Analyst Note| Ali Mogharabi |
Similar to what we anticipated in our Feb. 3 note, Alphabet’s Google announced that after third-party cookies are phased out in 2022, it will not accept any substitutes that track, identify, and target individuals with ads on its Chrome browser. Instead, the firm will put users into groups and create only group identifiers based on user interests, which then can be used by advertisers to target. While contextual and group targeting may lower the effectiveness of ads, it will address some data privacy concerns, which bodes well for the firm in the long run, in our view. However, this will not help Alphabet with regard to antitrust issues, as we think it will make it more difficult for ad-tech competitors to tap into Google’s platform. We think the move may negatively affect some ad-tech firms and have a positive effect on ad holding companies and their agencies, as well as larger brand advertisers.