What happened

Ad tech stocks were skyrocketing today on news that Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) The Google Chrome web browser is reportedly delaying the deletion of third-party cookies that help advertisers track Internet users until 2023.

The initial decision to delete cookies, which Google had been preparing towards since 2019, was seen as negative for ad technology platforms, as it would be more difficult for them to track user activity and therefore create value for them. clients.

Among the winners on today’s news were The trade office (NASDAQ: TTD), which was up 14.2% as of 1:13 p.m. EDT; Criteo (NASDAQ: CRTO), which gained 11.2%; SEMRush Holdings (NYSE: SEMR), up 27.8%; and Magnite (NASDAQ: MGNI), which was 7.8% higher.

Image source: Getty Images.

So what

Ad tech stocks plunged in early March when Google reiterated it would remove third-party cookies and not replace them with other identifiers to track web users. Google made the decision as part of its Privacy Sandbox initiative to give users more control over their data, with the goal of replacing individual tracking with cohorts so that advertisers can follow groups of similar users rather than individuals. people.

The March announcement did not include a timeline, but in the past the company has said it is targeting January 2022 for the removal of third-party cookies. In this morning’s blog post, Google said, “While there is tremendous progress with this initiative, it has become clear that it takes more time in the ecosystem to get it right.” The company now plans to phase out third-party cookies over a three-month period starting in mid-2023.

The delay is naturally positive for the range of stocks which depend on cookies for advertising.

The Trade Desk, the largest store of advertising technology in the market and the leading platform on the demand side, states in its risk factors that if the use of third-party cookies is restricted, “our performance may decline and we may lose. advertisers or revenue. â€Partly in response to Google’s initiative, the company is developing an open-source identity framework it calls Unified ID 2.0 that can direct relevant ads without the use of third-party cookies.

Criteo, an online display advertising company, also has several strategies to make it less dependent on third-party cookies, including using more first-party data, directly from Google for example, and The Trade Desk’s Unified ID 2.0 protocol. .

The recent SEMRush IPO helps companies gain online visibility or track internet traffic and ad data. The company also recognizes that restrictions on third-party cookies are a risk, although it’s not clear how it plans to change when Google bans third-party cookies.

Finally, Magnite is a leading platform on the supply side, increasingly focused on connected TV, which is mainly outside the domain of Google. Magnite recognizes the risk of the third-party cookie model being disrupted, but says it could benefit from this change as a sell-side platform. This would empower publishers who are Magnite customers and have better access to user data.

Now what

Alphabet’s stock barely budged today, but Google’s announcement shows just how much power it wields in digital advertising. While the news is apparently good for ad tech companies, it also shows that many of them are subject to the whims of the tech giants who control much of the online advertising ecosystem.

It should also be remembered that the delay does not eliminate the threat of the disappearance of third-party cookies. Google still intends to do this, just later than expected.

This gives those companies, which have been the darlings of growth stocks over the past year, more time to plan for alternative advertising identifiers. As the Trade Desk’s development of UID 2.0 shows, they seem to be on the right track to do so.

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Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Jeremy Bowman owns shares of Magnite, Inc and The Trade Desk. The Motley Fool owns shares and recommends Alphabet (A shares), Alphabet (C shares), Magnite, Inc and The Trade Desk. The Motley Fool recommends Criteo. The Motley Fool has a disclosure policy.

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