Google’s latest cookie news is for top ad tech stocks

Analysts are paying close attention to Google’s latest guidelines on its promise not to use technology to track individuals on the Internet. Some analysts say their views have not changed. But others at BMO have downgraded an ad tech stock, noting that “it’s too hot in the kitchen.”

Google said in a blog post on Wednesday that it would only use “privacy-protective technologies” that rely on methods such as anonymity or data collection after supporting cookies. Cookies are small pieces of code that websites deliver to a visitor’s browser and stay with it. They are used to target ads to users on multiple sites as the person visits other sites and to see how they perform. Google announced plans to support third-party cookies in January 2020, developing much of the digital advertising ecosystem. , In its Chrome browser in two years.

The blog post raises questions about the future of ad tech players’ initiatives in the industry, who are working on a way to balance customer privacy while maintaining personalization in advertising when they can’t use cookies.

Following the announcement, here’s what analysts say about the shakeout for public advertising tech companies, including Google:

Analysts at Bank of America said Thursday that Google’s comments suggest that “app developers and publishers must move away from all personal identification options, which could make Google’s ‘privacy sandbox’ capabilities more valuable in the industry.”

Analysts cite ounce media figures, which estimate that 40% of the money flowing from advertisers to publishers on the open Internet goes through Google’s advertising buying tools.

Keybank analysts said their real question was whether Google plans to ban alternative identifiers from Google products. They said such a move would “clearly favor Google on the open Internet, and would also be an interesting dilemma for regulators – how – to balance consumer privacy against market power?”

Google said Wednesday that its blog post is about how its own advertising products will work, and that it will not restrict what could happen to Chrome by third parties. The company said it would not use Unified ID 2.0 or LiveRamp ATS, two tools that it says would help target privacy-conscious ads more, but would not specifically talk about any of the initiatives. There is still uncertainty about whether Google will ban that activity on Chrome in the future.

“In our view, the inherent problem in current efforts to regulate Internet companies is that large companies are strengthened by efforts to provide more privacy,” said Keybank analysts. “Unless the trade-off between privacy and competition is taken into account, we suspect that regulation reduces competition.”

Query query analysts said they believe the move “more clearly defines the role that open internet ad tech companies such as Trade Desk, Live Ramp and Cryto Play will play on Google advertising online advertising.”

Query analysts say it is putting Google in a different segment of the ad-targeted business – what it can afford to scale, and the need for increased government scrutiny of its privacy concerns and its methods. “But it still raises the walls around its garden, because any advertiser will have to work with Google’s ad-providing technology, it will have to adopt Google’s new API-based protocol – which targets customers in a very different way.”

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

Keybank analysts said they would fight for changes to Google’s Chrome browser if Trade Desk banned the use of alternative identifiers.

Unified ID 2.0 was created by Trade Desk, a framework that relies on hash and encrypted email addresses from consenting customers. The trade desk paints the identifier as the best alternative to cookies that better explain to consumers how advertising is related to the content and experiences they read or use on the Internet. Trade Desk handed over control of Unified ID 2.0 to a nonprofit called Prebid in February.

“In short, Unified ID 2.0 puts privacy in the hands of the consumer, which is consistent with privacy goals and open internet value exchange,” Keybank analysts said. “If Google is able to ban alternative IDOs, Google has become even more powerful in the advertising industry.”

MacQuery analysts said Wednesday that the ad appears to restrict TradeDesk’s ability to purchase ads using IDs on Google’s exchange or supply-side platforms.

“… but it only encourages TTD to work directly and with broad-spectrum publishers of others. [supply-side platforms] Through a private marketplace transaction, “they wrote.” We expect Unified ID 2.0 to be evolving as a device- and with a browser-agnostic industry standard [opt-in] And consent between publishers and consumers and TTD will continue to leverage the status of the largest independent DSP ever to help advertisers reach customers on the open web outside of Google. ”

A trade desk spokesman said in a statement that “there is significant industry focus on building a new identity settlement that preserves the value of relevant advertising while protecting consumer privacy.”

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

Trade Desk stock was down 5% on Thursday morning.

The BMO downgraded the live ramp on Thursday in a note titled “Too hot in the kitchen.”

Analysts said they believe Google’s confirmation that it will not integrate “alternative identifiers” will re-evaluate how ecosystem players move forward this year, as revitalization could slow the sales cycle.

In late October, LiveRamp said Unified ID 2.0 would be available to publishers through its platform, which says advertisers help target real people rather than cookie-based profiles or devices. Live Ramp has what it calls a “” certified traffic solution, “which says that consumers can choose to gain control over their data. On the other hand, brands and publishers can tap that data. It is the company’s compromise to deal with.

“We think more clarity and revenue re-acceleration is possible in 2022 (when Google completes its cookie roadmap with other things), but visibility is limited today,” BMO analysts wrote. They said the industry is still waiting for Google to provide more clarity on how it will treat alternative options.

BMO analysts said they believe the impact of near-term earnings on Live Ramp is potentially limited, but warned of the low probability of the above estimates improving.

Analysts said the kind of announcement made by Google on Wednesday usually causes stock volatility at the risk of headlines. “But we believe this is yet another disorder in the evolving advertising technology landscape, while the outlook for TTD, RAMP and CRTO has not changed more or less.”

In a blog post responding to the news, LiveRamp said Google’s announcement is in line with what it is advocating. Liveramp argued that its ATS solution combines ideas of first-party relationships with customers, transparency and customer control.

“In short – marketers will be able to purchase people-based inventory using the Live amp on the DV360,” the Post says. The DV360 is a Google ad tech product.

Liveramp stock was down 7.7% on Thursday morning.

Ad tech company Critio said in a statement that Google’s post on Wednesday “does not in any way change or affect Critio’s plans and roadmap.”

“As we have said before, we continue to invest in our first-party media network, as well as in group-based and contextual advertising, which allows marketers to effectively connect with their customers in a privacy-secure and consensual manner.” The spokesman said. “User permission and consent is at the core of our settlement.”

In late October, Crito announced its involvement in collaboration with Unified ID 2.0. The company said it would provide a sign-on solution and help develop a “transparency portal” that gives customers more control over their advertising experience.

Query Query analysts said that Pay’s view on Crito has remained the same since Google’s announcement, noting that Crito is an active contributor to Google’s privacy initiative.

BMO analysts raised their target price from ડ 25 to 45 45 and said they were more confident in Cryto’s transformation efforts as it replaced its re-creation-heavy business.

“For CRTOs, we expect that the basic use case for re-targeting will continue to draw investors’ questions, ”BMO analysts said. “But we believe that CRTO is developing alternative technologies to effectively reach customers who have previously expressed interest in advertiser products.”

Going forward, BMO analysts said the changes may need to shift the goal of messaging a group of users showing similar interests in the advertiser’s product.

“When combined with strong machine learning, we believe that CRTO can show improvement in its core business of helping advertisers to remarket interested customers,” he wrote.

Cryto stock was down 5.4% on Thursday morning.

CNBC Michael Bloom Contributed report.