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Ad Age: How Google’s Snub of Tracking Will Upend the Industry

The advertising industry is gripped with fear over new moves from Google that could minimize or even cut out other ad tech players from the market. Earlier this week, the search giant announced a new policy position to restrict personalized advertising online, which could cement Google’s ad tracking system as the industry standard, forcing other players to compete for table scraps in the ad market.

Google drew a line in the sand this week, explicitly saying it would steer away from personalized advertising technology that has been the backbone of the internet ad industry for decades. While some see this as a win for consumers and privacy, for others it’s just another way for Google to gain even more power.

“People are a little shocked at how definitive [Google has] become for their vision of the future,” says Andrew Frank, research VP at Gartner, a research firm. He says Google’s outsize influence (and revenue) in the advertising industry could squeeze ad tech players building their own solution. “Google’s scale is so gigantically enormous that barring some major [government] intervention, whatever Google does it’s not going to be engineered to diminish its revenue from advertising,” says Frank.

Google is of course the largest internet ad company in the world, reporting fourth quarter ad revenue of $46.20 billion. It has an extensive empire that ranges from Android phones to YouTube, the Chrome web browser and more. Its dominant market position means its policies can affect the whole industry.

“If there was any doubt before today, it is crystal clear from this announcement that Google maintains its stranglehold on the future of [marketing technology]. It is difficult to foresee how this announcement won’t immediately impact plans that are already being put into practice, as marketers prepare for a post-cookie digital universe,” says one media executive at a major advertiser.

The industry is moving away from “third-party cookies,” files that websites save on user web browsers to help identify the same user across websites and serve up targeted ads. Cookies have fallen out of vogue in the wake of a privacy backlash as more consumers and governments take privacy more seriously. This has forced the ad industry, dependent on lucrative ad targeting, to scramble for a replacement that does not rely on cookie technology and provides more privacy. Google’s announcement this week makes clear it will ditch highly personalized targeting tools, like ones that rely on personal email addresses—an alternative way marketers can target people.

If Google reinforces its own ecosystem and does not “play well” with other ad tech companies developing new ways of ad targeting, it could cut those companies off from Google’s ad platform, rendering their tools useless. Apple demonstrated how a hardline stance can disrupt the ad industry with its movement to ban internet-tracking on Safari and more stringent controls on IDFA—Apple’s Identifier for Advertisers. For those concerned about privacy, these have been welcome changes that lockdown consumer data, but for online advertisers it means businesses must adapt.

“We’ve been planning for cookie deprecation for years now,” says Scott Hagedorn, CEO Omnicom Media Group, North America. “We’ve been future-proofing our strategy for 10 years.”

Publishers with direct relationships to consumers will be one of the beneficiaries in the future of internet advertising, says Andrew Casale, president and CEO of Index Exchange, which is an ad marketplace. Google’s move “raises the value of publisher first-party data that much more,” Casale says. “That’s effectively the strategy Google will use too, and that’s a positive event for all premium pubs that have the best first-party data.”

Read More at Ad Age