18 Dec The Continued Rise of Walled Gardens, and How Google Put the Final Nail in the Criteo Coffin
Google Marketing Live is a yearly event hosted in San Francisco, where marketers from all kinds of different backgrounds learn about the latest updates and marketing products offered by Google.
Every year Google’s presenters focus on different topics, but in the world of ever-emerging data-privacy regulations, there is one topic that remains at the top of every discussion throughout the entire event: user privacy.
It’s a topic that is buzzworthy in the AdTech space. In fact, AdTech vendors are keenly aware that consumers want to control who accesses their data- keeping users in the driver’s seat, no matter how AdTech vendors actually collect and use the data.
The topic of user privacy started to gain traction in 2017 when Apple announced the first version of Intelligent Tracking Prevention or ITP. After that, Facebook dealt with several privacy scandals, which cost the world’s largest social network millions of dollars in market capitalization.
Soon after that, we saw the appearance of new consumer-first platforms, such as Brave Browser, a free and open-source web browser that blocks ads and website trackers. So how does the AdTech world adapt the constant consumer-led push for more control and privacy over their data, and why is it relevant today?
Google is the most significant player not only in the AdTech market, but also in the browser market. In April 2019, they announced user-privacy related changes to the Chrome browser at their annual I/O developer conference, just one week before Google Marketing Live 2019. The update changed the way the Chrome browser handles cookies and addresses fingerprinting and now allows users to block or clear third-party cookies easily.
They also announced a browser extension that shows more information about parties involved in ad transactions and tracking.
These kinds of user-privacy led updates to create a new reality for marketers. Google makes 90% of its profit from advertising and would be the last company to narrow its revenue stream proactively. Instead, Google makes the strategic move to capitalize on the topic of user-privacy concerns with the goal of out-pacing advertising platforms for the open internet, like Criteo. And they do with the right AdTech.
Google claims that advertisers and digital marketers should aim for the non-personalized world and think back to the 2000s when contextual ads were the primary tool used to reach customers, but Google is one of a few platforms offering retargeting capabilities.
The truth? Google is not the third party on your website, even when it may seem like it.
Let’s create an example to illustrate what we mean:
A user (we’ll call her Ashley) uses a Mac with the Safari browser and visits a website (SimpleWebsite.com). She does not submit any information like her email or phone number, so the only way for marketers to retarget her is from her cookies.
Next, the SimpleWebsite.com team uses a Criteo pixel on their website, which stores the cookie in the Criteo.com bucket on Ashley’s Mac. While Ashley never visited Criteo.com, the cookie is considered a third-party cookie. Criteo now has 24 hours to retarget Ashley before Apple blocks their cookie per user-privacy, with the only exception being if she visits Criteo.com in the next 24 hours. But realistically she never would.
In simple terms, this example shows how ITP works. So it is no surprise Criteo stock went down on the same day Safai announced Safari 2.1.
Criteo stocks also fell after they announced lower revenue due to changes in the retargeting space.
After all of these changes, Criteo traded at around $20. 2.5 times lower than in previous years.
Let’s get back to our example. While Ashley is never going to visit Criteo.com, she is extremely likely to visit one of Google’s properties.
SimpleWebsite.com may have analytics.google.com or tagmanager.google.com installed on their website. Or Ashley may have a Gmail account (mail.google.com), an Android phone, or even a Google Pixel. She might also use maps.google.com on her commute, and YouTube to share a funny video while she is at happy hour with friends.
All of those combined properties allow Google to sit uniquely in the first party bucket. They not only keep their cookies, but actually enhance the data that Ashley left on SimpleWebsite.com with her anonymized Google searches, YouTube watch history, and billions of other digital breadcrumbs.
So it’s no surprise that Google focused heavily on finding a solution to ITP when Apple first announced it, and they also pushed similar updates to Chrome. Chrome and Safari combined makeup 73% of the US consumer browser market. And if other systems cannot support those two browsers, they become irrelevant. Something that happened to Criteo, exactly.
But there’s an even bigger question here about the monopolies sitting at all corners of the AdTech industry, and the walled-gardens they create.
Advertisers, publishers, and even consumers want the best of both worlds. The advertisers and publishers want to make money and provide better user experiences at a lower cost, while consumers want to protect their privacy while still enjoying the advertiser experience.
Publishers need to stay relevant and cheap or even free for consumers, but they also need to be paid by advertisers for the inventory and data they provide.
On the other hand, Advertisers, need access to targeting and data controls, driving ROI across screens, devices, and users.
And the consumer? They need to feel both safe and in control over the data choose to share, which ultimately allows them to see more personally relevant ads.
Few companies give every one of the above stakeholders everything they want. Who are they? Facebook, Google, and Amazon. Walled Gardens continue to grow, by design. And marketers across the industry need to be ready for it.
At DELVE, we stay up to date on the latest industry news, including data governance, and data privacy regulation. More importantly, our team commits to best practices that align with all current data privacy regulations. To learn more about our team of experts in data privacy compliant digital marketing, visit our team page here.