What the latest Google cookie news means for major advertising technology actions

Analysts are reviewing Google’s latest guidelines on its promise not to use technologies that track people individually over the Internet. Some analysts say their views have not changed. But other BMO people have downgraded an advertising technology category and noted that “it’s too hot in the kitchen.”

Google said Wednesday in a blog post that it will only use “privacy-preserving technologies” that are based on methods such as anonymization or data aggregation after it stops supporting cookies. Cookies are small pieces of code that websites deliver to the visitor’s browser and are left with when that person visits other sites. They have been used to track users of various sites to target their ads and see how they work. Google announced in January 2020 plans to end the assistance of third-party cookies, which feed much of the digital advertising ecosystem, in its Chrome browser within two years.

The blog post asked industry questions about the future of advertising technology players ’initiatives, who have been working on ways to balance consumer privacy while maintaining the personalization of advertising after they are unable to use cookies.

Following the announcement, this is what analysts say about the shake-up of public advertising technology companies, including Google:

Bank of America analysts said Thursday that Google’s comments “suggest that app developers and publishers will have to move away from all individual identification alternatives, which could make the capabilities of” privacy “Google’s are even more valuable in the industry.”

Analysts cite figures from Jounce Media, which estimates that 40% of the money coming from advertisers to open Internet publishers goes through Google’s ad buying tools.

KeyBanc analysts said their real question was whether Google plans to restrict the alternative identifiers of Google products. They said the move “would clearly favor Google over the open Internet and poses an interesting dilemma for regulators: how should consumer privacy be balanced with market power?”

Google said Wednesday that its blog post was about running its own ad products and will not restrict what might happen to Chrome by third parties. The company said it will not use Unified ID 2.0 or LiveRamp ATS, two tools it says would help target ads in a more privacy-conscious way, but would not specifically address any initiatives. Uncertainty remains about whether Google will restrict this activity to Chrome in the future.

“In our view, the problem inherent in current efforts to regulate Internet companies is that efforts to provide more privacy simply make larger companies stronger,” KeyBanc analysts said. “Until the trade-offs between privacy and competition are contemplated, we suspect the regulation runs the risk of stifling competition.”

Macquarie analysts said they believe the move “more clearly defines the roles Google will play in online advertising versus the roles open to Internet advertising technology companies such as The Trade Desk, LiveRamp and Criteo.”

“It seems to put Google in a different part of the ad targeting business, which you can afford to achieve given its breadth, and you’ll probably have to do it with privacy issues in mind. an increase in control of their methods by the government, ”Macquarie analysts said. “But it still lifts the walls of your garden even further, as any advertiser working with Google’s ad serving technology will need to adopt Google’s new API-based protocols, which target consumers of a very different way “.

Shares of Google rose nearly 1% after the market opened on Thursday.

KeyBanc analysts said The Trade Desk will answer changes to Google’s Chrome browser if it restricts the use of alternative identifiers.

Trade Desk led the formation of Unified ID 2.0, a framework that will be based on email addresses that have been encrypted and encrypted by consumers who give their consent. Trade Desk has painted the identifier as a superior alternative to cookies that better explains to consumers how relevant advertising funds the content and experiences they read or use on the Internet. In February, Trade Desk passed control of Unified ID 2.0 to a nonprofit called Prebid.

“In short, Unified ID 2.0 is once again putting privacy in the hands of the consumer, which seems consistent with the goals of privacy and open Internet value sharing,” KeyBanc analysts said. “If Google is able to restrict alternative identifiers, Google has become even more powerful in the advertising industry.”

Macquarie analysts said Wednesday that the ad appears to restrict The Trade Desk’s ability to buy ads using identifiers on Google’s exchange or supply platform.

“… But that only encourages TTD to work directly with publishers and across a wide range of others [supply-side platforms] through private market transactions, “they wrote.” We expect Unified ID 2.0 to continue to develop as an agnostic industry standard for devices and browsers with [opt-in] and consent between publishers and consumers, and TTD will continue to leverage its position as the largest independent DSP to help advertisers reach consumers through the open network beyond Google. ”

A Trade Desk spokesman said in a statement that there is “an important focus by the industry on building a new identity solution that preserves the value of relevant advertising while protecting consumer privacy.”

“Unified ID 2.0 places the consumer in the driver’s seat, ensures they are not identifiable, and gives them control over how their data is used,” he said.

Trade Desk shares fell 5% Thursday morning.

BMO downgraded the LiveRamp category on Thursday in a note titled “Too Hot in the Kitchen.”

Analysts said they believe Google’s confirmation that it won’t integrate “alternative identifiers” could slow down LiveRamp’s sales cycle, as ecosystem players evaluate how best to move forward this year.

In late October, LiveRamp said Unified ID 2.0 will be available to publishers through its platform, which in turn helps advertisers target real people rather than profiles or cookie-based devices. LiveRamp has what it calls its “authenticated traffic solution,” which it says allows consumers to choose to gain control of their data. On the other hand, brands and publishers can take advantage of this data. It is the company’s solution to deal with the depreciation of third-party cookies.

“We believe that by 2022 (when GOOG completes its cookie roadmap, among other things) greater clarity and revenue acceleration is possible, but current visibility is limited,” BMO analysts wrote. They said the industry still expects Google to provide more clarity on how it will handle alternative options.

BMO analysts said they believe the impact on short-term revenue for LiveRamp is likely to be limited, but warned of a lower likelihood of revisions to the upward estimate.

Macquarie analysts said the type of ad that came out of Google on Wednesday usually causes stock volatility on perceived headline risk. “But we believe that while this is another twist in the evolving advertising technology landscape, the prospects for TTD, RAMP and CRTO are more or less unchanged.”

In a blog post responding to the news, LiveRamp said Google’s ad fits the advocacy. LiveRamp argued that its ATS solution encompasses ideas of first-hand relationships with consumers, transparency, and consumer control.

“In short, marketers will be able to buy people-based inventory on DV360 through LiveRamp,” the message says. DV360 is a product of advertising technology from Google.

Shares of LiveRamp fell 7.7% Thursday morning.

Advertising technology company Criteo said in a statement that Google’s post on Wednesday “does not change or affect Criteo’s plan and roadmap.”

“As we said before, we continue to invest in our first-hand media network, as well as in contextual, cohort-based advertising, which allows marketers to interact effectively with their customers in a safe and consensual way. privacy, ”one company said. said the spokesman. “User permission and consent are the basis of our solution.”

In late October, Criteo announced its participation in the collaboration with Unified ID 2.0. The company said it will provide the login solution and help develop a “transparency portal,” which allows consumers to have more control over their advertising experience.

Macquarie analysts said the company’s outlook on Criteo has not changed since Google’s announcement, noting that Criteo has actively contributed to Google’s privacy initiatives.

BMO analysts raised their target price from $ 25 to $ 45 and said they are boosting confidence in Criteo’s response efforts as it repositioned its heavy reorientation business.

“For CRTO, we expect the basic use case to reorient continue to raise questions for investors,” BMO analysts said. “But we continue to believe that CRTO has been developing alternative techniques to effectively reach consumers who have previously shown interest in an advertiser’s products.”

BMO analysts said that to move forward, changes may require a change from an individual orientation to a messaging orientation for a group of users who have shown similar interests in an advertiser’s product.

“When combined with strong machine learning, we believe CRTO can continue to show improvements in its core business: helping advertisers remarket to interested customers,” they wrote.

Shares of Criteo fell 5.4% Thursday morning.

CNBC Michael Bloom has provided reports.