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    Google’s plans to nix ad tracking has big implications for adtech companies, brands, and publishers.Advertisers will shift toward collecting their own consumer data and targeting them contextually, experts said.The move will likely make Google’s ad business more powerful, ad execs predicted.Visit the Business section of Insider for more stories.

    Google sent shockwaves through the advertising industry on Wednesday when it announced that it would stop tracking individual users as they browse the web.

    Google was already planning to strip third-party cookies from its Chrome browser that advertisers use to target and measure ads by next year. It now plans to wipe out any tracking or tools that identify people that advertisers use to pinpoint ads at specific audiences. 

    “People shouldn’t have to accept being tracked across the web in order to get the benefits of relevant advertising,” David Temkin, director of product management of ads privacy and trust, wrote in a blog post. “And advertisers don’t need to track individual consumers across the web to get the performance benefits of digital advertising.”

    Google will still let advertisers target logged-in users across Google properties like YouTube, Gmail and search and mobile apps, and publishers can still collect first-party reader data and sell it to advertisers.

    Such moves by Google, Apple, and others, which come in the face of looming pro-privacy regulation, mean big changes for digital advertising and media companies that rely on advertising’s targetability.

    Advertisers say it’s unclear how Google will replace ad tracking and how much they’ll have to rely on Google’s data to keep targeting ads at big audiences as they’re accustomed to doing. 

    “The bomb that they dropped is not that cookies are going away, it’s that they’re not going to replace it with anything,” one agency executive at a large holding company said. “They are not saying that you can’t target an individual — they’re saying that you have to have explicit consent about what you intend to do with the data.”Ad targeting could get less sophisticated

    Google’s move is expected to significantly push advertisers towards contextual-based targeting that zaps ads at groups of people based on their behavior, demographics, and interests.

    Google has an alternative to third-party cookies it calls FLoC (short for federated learning of cohorts), which are audiences of people who share traits like an interest in buying cars or red dresses. Google claims these cohorts are 95% as effective as third-party cookies in driving conversions for advertisers.

    But several advertisers said it’s unclear how much advertisers will be able to mix in first-party data and other types of data that they use, like Nielsen panel data with Google’s data.

    Madan Bharadwaj, CTO of Measured, said that cohorts have big implications for adtech companies that have long pitched aggregated publisher audiences.

    “The fundamentals of all these DSPs are based on the cookie,” he said. “Now you have to target based on aggregated cohorts rather than cookies, so they have to retool their data sets. LiveRamp has a big question mark. The Trade Desk has a legitimate opportunity for the rebirth of their business.”

    Bottom line, say experts: Google’s move will likely make its already massive ad business more powerful and brands will need to prioritize collecting data directly from people like email addresses and shopping data.

    “It gives a whole new meaning to ‘walled garden,'” said Daniel Pearson, cofounder and CEO of agency Bamboo. “If no company can use cross-site data for personalization, only the big platforms can do great personalization, which is quite the competitive advantage.”

    “Google has the lion’s share of browser activity,” said Jesse Rosenschein, VP of digital and account strategy at Mediassociates. “If you don’t have a [first-party data] strategy now, you should be developing one. It’s king in a world where consumer-privacy balance is restored.”Cookie workarounds are at risk now

    The future of efforts by adtech companies and groups like LiveRamp, The Trade Desk, and Prebid to come up with third-party cookies workarounds also are up in the air after Google’s announcement.

    LiveRamp, for example, wants to pool audiences for targeting across multiple publishers. Unified ID 2.0 is an industry effort started by adtech company The Trade Desk to use hashed, encrypted email addresses instead of third-party cookies. The Trade Desk recently handed off the initiative to a publisher-focused group, Prebid.

    “There is significant industry focus on building a new identity solution that preserves the value of relevant advertising while protecting consumer privacy,” a Trade Desk spokesperson said. “Unified ID 2.0 puts the consumer in the driver’s seat, ensures that they are not identifiable, and gives them control over how their data is used.”

    Chris Kane, founder and president of adtech consultancy Jounce Media, predicted the adtech companies developing third-party cookies alternatives would campaign against Google.

    “Those companies are going to double down and say, ‘Google was never on our team anyway and we need to make sure that these new IDs are perceived to be privacy-friendly,'” he said.

    Advertisers buy programmatic ads through bidding-based open exchanges that are open to all advertisers and private marketplace deals that let publishers choose what ad inventory they sell.

    Travis Clinger, SVP of addressability and ecosystem at LiveRamp, helps advertisers target ads using first-party data via Google ads that are bought through private marketplaces. It was unclear if Google would allow IDs within the other part of its adtech business that helps publishers sell ads.

    “Publishers — including those who work with Google’s SSP — will continue to have control over their direct relationships with buyers and the vendors they choose,” said a Google spokesperson.Google’s move has mixed implications for adtech

    Some experts said that Google’s move could level the playing field for adtech companies.

    Tom Kershaw, chairman of Prebid and CTO of Magnite, said that advertisers have long been asking Google to agree to its own cookieless guidelines, called Privacy Sandbox, instead of using the data it collects from people when they log into Google properties like YouTube and Gmail. 

    “The concern is that Google is forcing everyone to use Privacy Sandbox, and they’re going to use log-ins for their own business,” he said.

    Google nixing tracking could create a larger pool of premium ad space and advertisers for adtech companies to pitch as inventory that isn’t touched by Google, Jounce Media’s Kane said.

    It also could sour sentiment on adtech, with its association with ad targeting. Already, brands like Nestle, Unilever, and Mondelez backed Google’s targeting announcement. Shares in The Trade Desk and Magnite each traded down 12.8% on Wednesday while LiveRamp’s shares were down 8.4%, and Criteo fell 1.6%.

    “Is P&G next?” Kane said. “The negative outcome is that Google goes on a PR blitz to say that adtech is creepy. If other brands start saying this, it creates a snowball effect.”

    Google doubles down on its plan to disrupt ads that target web history

    “As our industry has strived to deliver relevant ads to consumers across the web, it has created a proliferation of individual user data across thousands of companies,” David Temkin, a Google ads executive focused on privacy and trust, said in a blog post. “This has led to an erosion of trust.”

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    Google had already committed early last year to blocking third-party cookies — little bits of code used to track people online — from its Chrome browser by the end of 2021. Because Chrome is the most popular way people access the Internet worldwide, the move sent advertisers scrambling to find alternative ways of targeting ads. Some of the proposals involve combining and matching lists of emails in vast databases, using complex math to hide specific identities from advertisers.

    But Google will not participate in those solutions, it said today. Instead, it will focus on developing its own tools that it says preserve privacy while still offering effective advertising. Its core proposal involves lumping people in large groups based on their interests, then letting advertisers target those groups instead of the individuals.

    Holding the keys to this new system only deepens Google’s power over the Web, said Lukasz Olejnik, an independent privacy researcher and consultant.

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    “Competitors may hold justified concerns about the future,” Olejnik said. “Could Google unilaterally switch off the new solution if they so wanted?”

    Google has tremendous influence over the online advertising industry. Over the past two decades, it bought up many of the companies that form the infrastructure that matches digital ads with people online. Today, it controls tools used by Web publishers who sell ad space and advertisers who buy the ads, plus a major exchange that helps connect the two. In addition, its massive video platform YouTube and the Google search engine together make it the largest seller of digital ad space in the world.

    As skepticism of big tech has grown among consumers and politicians, the need to appear supportive of user privacy has grown. Apple, which largely sells phones and software instead of targeted ads, has largely led the way, clamping down on tracking IDs on its Safari browser and more recently on iPhones themselves. That’s led to a fight with Facebook, which derives billions in revenue from selling ads on mobile phones.

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    Google has forged a middle path, slowly following Apple’s moves while trying to build alternatives that still support advertising. Finding ways to allow advertising to work online without pushing consumers toward ad blockers or other tools that protect privacy but undercut revenue for Web publishers is necessary to help the Web flourish, the company says.

    “Keeping the Internet open and accessible for everyone requires all of us to do more to protect privacy,” Temkin said. “That means an end to not only third-party cookies, but also any technology used for tracking individual people as they browse the web.”

    There’s a catch though. The changes do not apply to mobile phones running Google’s Android operating system, where the company still provides advertisers with a personalized ID for each user. Mobile Internet use is fast outpacing desktop browsers.

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    Google will still let advertisers target individuals based on emails consumers have willingly shared with them. That has deepened a push by companies to build their own customer databases by getting consumers to download their apps and give up their email addresses and phone numbers. This move to “first-party data” also benefits Google itself, which uses its vast knowledge on billions of logged-in YouTube, Gmail and Chrome users to targets ads toward them.

    Google says it won’t use new ways of tracking you as it phases out browser cookies for ads

    Google says it will only use “privacy-preserving technologies” that rely on methods like anonymization or aggregation of data.  Ad tech players have been working on ways to balance consumer privacy while maintaining personalization in advertising after they can no longer use cookies. 

    a close up of a sign: Google signage.

    © Provided by CNBC Google signage.

    Google on Wednesday clarified its plans for targeted advertising, promising not to use other ways to “track” users around the internet after it ends support for cookies in Chrome by early 2022.

    The company said in a blog post it will only use “privacy-preserving technologies” that rely on methods like anonymization or aggregation of data. Google announced plans in January 2020 to end support for third-party cookies, which fuel much of the digital advertising ecosystem, in its Chrome browser within two years.

    The blog post from David Temkin, director of product management for ads privacy and trust, said the search giant had received questions about whether it will “join others in the ad tech industry who plan to replace third-party cookies with alternative user-level identifiers.” Ad tech players have been working on ways to balance consumer privacy while maintaining personalization in advertising after they can no longer use cookies.

    “Today, we’re making explicit that once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products,” the Google post said. 

    Cookies are small pieces of code that websites deliver to a visitor’s browser and stick around as the person visits other sites. They can be used to track users across multiple sites to target ads and see how they perform. Google said last year it would end support for those cookies in Chrome by early 2022 once it figured out how to address the needs of users, publishers and advertisers and come up with tools to mitigate workarounds.

    To do so, Google launched its “Privacy Sandbox” initiative to find a solution that protects user privacy and lets content remain freely available on the open web. Google said in January it was “extremely confident” about the progress of its proposals to replace cookies, and that it plans to start testing one proposal with advertisers in Google Ads next quarter. That proposal, called “Federated Learning of Cohorts,” would essentially put people into groups based on similar browsing behaviors, meaning that only “cohort IDs” and not individual user IDs would be used to target them.

    Google says this is about how its own ad products will work, and it would not be restricting what can happen on Chrome by third parties. The company said it wouldn’t use Unified ID 2.0 or LiveRamp ATS in its ad products but wouldn’t speak specifically about any one initiative.

    Unified ID 2.0, an initiative that some top ad-tech firms are working on together, would rely on email addresses that are hashed and encrypted from consumers who give their consent. Public company LiveRamp also has what it calls its “Authenticated Traffic Solution,” which it says involves consumers opting in to gain control of their data, and on the other side, brands and publishers being able to use that data.

    Temkin said in the post that other providers “may offer a level of user identity for ad tracking across the web that we will not — like PII graphs based on people’s email addresses.” 

    “We don’t believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions, and therefore aren’t a sustainable long term investment,” the blog post says. “Instead, our web products will be powered by privacy-preserving APIs which prevent individual tracking while still delivering results for advertisers and publishers.” 

    Google had briefed several major advertisers and groups ahead of Wednesday’s post, including George Popstefanov, founder and CEO of digital agency PMG.

    Popstefanov said in an email that while this is a dynamic shift, “we have been preparing for it for a while.”

    “Following last year’s announcement to phase out third-party cookies, many of our clients have been moving swiftly to build their data infrastructures and to invest in their CRM, to better leverage their first-party data,” he said.

    “The important thing is that consumer behavior isn’t fundamentally shifting, just our ability to track and measure behaviors as we’ve been accustomed to,” Popstefanov added. “The importance of strategic planning and insights will be more important than ever for understanding audiences and how to connect at the right times and in contextually relevant ways.”

    He also said he believes Google is motivated to design its products and solutions to solve for the new reality.

    “Marketers are already diversifying their spending in more areas up and down the funnel, so it will be incumbent on Google for its solutions to appeal to brands and to support marketers’ investments and impact,” Popstefanov said.

    Alec Stapp, director of technology policy at the Progressive Policy Institute, called Google’s news a step in the right direction for user privacy. The group has received funding from Google and other major tech players, Protocol reported last year.

    “However, companies — even very large ones — can only do so much on their own,” he said in an email. “Policymakers need to step in and formalize rules that protect user privacy while being mindful of not burying users in an endless series of opt-in screens.”

    Jon Halvorson, global VP of consumer experience at Mondelez International, said the decision is consistent with feedback from consumers about what they want and expect. He said the company will be doing some testing in the Federated Learning of Cohorts and will be building it into business plans for this year.  

    “We don’t think that it can be privacy or performance, advertisers need and require both,” he said in an email.  

    Here are possible implications of Australia’s law requiring Facebook to pay news outlets.

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