Today Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google announced new privacy-focused changes to how it sells ads. While these changes are not causing major moves in GOOGL, ripple effects could disrupt business for competitors in the digital ads world. So what do you need to know about the Google ad tracking changes? And most importantly, will Google still be watching you?
The heart of the news is that Google said on Wednesday it will not invest in or otherwise use technologies that identify web users as they move from site to site. More specifically, this means it will stop selling ads based on any individual user’s browsing history across multiple websites.
This comes after Google announced its plan to phase out third-party cookies, but it takes it a step further. Some experts were wondering if the company would introduce other means of tracking individuals. However, with lawmakers and consumers pushing for greater internet privacy, it seems that Google is looking for a middle ground. As Ashley Gold and Sara Fischer wrote for Axios this morning, the Google ad tracking changes come on the same day that Virginia Gov. Ralph Northam signed a law that essentially allows internet users to opt out of targeted advertising.
So while it sounds like Google is stepping more into alignment with what consumers and lawmakers want, will it still be watching you?
The answer is… sort of. As Sam Schechner and Keach Hagey wrote for the Wall Street Journal, Google will have a compromise to still deliver ads that work. We all know how powerful a well-targeted ad is. My wallet knows. Google knows, and so it is going to introduce a so-called “privacy sandbox” to still harness those ads while talking the privacy talk.
Instead of tracking individuals from site to site, this privacy sandbox will allow advertisers to target buckets of users with similar interests. How similar remains to be seen.
Google Ad Tracking Changes 2021: What Comes Next?
What impacts from the Google ad tracking changes should investors be watching for? Perhaps the biggest is the blowback for other digital ad stocks. These equities already struggled at the start of the Covid-19 pandemic as traditional advertisers pulled back. Now, any pressure by Google to rethink the privacy focus could cause frustration and trigger backlash from its competitors. For investors, these companies include Facebook (NASDAQ:FB), Snap (NYSE:SNAP), Roku (NASDAQ:ROKU) and The Trade Desk (NASDAQ:TTD).
Another thing to watch is just how much of a step toward privacy this really is. Facebook actually leaned into personal ads last week, launching the “Good Ideas Deserve to be Found” campaign. In short, Facebook is trying to convince users that targeted ads are good for small businesses. Other ad sellers are leaning into the fact that some consumers like the personal experience of targeted ads. And there is a chance the Google privacy sandbox still allows advertisers great insight into our browsing habits.
Keep a close eye on this news, and the ripple effects it could have. Don’t take your tin foil hat off just yet.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.