• by Laurie Sullivan  @lauriesullivan, June 28, 2024

The IAB Tech Lab’s Privacy Sandbox Task Force issued its final report of the Fit Gap Analysis, and its conclusions were no more reassuring for the digital media industry or Google than when it released its report in February.

The task force assembled to analyze the implementation still believe that “Privacy Sandbox will restrict the digital media industry's ability to deliver relevant, effective advertising, placing smaller media companies and brands at significant risk. The lack of functionality will throttle their ability to compete, ultimately impacting the industry’s growth.”

Anthony Katsur, CEO of IAB Tech Lab, in January called the endeavor a “massive sea-change,” and a “radical departure from the past three decades” in the way the media industry serves and targets advertisements to consumers.

All this as Emarketer estimates global digital ad spend will reach $767.12 billion next year.

The Fit Gap analysis originally opened for public comment in February 6, 2024 and closed March 22, 2024. The changes were documented.

“We are encouraged that the Tech Lab is turning its Privacy Sandbox focus toward discussing new capabilities and sharing integration guidance with the industry, with input from Chrome,” said a Google spokesperson. “The Chrome team remains committed to its goal of collaborating with the industry, including many IAB and Tech Lab members, who are working to create innovative solutions using the building blocks provided by Privacy Sandbox."

The Google spokesperson said companies are building with Privacy Sandbox and other privacy technologies, but it’s not possible to predict publisher performance based on effectiveness of one buying platform, as publishers typically work with dozens of demand sources.

“We expect performance numbers to evolve, and they currently don’t reflect how the overall ecosystem will perform in a true marketplace - which won’t exist until adoption expands alongside third-party cookieless traffic,” the spokesperson said.

Criteo CPO Todd Parsons in a blog post shared details on the testing results and recommendations.

“We believe the Privacy Sandbox has the potential to be a sustainable alternative to third-party cookies, provided our requests are satisfied, a disciplined rollout schedule is maintained, and a clear roadmap is provided, he wrote, saying that the company remains committed to continue helping Google close the gaps.

Criteo’s Privacy Sandbox Market Testing, the basis for the company's final report to the CMA, was conducted over eight consecutive weeks between March 18, and May 12. Prior to testing, Criteo adapted its entire advertising infrastructure to operate in this new environment, which enabled analysts to understand the impact to publisher ad revenue if third-party cookies were deprecated today.

Three groups were tested, and the company highlights four key findings:

• If third-party cookies were deprecated today and the Privacy Sandbox released in its current state, Criteo expects publisher revenue to decrease by an average of 60% for those that have fully integrated the Privacy Sandbox. Publisher adoption overall remains below 55%.
• The current version of the Privacy Sandbox also creates an advantage for Google's advertising business. Testing showed that Google Ad Manager (GAM) captured the majority of spend in the treatment population, an increase in market share of 360%: from 23% to 83%. This demonstrates a significant increase in publisher reliance on Google for ad revenue.
• Criteo observed a median increase of more than 100% latency in publisher ad rendering on Privacy Sandbox traffic. Latency negatively impacts consumer experience due to long page load times. Publisher revenue is likewise impacted due to degraded viewability, click-through rates and price per ad slot.
• Results from various industry participants may vary as testing methodologies differ between companies. Criteo also identified four potential biases that, if not mitigated, may distort test results to erroneously show more favorable performance of the Privacy Sandbox.

Complications have repeatedly delayed Google's industrywide rollouts, despite the company providing tools such as Topics, which assigns an interest group to individuals without identifying them, and sidetracking the implementation to 1% of Chrome users globally.

U.K. regulators also had warned not to implement the tools until anticompetitive concerns have been resolved.

Privacy Sandbox also provides a way for consumers to opt-out similar to what Apple developed for iOS.

In April, the UK's Competition and Markets Authority released its quarterly report on Privacy Sandbox, detailing further information about Google's plans for third-party cookie deprecation.

It detailed many issues in the 99-page report, listing about 80 issues that it believes must be resolved.

Most were technical, and involve functions of specific Sandbox APIs and how Google had planned to reduce its competitive advantage based on its processes and platforms. Around that time, Google had announced another delay. The timeline has changed many times.

The IAB Tech Lab working group's report and full analysis states that “while the Privacy Sandbox removes many Chrome and Android features which have been leveraged by publishers and advertisers to build a thriving content monetization ecosystem, it introduces a new set of features aimed to fill the gap in functionality” that could create new challenges.