What are your latest concerns?

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The Privacy Sandbox initiative is Google’s primary vehicle for rolling out proposals for replacing third-party (3P) cookies after it first committed in January 2020 to gradually phase out the use of these cookies in its Chrome browser.

The tech giant has faced numerous obstacles in its efforts to phase out third-party cookies, delaying the cookie phase-out deadline not once but three times, most recently to early 2025. The company has already backed away from one of its tracking proposals, Federated Learning of Cohorts (FLoC), in response to criticism from privacy groups and other browsers, as well as antitrust concerns.

However, many concerns remain about Google’s Privacy Sandbox, and the stakes are high given the advertising and marketing industry’s widespread use of cookies for measurement and tracking, and Google’s dominance of the advertising market.

Google recently concluded an industry testing period after phasing out cookies for 1% of Chrome users, but the results have highlighted the issues ad publishers and regulators still have with the Privacy Sandbox in its current form.

So what are the issues raised, and what do they mean for advertisers worried about the future of measurement and tracking in Chrome, and the demise of the third-party cookie?

“Publishers will lose an average of 60% of revenue from Chrome”: Criteo

One of the key findings from the Privacy Sandbox testing phase came from advertising platform Criteo, a development partner of the Sandbox project, which conducted extensive testing of the Privacy Sandbox with the majority of 18,000 advertisers and 1,200 publishers between March 18 and May 12, achieving over 100 million ad impressions per week.

After the test period ended, Criteo assessed that if the 3P cookie were to be phased out today and the Privacy Sandbox were implemented as is, “publishers would lose an average of 60% in revenue from Chrome.” Needless to say, this is a big problem.

Criteo's testing also uncovered some concerns around latency (the time it takes for ads to load, which impacts page load speeds): During testing, the ad platform reported “an average increase of over 100% in publisher ad rendering latency on Privacy Sandbox traffic,” which has a knock-on effect on consumer experience, viewability and click-through rates, the last two of which negatively impact revenue.

It's worth remembering that Google itself also ranks fast-loading websites higher in searches, meaning there's an impact on SEO too.

Criteo’s report concludes that “if Google does not take further steps to significantly improve the Privacy Sandbox, publishers will suffer lower revenue, declining earnings and an inability to measure performance.”

“Privacy Sandbox initiative would pose significant obstacles to the digital advertising economy”: IAB Tech Lab

The Interactive Advertising Bureau (IAB) Tech Lab has conducted an independent analysis of how effectively Privacy Sandbox fills the “gap” left by the deprecation of the 3P cookie. The analysis was prepared by the Privacy Sandbox Task Force, a group of industry product development leaders who have had first-hand experience with Privacy Sandbox and have worked closely with our team to provide industry feedback and recommendations for product updates.

In February, the task force released a gap analysis based on six months of work on the Privacy Sandbox with more than 65 participating companies. It concluded that “several key features in the sandbox, including frequency capping, video ads, audience creation, and impression counting, are either not supported or face limitations.” The analysis also identified concerns around audience management, auction dynamics, creative and rendering, reporting, and technology and interoperability.

Google responded to the IAB's concerns, saying the analysis “contains a number of misconceptions and inaccuracies” and that the report “appears to ignore the Privacy Sandbox's broader objectives of enhancing user privacy while supporting effective digital advertising.”

The Gap Analysis accepted comments from the industry from February 6 to March 22, 2024, with the final version of the analysis released in late June to coincide with the end of the Privacy Sandbox testing period. The analysis remains highly critical of the Privacy Sandbox and its appropriateness as an alternative to the 3P cookie, stating that “while the Privacy Sandbox initiative aims to enhance user privacy, it poses significant obstacles to the digital advertising economy.”

Additionally, the IAB Tech Lab believes that “in its current form, the Privacy Sandbox could limit the industry's ability to deliver relevant and effective advertising and place smaller media companies and brands at a significant competitive disadvantage. The stringent requirements could stifle their ability to compete and ultimately impact the industry's growth.”

The final gap analysis outlines several outstanding concerns and questions for the Chrome team around key areas, including fragmented documentation, lack of attention to commercial requirements, lack of third-party audits, lack of industry standard certifications, scalability and performance, Chrome transparency, and future governance.

“Further progress by Google is required to resolve competition concerns”: CMA

The UK Competition and Markets Authority (CMA) began investigating Google's Privacy Sandbox in 2021 for possible breaches of competition law, and from July 2022 began publishing quarterly reports tracking the progress of Google's efforts to address the CMA's concerns.

The CMA's Q4 2023 report, published in January 2024, contained the stark declaration that “Google cannot proceed with the phase-out of third-party cookies until its concerns are addressed.” At the time, Google was still aiming for a phase-out deadline in the second half of 2024, but just before the CMA published its Q1 2024 report in April, it revealed that the deadline would be postponed again to early 2025.

In its most recent report, published in April, the CMA asserted that “Google has followed the necessary processes set out in its commitments and is working with us (and the ICO) to resolve its remaining concerns ahead of the phase-out of third-party cookies”, but added that “further progress is required by Google to resolve its competition concerns ahead of the phase-out”.

The main concerns raised by the CMA about the Privacy Sandbox are:

The possibility that Google may design or develop the Privacy Sandbox tool in a way that favours the market position of Google's advertising products, such as Google Ad Manager (GAM); The lack of long-term governance arrangements and independent governance for the Privacy Sandbox. The CMA is keen for stakeholders to have the opportunity to engage with Google on the Privacy Sandbox on an ongoing basis; Google's use of first-party data to target and measure ads on its owned and operated (O&O) inventory, and the risk of ad spend shifting from open display to O&O inventory; Restrictions on cross-site tracking that could adversely affect tools that compete with the Privacy Sandbox. The CMA highlights that “Google's market position gives it significant influence over the viability of alternative technologies that could compete with the Privacy Sandbox tool following the removal of third-party cookies”.

The Information Commissioner's Office (ICO), the UK's main privacy authority, has also expressed concerns that the Privacy Sandbox framework contains loopholes that could allow it to track users and violate their anonymity, according to documents obtained by The Wall Street Journal. The ICO has reportedly shared its findings with the CMA and urged Google to strengthen privacy safeguards within the Privacy Sandbox.

What does all this mean for advertisers?

In developing the Privacy Sandbox and related tools, Google is walking a tightrope: on the one hand, it needs to satisfy advertisers by providing them with the same level of visibility and reporting that they expect from cookies (and maintain its own advertising business), and on the other, it needs to assure consumers and regulators that it respects privacy.

All of this matters because Chrome commands more than 65% market share worldwide, according to GlobalStats, and accounts for the majority of online browsing time and attention.

But in emailed comments to Digiday, Google noted that “publishers typically work with dozens of demand sources, so it's impossible to predict a publisher's performance based on the effectiveness of a single buying platform,” adding that without widespread adoption, performance figures cannot reflect how the ecosystem works in a “true marketplace.”

Criteo's testing report noted that fewer than 55% of publishers overall have adopted Privacy Sandbox. This may be due to justified wariness of the tool, but it also impacts the extent to which the findings can be generalized. Ultimately, advertisers should take any numbers they get from Privacy Sandbox testing with at least a little skepticism and remember that they don't accurately represent real-world conditions.

Furthermore, the Privacy Sandbox and related solutions are not a 1:1 replacement for the 3P cookie: the way the 3P cookie works and the level of insight it provides are considered too invasive of user privacy, and as such it is being phased out by browsers, including Chrome.

Industry groups and regulators should join Google in holding the Privacy Sandbox accountable, but advertisers also need to avoid expecting it to be a panacea.

According to Econsultancy's Future of Marketing Report 2023, marketers are already dealing with signal loss when it comes to tracking and targeting, and by addressing these challenges now, they'll also be better prepared for change when Chrome turns off cookies (whether that's in early 2025 or at a yet-to-be-determined future date).

Sources 1/ https://Google.com/ 2/ https://econsultancy.com/google-privacy-sandbox-concerns-third-party-cookies/ The mention sources can contact us to remove/changing this article

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