Google's March 2021 Announcement

ACXIOM POINT OF VIEW GOOGLE’S MARCH 2021 ANNOUNCEMENT WHAT YOU NEED TO KNOW EXECUTIVE SUMMARY When Google speaks, everyone listens. It owns over 60% of browser market share and over 29% of the U.S. digital ad revenue.1, 2 Any change that Google makes to its Chrome browser will likely impact all advertisers, publishers and adtech vendors that depend on the internet as a way to make money. Just the facts. 1. What did Google say on March 3? • The company reiterated that third-party cookies will go away on Chrome in March 2022. • Google will not build alternate user-based identifiers to track individuals, nor use them in its products. • As part of Chrome’s Privacy Sandbox proposals, different APIs will be used for different use cases. FLoC (Interest-based targeting), Fledge (Remarketing), and Conversions API (Measurement use cases} are three out of the nine APIs that will be available. All data will be aggregated and no longer used to track and target users at the individual user level. Per Google’s announcement, we have one year to prepare for a world without third-party cookies. While we’ve all known this was coming, we really didn’t know when. Now you can set your countdown timer to March 2022. Google has also clarified that there will be no alternate identifiers used in Google products. In a blog post, David Temkin, Google’s Director of Product Management, made it clear Google would be curbing any attempt by third-party intermediaries to track individuals across sites as they browse the internet. “We continue to get questions about whether Google will join others in the adtech industry that plan to replace third-party cookies with alternative user-level identifiers,” Temkin wrote. “Today we’re making explicit that once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products.” We applaud Google’s heightened concern for consumer privacy. At Acxiom, we have long held to the highest standards of transparency and ethical data use as our North Star and welcome leaders from our industry doing the same. Though most of Google’s latest announcement regarding third-party cookie deprecation on March 3 wasn’t really new, we’ll take a deeper look into some new and important clarifications. We will also assess the impact these decisions will have -- within the Google ecosystem as well as the greater adtech ecosystem. Finally, we will finish with some immediate recommendations in response to the pending changes. WHAT WE KNOW Google is doubling down on the elimination of user-based identifiers based on an “erosion of trust” as advertisers and technology firms used third-party cookies to gather sensitive and/or private information about individual consumers as they browsed the internet. While advertisers have provided the economic foundation for people to have a free and open internet, a recent study by Pew Research Center found that 81% of people now believe the risk of current data collection practices now outweighs the benefits. While Google is eliminating user-based tracking on its own ad platform, it has stopped short of blocking other independent DSPs and SSPs from doing the same. Google will continue support of first-party relationships on its ad platforms. Google will allow first-party identifiers that are limited to individual publishers — but not cross-site. GOOGLE WILL DOUBLE DOWN ON FIRST-PARTY RELATIONSHIPS With more than 2 billion email-based logins across their ecosystem, Google has more than enough person- based reach to establish direct relationships with advertisers on its premium YouTube and paid search platforms. In the same way that it’s doubling down on the end of third-party cookies, Google is deepening its support for solutions that build on direct first-party relationships. Similar to how Facebook has dominated user-based targeting within its social properties/apps, Google is well positioned to continue with its strength of first-party digital paid media within its walls. Acxiom is a Google Certified Partner in North America and EMEA to provide first-party data solutions to clients. We applaud Google’s concern for consumer privacy. As we have long done at Acxiom, we believe every company should prioritize transparency with customers. GOOGLE HAS INTRODUCED FLoC Enter the age of the cohort. Google also announced that in place of user-level identifiers, it will begin hiding individuals in large crowds of people with common interests. Google will do this using an algorithm called FLoC (Federated Learning of Cohorts) with the goal of being able to deliver a private and secure browsing experience without sacrificing relevant advertising and monetization. Google is encouraged by the results from early tests and expects to begin testing FLoC-based cohorts with advertisers in Google Ads second quarter. In a recent blog post, Chetna Bindra, Google Product Manager — User Trust and Privacy, wrote “Our tests of FLoC to reach in-market and affinity Google Audiences show that advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie- based advertising.” 3 WHAT WE CAN ASSUME…FOR NOW Google will restrict other identifiers in the App Store and Chrome. Similar to Apple, Google can impose rules on whether apps can use identifiers for advertising purposes without explicit consent, as Google ultimately controls what apps are in its store. However, neither Apple nor Google will likely ban a website in its browsers if utilizing identifiers for advertising. Browsers do not control server-to-server data being passed from websites to SSPs and DSPs. There doesn’t seem to be a likely way – or intention -- for Google to turn off solutions based on user identifiers. WHAT IS NOT CLEAR There remains uncertainty around Google’s position on other identity providers (LiveRamp’s ATS, TradeDesk’s UID2.0) using their identifiers for tracking. In the same blog post, Google’s Temkin goes on to say, “We realize this means other providers may offer a level of user identity for ad tracking across the web that we will not — like PII graphs based on people’s email addresses. We don’t believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions, and therefore aren’t a sustainable long-term investment.” WERE IS U.S. IITAL A SPEN OIN Source: eMarketer Other*** . Amazon . 2020 Facebook . Google Top 3* . 4 RESPONSES FROM OTHER PROVIDERS Google isn’t the only platform advertisers use to engage with people. There are still independent ad exchanges and DSPs, like TradeDesk, that will still offer a user-based alternative to third- party cookies. Since the 2018 announcement of GDPR and CCPA, TradeDesk has been hard at work developing their anonymized user-based identifier, Unified ID 2.0. Their goal is to champion a new common currency of the open internet. In a response to Google’s March 3 announcement, TradeDesk’s CEO, Jeff Green, suggests that “Google is doubling down on its own properties, such as search and YouTube and adding bricks to the walls around those properties. The trade-off is that Google no longer values serving ads on the rest of the internet as much — certainly not as much as it once did. DoubleClick, the ad server and ad exchange, will be operating at a small disadvantage going forward. DV360 will likely be in a similar position. On the open internet, it will not use alternative identifiers to cookies, but everyone else will.” According to LiveRamp’s official response to Google’s announcement, it believes this will not change its integrations with Google search or YouTube. LiveRamp also mentions that Google isn’t suggesting the discontinued use of user-based identifiers within Chrome. Rather, it believes Google’s announcement reinforces that Chrome will enable publishers to use people-based identifiers in addition to FLoC. 5 WHAT WE THINK AN EQUAL AND OPPOSITE REACTION Similar to Newton’s third law of motion — with every action, there is an equal and opposite reaction. Google’s and Apple’s action to provide people with more transparency and control will be met with an equal and opposite reaction by advertisers and publishers wanting to ensure they can recognize adequate value in this new form of exchange. Advertisers will take back control of their data by building and maintaining private, first-party identity graphs. Advertisers will demand the right to understand how their paid media is working across all platforms. Unbiased, advertiser-owned, and privacy-compliant analytic solutions will become essential in driving accountability across walled gardens, independent ad exchanges, and private publisher partnerships. Publishers will start raising paywalls and asking people to pay for content rather than depending solely on advertisers to monetize, and they will begin to develop direct partnerships with advertisers as an alternative to depending on platforms and exchanges. SUMMARY OF KEY CONCLUSIONS • Google is still going to support advertiser’s first-party audiences for targeted personalized advertising on DV360 and Google Ads on Google owned inventory (YouTube, Google Search, etc.) through Google Customer Match, for which Acxiom is a partner. Google’s definition of “first-party” is data that is collected and consented on the advertiser’s own web properties. • Across third-party inventory, Google will support direct relationships between publishers and marketers. Decisioning will need to occur on the sell side, as DV360 will not make any real time decisions based off of these third-party ID signals. Ads Data Hub (ADH) will continue to support YouTube and is exploring additional features.

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