on publishers' websites. The company also plans to include the browser extension into software that other ad-tech companies can use to tell consumers what information is collected on them.

Depending on how widely people adopt third-party blocking, the changes could be a blow for ad-tech companies that specialize in retargeting like Criteo, Rubicon, and AdRoll.

Chrome dominates the browser market with about a 60% share, per Statcounter, versus Safari's 15%. That means Google's move could be far more sweeping than Apple's similar changes to Safari in 2017, said Jay Wells, senior director of strategy at Merkle.

"If third-party tracking is deprecated across the browser, that's a significant amount of data that the programmatic industry needs to create identity," he said during a panel hosted by ad-tech company TripleLift on Wednesday. "That would look like 70% of traffic is gone. The winners in the short-term will be [companies] who can create first-party data."

Here's who stands to gain and lose from Google's changes.

Winners

Facebook and Google

Google naturally stands to win in favoring first-party data since it has reams of its own data across its own search, email and video services that can be used for ad targeting.

Its decision could also end up helping other big tech companies like Facebook. Facebook and Google often get hammered by advertisers who complain that the platforms are walled gardens in terms of how data is stored and shared. With Google limiting ad-tech companies that can operate in Chrome, the move suggests that walled gardens aren't likely to come down for advertisers.

Plus, Facebook has money to fend off regulation that ad-tech companies do not have.

"The more complex and onerous regulations are, the more it hurts smaller businesses, the startups and less funded companies," Wells said.

Publishers with first-party data

Under regulation like the European Union's General Data Protection Regulation (GDPR) and the upcoming California Consumer Privacy Act, high-end publishers including The Guardian have focused on collecting first-party data from readers over using third-party data from ad-tech companies. Such publishers could benefit if advertisers start buying directly from them in the wake of Google's changes, Wells said.

Michael Balabanov, SVP of sales for The Guardian US, said advertisers may shift to serving ads to consumers based on articles that they've read.

But first-party data also comes with targeting limitations, and less targeted ads are typically cheaper for advertisers. Since Apple rolled out changes to third-party tracking, he said that The Guardian's cost per thousand (CPM) have fallen 40% for ads served to Safari browsers, and he worries that the impact from Google will be more significant.

"If Chrome came out rolling the same protections, that would be really worrisome for a lot of publishers," he said. "Buyers need to change the way the way that they're buying to more contextual aspects."

Consumers

Google's changes reflect how regulations and privacy are pressuring Google to be more transparent about how it uses data.

It's not clear how significantly consumers will seek out Google's tools to change their preferences, but it could be a step in the right direction in helping consumers understand how their data is used.

"Our experience shows that people prefer ads that are personalized to their needs and interests — but only if those ads offer transparency, choice and control," Prabhakar Raghavan, SVP of Google ads and commerce, wrote in a blog post. "However, the digital advertising ecosystem can be complex and opaque, and many people don't feel they have enough visibility into, or control over, their web experience."

Losers

Ad-tech companies that specialize in retargeting

Ad networks and ad-tech companies that specialize in cross-device targeting including Criteo, The Trade Desk, and MediaMath stand to be some of the biggest casualties of Google's move.

"They need to come up with Plan B, fast," Matt Prohaska, CEO and principal of Prohaska Consulting, said of retargeters.

In a statement to Bloomberg First Word, the French ad-tech company Criteo said that it expected Google's changes to have a "neutral to potentially low single-digit negative" impact.

Tech firms working to solve attribution

Joella Duncan, director of media strategy for global consumer solutions for North America at Equifax, said multi-touch attribution companies that Equifax uses to help marketers pinpoint which of their ads drove a sale would get less data back, making their models less accurate.

Duncan did not name any such vendors but research firm Forrester lists companies like Neustar, Analytic Partners and IRI as examples of attribution companies.

Consumers, again

With less third-party data for advertisers to work with, Prohaska said consumers could wind up seeing more spammy ads that are less targeted than they have been.

"The upside of personalized content and monetization should outweigh privacy concerns," he said. "There's going to be a pendulum swing of 'get this away from me.' And we'll have punch-the-monkey ads and a lot of untargeted garbage. We don't need to go back to that."

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