Why Did Google Pause their Third-Party Data Plans?

July 7, 2021

NEW PODCAST

We’re back with another episode of The Digital Marketing Troop.

Google threw a wrench in marketers’ strategizing when they announced their third-party data deprecation initiative is on pause until 2023.

After weeks, if not months, of feverish planning to shift to a first-party data strategy, marketers might be wondering, what now?

Haley Nininger explains why Google hesitated and what might be next, both for third-party cookies and marketers looking to use the learnings over the last few weeks to be ready for 2023.

Transcript

John Tyreman:  Howdy gang. Welcome to The Digital Marketing Troop, where we talk about changes and trends shaping the world of digital marketing. My name is John Tyerman. I’m here with second time podcast guest, Haley Nininger, Paid Media Account Manager at Silverback strategies. Haley, how you doing?

Haley Nininger:  I am doing fantastic. Hey John, how are you?

John Tyreman:  I’m doing well. Have you visited any more Asian restaurants down there in Richmond?

Haley Nininger:  I have. I have a new plug. It is called LuckyAF, and it’s Lucky Asian Fusion. They’ve got an incredible happy hour. I mean you’re talking bottomless sushi. You can catch me there every day of the week.

John Tyreman:  Gosh, that’s awesome. Well, Haley, we’ve got some bombshell news from Google that I’d love to tackle with you. Well, first of all, we all know that Google’s plan was to phase out third party cookies. And their original plan was to phase out that tracking model over 2021, but on June 24 Google announced their plan to delay that transition to 2023. So, let’s start here Haley. Why do you think Google kicked the can on this?

Haley Nininger:  Well, you know what they said was, it was the responsible thing to do, we wanted to allow more time for public discussion, we didn’t want to rush it. We wanted this to be as seamless as possible. So of course that was kind of the public statement around it. What I think? I think waters got choppy. I think Google thought that this was going to be a widely adopted technology, everybody was going to adopt this kind of as the new solution but that’s honestly sort of the opposite of what happened. You had almost every other player almost mocking Google on their privacy stance with just several people or entities saying, “This is not a move in the right direction”, but just reinventing the tracking wheel, especially with the rising concerns around browser fingerprinting and things like that. And then, on one hand, sure you know this makes Google a bit more of a walled garden but similarly they’re kind of getting some of those threats from WordPress, and several other entities saying that they’re going to block transmission or participation in FLoC altogether. That could be a lot of lost revenue for Google. So I think that’s, you know, at least a part of it but maybe even the bigger part could be regulation. Following those January probes from the Competition and Markets Authority, as well as kind of the Information Commissioner’s Office, they’ve now agreed to kind of having their commitment and oversight involvement throughout, whatever development whatever solution that might look like, and whatever comes out of that whatever they agreed to, is going to be legally binding. So I think another piece to kind of tack on to my theory there is just in Google’s announcement they explicitly said that this decision to phase out the cookies over this three month period is going to be subject to kind of the engagement and the agreement with the CMA. So you’ve got that. You’ve got nonprofits like the EFF, the Electronic Frontier Foundation, basically just imploring Google, stop doing this, this is not a solution. It’s just creating a new problem. And then of course antitrust being thrown around, as it usually is with Google, probably putting the pressure on for a solution that meets those requirements and Google is still just figuring out, you know, how am I going to benefit here. So I think they just need a little bit more time.

John Tyreman:  It’s interesting that the regulation landscape from the UK but also in the US, too. In March, there was a bill that was introduced, I believe by a representative from Washington State, on a national data privacy law. So you’ve got this new timetable where there’s new state legislation that’s going into effect in 2023, there’s the potential for a national privacy law, and so I think that had to play into it as well, I’d imagine.

Haley Nininger:  Yeah, for sure. I 100% agree and like I mentioned before, and will continue to mention, I think 2021 is going to be the year of privacy. So as that landscape changes Google’s going to have to navigate how, you know, they’re still going to come out on top, amidst all of these changes.

John Tyreman:  So you mentioned that Google was kind of lambasted by other players in the industry like WordPress. Do you think that this decision to delay their plans, do you see this as a sign of weakness?

Haley Nininger:  Do I dare say yes? I think maybe I’m being a little bit cynical there, maybe not quite weakness, but definitely feel a bit of self interest coming out of that. I think a part of this could be, did they do this out of clout?  Google is seen and you know they see themselves as kind of one of the biggest players in the digital industry, you’ve got all these other companies making strides towards quote unquote privacy. Apple, of course. You’ve got DuckDuckGo, with lots of different things there. I think Google probably felt compelled or, you know, just wanted to jump on or possibly even lead kind of that bandwagon or, you know, maybe even got jealous of kind of Apple’s new walled garden that they had been accused of building. You know, that kind of thing. Google’s like I want that. So I think that could be, you know, who knows how big of a piece that is, but I do think again, Google got worried about this being a little bit of a blow to their pockets. Google did come out and say that through the FLoC testing, they anticipated that this solution would see around 95% effectiveness or 95% of a conversion match to what you would typically see with third party cookies. And, you know, that’s great, but again, back to what I was saying earlier, getting a ton of pushback from people that are – are they even going to adopt it at all? And so if they don’t adopt it, then how does that impact Google? And WordPress, as I mentioned, they own 40% of the market alone. So you’ve got 40% of the market saying, I’m going to block your technology. I’m not going to facilitate this. What’s the solution there? So Google’s going to continue to probably put away at least a little bit of that self interest and think a little bit harder about privacy and the trade offs with the FLoC model when compared to cookies. You know, there’s definitely potential for that to spiral quickly. So I think… I guess back to your original question, the main thing that stuck out to me in terms of maybe that weakness in particular was in March of this year when Google kind of was talking publicly and widely about this whole phasing out of cookies this year, they said, people should not have to accept being tracked across the web. And then here we are not even three months later with a big ol’ U turn, and we have to accept being tracked across the web for another two years. So that’s not the greatest sign.

John Tyreman:  I found it interesting that you brought up Google having Apple envy because Apple has always been the company to not really lead the market, but perfect what’s already out there. And with Google kicking the can on this and delaying their effort to become more privacy centric, Apple is really leading the way with their app tracking transparency with all the data privacy features that they’re rolling out on their devices. And then Google came out afterwards, after the fact, and said, “Hey, we’re developing our own app tracking transparency or version thereof.” So, it’s interesting that you brought that up and how that change is happening right before our eyes.

Haley Nininger:  I agree. I definitely see an element of that, playing a role here for sure.

John Tyreman:  Haley, I’d like to read an excerpt from Google’s statement and then get your reaction. For folks who don’t know, here’s a little bit more detail about Google’s new plan and timeline: “Google has laid out a two stage plan to deprecate third party cookies and develop other privacy compliance solutions for advertisers. Phase one which will start in late 2022. Once testing is complete and API’s are launched in Chrome, Google will announce the start of stage one. During this stage publishers in the advertising industry will have the time to migrate their services. We expect this stage to last for nine months, and we’ll monitor adoption and feedback carefully before moving to stage two. And then stage two, starting in mid 2023, Chrome will phase out support for third party cookies over a three month period, finishing in late 2023.” So there’s the timeline. In a nutshell, Haley, what’s your initial reaction to this approach?

Haley Nininger:  Well first, that timeline, we will see. We’ll see. According to Google, until the privacy sandbox initiative is fully tested and deployed via API’s in Chrome, third party cookies are going to be our solution. They’re going to remain in use and because of some of the things that we’ve already chatted about today, I’m definitely skeptical of this timeline. I think that the timeline for the cookie sunset is going to be almost completely dependent on the success of whatever initiative is next, and also kind of the changing privacy landscape and also the strict regulation requirements that are going to be thrown in there. There’s a ton of room for iteration and change in that. So that’s kind of the second place, as I mentioned earlier, that Google explicitly was saying this is subject to our engagement with the CMA. So regulation is definitely going to play a role there. And I don’t think anything moves particularly fast in that space. But as far as the overall approach, I do actually think… I’m more excited about this approach and kind of the phase layout that they’ve presented because it makes me feel as somebody that advertises on behalf of other entities or businesses, gives me hope that I would have a chance to experiment around with it a little bit more. So with the FLoC, it felt so much more like a high stress concept with no practical implication or experimentation for advertisers that are in the platform, day to day. It was kind of only meant for testing on the supply side, and with their ad management firms, but that language – they said publishers and advertisers as well, are going to hopefully have a chance in that nine month period to experiment a little bit more. So I’m hoping that this will give us a chance to see, on the ground level, you know, “Okay, we don’t have… we’re not having cookies in the foreseeable future, but this is a phased approach. We’re able to iterate.” We’re able to figure out how this works for each of our clients and see what that looks like on kind of the practical level instead of just kind of hearing through the grapevine what this looks like.

John Tyreman:  I like that they phrased it like, you know, we’re in this together, we’re gonna have this transition period where we’re gonna be able to test. How does that message translate to, you mentioned those clients that you’re advertising on behalf of, how does this translate to the impact to their strategies?

Haley Nininger:  Yeah, I think, this feels so much like I was back in school and I would study, study, study for three weeks for this math test. I was preparing, preparing, preparing, just to get in class and find out it’s been moved back a week or maybe in this case years. But I think my perception, in this case, is that I love it. I think it’s great for advertisers and clients alike, and that example, I think Silverback has really been studying, studying, studying for months at this point, and we strive to make that impact clear to our clients and prospects and help our partners navigate these uncertain waters. And here we are now kind of faced with this delay, but we’ve done the study, we’ve committed to the research, we’ve tested, we’ve ideated, we kind of understand or have at least a rough idea of where this is going. So I’m looking at this as more of a two year runway to get ourselves and our clients completely onboarded to the things that we’ve already discussed. So we’ve already discussed the importance of first party data. If you as a business are not already collecting that, it’s okay. You’ve got about roughly two years to kind of get that collection in place and I recommend doing that as soon as possible. So you’ve got some runway there. Full funnel strategies, testing higher funnel channels early on so that you can kind of measure the impact and be well equipped when that’s kind of something you’re going to have to rely a little bit more heavily on. And then of course a big push, kind of across the industry is offline conversion tracking and making sure that you’ve got a CRM in place or the capabilities in place to have your advertising efforts communicating with your sales efforts. What does that look like? What does that process look like? We’ve already done a lot of work and understand the impact that these things are going to have for advertisers in the future, but I see this as a really great opportunity for entities to say, “Okay, we understand the plan, let’s get ourselves a two year runway, a two year test plan, see how this rolls out for us, and use this as really a learning period so that we can be as prepared as possible when this actual phase out does happen”.

John Tyreman:  Yeah, it seems like those three key points that you laid out there, the first party data strategy, approaching the funnel from a full perspective and then offline conversion tracking, getting those set up, it sounds like we’ll make for a seamless transition, once that time comes. There is going to be a temptation to just try to harvest as much as we can, “Oh we don’t need to worry about that.” But it sounds like that could come at quite the cost if those three things aren’t made a priority. Does that sound right?

Haley Nininger:  Yes, I absolutely agree. This is going to be where the whole industry is moving and so if you’re not thinking of these things ahead of time, it’s going to be really tough for you to kind of catch up when that is really the only solution in place because it’s just going to be a much more competitive and saturated space.

John Tyreman:  Now that there’s more runway for companies to invest in these activities, it’s going to be harder and harder to play catch up, the more that you wait, so it’s really important to start now. Yeah, so that’s great stuff Haley. So you mentioned that the success of this timeline that Google laid out is really dependent on what they do next. So do you have any thoughts on what Google might try next in their privacy sandbox?

Haley Nininger:  Yeah, I mean, you know, anything could be next. But based on what we’ve seen, based on what we’ve learned, I do think whatever solution is next, is going to be cohort based. I think that’ll stick around. But where I do possibly see a little bit more expectation is going to be where the auction is actually taking place. So currently the ad auctions take place in ad network servers. I could see them testing another iteration of new moving the auction to the device or browser like the FLoC suggests. Given kind of the backlash there on the fingerprinting possibilities, maybe they’ll move to something more like Creatio Sparrow proposal where that essentially moves, kind of the exchange to an independent third party which they’re referring to as the gatekeeper. And I think that could be a little bit more unlikely just in the spirit of Google having its own interest and its own walled garden, so I’m not sure if that will be quite the solution for them either. But I think some other things to look out for is some other players like Microsoft. Microsoft has a Parakeet proposal, and their proposal allows for a little bit more control over your participation and the process is a little bit more of an opt-in process which isn’t supported in the privacy sandbox right now. In addition, Parakeet also does not host the auction in the browser, but the browser acts as the anonymizer for your data and still kind of passes your data through to the classic ad auction that we’re already familiar with, with the infrastructure that we’ve already got. So I think that could be something else to look out for, kind of more tied to the auction. And I think that everything I’ve mentioned is going to hinge a little bit on Google’s self interest or the walled garden that they do or don’t want to build out. So a little bit of a revelation in terms of their true intentions there I think. But I think the last thing I guess in that spirit would be, I would anticipate they’re going to look for something that’s going to be more wildly supportive of cross browser support. So Chrome is right now, or was the only browser that was set to adopt the FLoC. So what does that look like on safari? What does that look like on Firefox and these other areas? And like I mentioned, Microsoft has their own version but they’re in talks with Google and they actually are hoping to kind of have one unified experience that will be used across the industry. So I could see that inspiring Google to have everybody rely on Google technology and have everybody rely on whatever their solution is and if they make that easy across different experiences, I can see that being a fair testing ground for them in the future too.

John Tyreman: Wow. I think that right now, all we can do is really wait and see what happens. 

Haley Nininger: Yeah, I agree with that. 

John Tyreman: All right. Well Haley, thank you so much for taking the time to hop on our podcast. If folks wanted to connect with you, where can they find you?

Haley Nininger: LinkedIn. LinkedIn is the place to go. Haley Nininger on LinkedIn, and I’m looking forward to connecting. 

John Tyreman:  Awesome. Well there you have it. Go connect on LinkedIn folks – Haley Nininger. Thank you so much for the time Haley, we’ll chat soon. 

Haley Nininger:  Awesome. Thanks John. 

John Tyreman:  If you found this podcast episode insightful, please subscribe, tell a friend and leave a rating and review. And to learn more, head on over to silverbackstrategies.com where we have a wealth of digital marketing insights on our blog and Resource Center. We’ll see you next time on The Digital Marketing Troop.