In 2024, Google will block third-party cookies in Chrome, the world’s most widely used internet browser. That will kill off one of the main ways companies track you online, and the ad tech industry is freaking out about it. Google has developed a suite of tools to replace cookies, which it collectively calls “Privacy Sandbox.” These tools let Google and other companies keep tracking people on the internet for targeted ads, but the tools use techniques to hide what individual people are doing. Google really wants everyone to calm down and get on board with its project, and to that end, the company just published the results of a test of Privacy Sandbox’s targeting.
In a new experiment, Google compared the performance of ad campaigns using third-party cookies with near identical campaigns using tools from Privacy Sandbox. Over the course of five weeks, Google found advertisers using Privacy Sandbox decreased their spending by 2-7%. The experiment showed conversations per dollar—a measure of how well the ads work—dropped by 1-3%. The number of people who clicked on the ads was within 90% of the status quo.
In other words, Google’s Privacy Sandbox tools perform worse than cookies, but not that much worse, which is about what you’d expect. On a conference call, Google’s vice president of global ads Dan Taylor celebrated the results.
“The experiment showed that the performance of campaigns using privacy preserving signals to reach users with relevant ads maintain a pretty high range of fidelity, relative to third party cookie based performance in Google ads,” Taylor said. “What we learned is that the encouraging results are validating what we hoped: that digital advertising can be more private for users and also effective for advertisers and publishers.”
The company published a blog post Tuesday describing the experiment, along with a whitepaper that goes into greater detail.
Google is in a difficult position. The average person is a lot more worried about their privacy than they used to be, a trend that’s only on the rise. Lawmakers and regulators have promised new rules to govern privacy on the internet and are even threatening to break up the tech giants. Meanwhile, other browsers like Safari, Firefox, and Brave already block third-party cookies, which makes Google Chrome look like spyware in comparison.
Google’s solution makes just about everyone unhappy. Privacy advocates say it’s not private enough, ad tech companies say it’s too private, and governments have raised antitrust concerns. Google says that the finger pointing from all sides is a sign the company is doing things right. Google needs buy-in from everybody for this plan to work.
Advertising technology is complicated enough without a bunch of numbers thrown in, but the high level view of the experiment is fairly simple. If your ad tech can produce similar results in a way that improves people’s privacy, that’s great. Even better, the test indicates that these new privacy preserving technologies might be a little more efficient. If advertisers spent 2-7% less but only saw a 1-3% dip in their results, that means they’re getting more for their money. And according to Google, machine learning techniques may improve that performance in the near future.
However, not everyone thinks that picture looks so rosey.
“Marketers are going to experience some significant pain as a result of this,” said Jeff Greenfield, CEO of Provalitics and a long time ad industry executive. (He did not review the study before its publication.) Part of the reason the numbers dropped may be because marketers are used to targeting individuals, not groups, as Google will soon require them to do. “It’s going to be a paradigm shift that requires a lot of reeducation,” Greenfield said.
Even if this new system works for advertisers, the experiment looks discouraging for publishers—apps and websites like the one you’re currently looking at who make their money through ads. Again, Google’s experiment showed advertisers spent less with the new system. That could be catastrophic for media companies and news organizations in particular that often operate with razor thin margins.
“The change is going to be drastic for publishers,” Greenfield said.
Taylor pushed back on the idea that Privacy Sandbox will hurt publishers. “We are working with technology that is emerging and reducing the ability for ad technology companies and data brokers to be able to identify individuals across the Web, and yet still be able to deliver a high degree of relevance for advertiser. That translates into a high degree of monetization for publishers,” he said. “So we’re actually quite happy with the results of the experiment.”
The study paired one of Google’s Privacy Sandbox tools called the Topics API with first-party data provider by publishers, the advertising term for websites and apps that show ads. Google says Topics and other Privacy Sandbox systems aren’t supposed to work in isolation, but as part of a broader ecosystem of tools.
Another problem with the whole endeavor is that Google’s competitors are hard at work developing fancy new ways to keep tracking you after cookies go away. If these techniques are effective, it would mean Google’s privacy preserving efforts are a wash.
“A lot of companies out there are offering cookieless solutions. They’ve found a way to link identities together without cookies. But Google and other companies like Apple want to be in control, so the next thing we’re going to see is them trying to stop all of these cookie replacements,” Greenfield said.
That’s a problem Google is well aware of, and it’s one the company needs to solve in order to maintain its vice grip on the advertising business. If other companies have tools that work better, they’ll spend their money elsewhere. That’s a battle that will shake out in the years to come, as Google finally rolls out its changes and the sea of ad tech companies compete to be the most dominant alternative. So far, Google hasn’t shared anything about how it will fight back.
“I can tell you that as an initiative, we don’t feel that those approaches stand up to consumer expectations,” Taylor said. “And what we’re seeing in terms of their concerns with privacy, as well as the overall regulatory trend in the ecosystem, is moving away from tracking individual users online. So any replacements that go down that path don’t seem to be a long term solution.”
Google said it has additional experiments in the works to test other aspects of Privacy Sandbox, including the Flash API and the Attribution Reporting API. Taylor said Google will release results from those tests later this year.
“We think together that will paint a more holistic picture on how each of these new technologies will drive results for marketers, monetization for publishers and keep people’s information more private,” Taylor said.
