Google is going forward with sweeping changes to how companies track users online—moves that have been years in the making. Advertisers still aren’t ready.
The changes, among the biggest in the history of the $600 billion-a-year online ad industry, center on the use of cookies, technology that logs the activity of internet users across websites so that advertisers can target them with relevant ads.
Starting Thursday, Google will start a limited test that will restrict cookies for 1% of the people who use its Chrome browser, which is by far the world’s most popular. By year’s end, Google plans to eliminate cookies for all Chrome users.
Marketers, advertising technology companies and web publishers are workingto ensure their businesses can weather the transition. They said Google, which has introduced software tools designed to help replace cookies, hasn’t done enough to prepare the market.
The industry is nowhere near ready, said Anthony Katsur, chief executive of the IAB Tech Lab, an ad-tech industry trade group that is funded by its members including Google.
He said Google should give people more time to test its replacement technologies before eliminating cookies and that Google’s planned timing for the full ban—near the crucial fourth-quarter advertising blitz—would be brutal for the industry.
“The timing remains poor. Launching it during the industry’s greatest revenue-generating part of the year is just a terrible decision,” Katsur said.
Google executives said their efforts to eliminate cookies involved extensive collaboration with the internet ecosystem. Many in the advertising industry have urged Google to push ahead with the changes following previous delays in the process, they said.
Google’s tools for replacing cookies are intended to help the industry meet business goals while respecting consumer privacy, they said.
“We’re confident in the ability for the industry to navigate the transition,” said Anthony Chavez, a Google vice president overseeing the changes.
Cookies have been around since the early days of the web. Google’s changes target third-party cookies the online ad industry places on websites to track users around the internet.
For instance, a clothing manufacturer can use the technology to target someone reading articles on a news outlet’s website after that person clicked a competitor’s ad on another site. Google’s changes don’t affect the kinds of cookies sites use to store basic information such as login details.
Though Google’s efforts will only affect a fraction of Chrome users at first, they could eventually mean billions of internet users see fewer ads that appear to closely match their online browsing habits. Consumer advocates have argued third-party cookies invade user privacy because they can be used to compile detailed profiles, including sensitive information such as a person’s medical history.
Late last decade, Mozilla’s Firefox and Apple’s Safari browsers began placing limits on tracking cookies because of privacy concerns. Google followed in 2020 with plans to banish them from Chrome but has delayed the process several times to address complaints from the ad industry and privacy advocates.
Google’s plans have faced vocal resistance from ad brokers that rely on cookies to help marketers target customers and track the effectiveness of their spending. Some of them have also raised concerns that the changes will reinforce the tech company’s dominance by centralizing more critical functions in the company’s browser technology.
Chrome accounts for 65% of internet traffic worldwide, making it three times as popular as Safari, the next most widely used browser, according to Statcounter data.
Google said it promised not to give any preferential treatment to the company’s own products as part of an agreement with the U.K.’s Competition and Markets Authority, which is overseeing the plans to eliminate cookies. The company has said its agreement with the CMA will be applied globally.
Major ad-tech companies have also complained to the CMA and Google that its proposals contain significant gaps for important features such as video and are technically difficult to implement, said people familiar with the discussions.
Those issues have made it difficult for publishers, brokers and ad buyers to perform the testing required to prepare for the elimination of cookies, the people said. Google’s efforts are part of a broader project named Privacy Sandbox that also spans Android, its widely used mobile software.
Google described the changes this month as a limited test before it moves forward with eliminating cookies. The CMA has the power to effectively veto the plans if it concludes they will harm other businesses.
Some industry executives said Google’s lucrative search advertising business stands to benefit from the elimination of cookies because it doesn’t rely as heavily on them, making it a safer destination for marketers during the transition.
“As a result, Privacy Sandbox likely has very few winners outside of Google, if there are any at all,” Bill Simmons, vice president of product at Trade Desk, one of the largest platforms for digital ad-buyers, wrote last month. He wrote that Google’s elimination of cookies would likely depress the overall value of online advertising.
Google executives said the company’s primary goal is to improve user privacy while providing as much value to advertisers as possible. The changes will require some companies to rework their existing products or invent new ones, they said.
“This is not a static, point-in-time picture,” Google’s Chavez said. “The ecosystem contains thousands of companies, and they’ll continue to adapt and optimize over time.”
A spokeswoman for the CMA said it “will continue to engage with industry participants and others that could be affected by Privacy Sandbox changes to ensure that their views are considered.”
Some advertising executives said they were relieved Google was pushing ahead with the changes after it delayed the process twice. In late 2023, Google began widely allowing others in the industry to simulate what it would look like if cookies were eliminated.
“It was hot for a minute, and then things kind of cooled off,” said Evelyn Mitchell-Wolf, a senior analyst at Insider Intelligence, which tracks the online ad industry. “Advertisers are only just starting to pick up those conversations” again, she said.
Other ad executives said Google’s schedule hasn’t given the industry enough time to prepare. Some predict the changes will cause disappointing results for both advertisers and ad-supported websites, as marketers might find it more difficult to target consumers, leading to depressed ad prices. They point to the way ad prices fell in Firefox and Safari after those browsers restricted cookies.
Criteo, an ad-tech vendor and early tester of Google’s solutions, found third-party cookies were five times more effective at targeting users than one of Google’s proposed replacements named Topics, according to a November 2022 report published on its corporate blog. A Google spokesman said it had made changes to Topics since the Criteo study.
Jamie Seltzer, an executive vice president at ad agency Havas Media, said its tests with advertisers have shown a mix of alternatives to cookies can produce similar or better results most of the time. It is difficult to tell how well they will work in higher volumes until Google moves forward with its plans, she added.
“Many of our clients are waiting to see where things go and how things evolve,” Seltzer said.
Write to Miles Kruppa at miles.kruppa@wsj.com and Patience Haggin at patience.haggin@wsj.com
