33% Decline In CPMs Seen In Sandbox-Enabled Impressions

Index Exchange product team members last week outlined the reasons they believe Google's Privacy Sandbox in its current form poses "major risks to publishers and the overall programmatic ecosystem."

Supply-side platform findings from tests of Protected Audience (PA) and Topics Privacy Sandbox APIs were shared with its customers and partners, as well as with Google Chrome and the UK Competition and Markets Authority (CMA).

The data revealed in a blog post suggests millions of Sandbox impressions can be purchased and delivered, but questions and issues must be addressed.

For example, data on attribution or measurement does not exist -- areas that the company hopes to evaluate with partners in the future.



And while Google’s delayed plans to fully deprecate third-party cookies give advertisers time to continue tests and for Google to address concerns, the effect on CPMs surfaced as the issue of greatest concern. 

“We are encouraged to see companies building with the Privacy Sandbox and other privacy enhancing technologies, but it’s not possible to predict publisher performance based on effectiveness of a single buying platform, as publishers typically work with dozens of demand sources,” a Google spokesperson said in an email sent in June to address the IAB findings.

The spokesperson wrote that Google expects performance numbers to evolve, and they currently don’t reflect how the overall ecosystem will perform in a true marketplace -- which will nor exist until adoption expands alongside third-party cookieless traffic.

“We look forward to the ecosystem continuing to share valuable insights and feature requests for Chrome and the industry,” he wrote.

Latency has been shown to be a significant issue, with 28% more latency for Privacy Sandbox auctions compared to others. 

This latency is primarily due to the requirement for Google to be the top Seller in protective audience auctions, which in turn requires all non-Google bids to be processed by Google Ad Manager (GAM) before an auction can proceed. All auction participants must also wait for Google to finalize the winning bid.

Latency could be reduced, Index Exchange said, by allowing other publishers and ad exchanges to compete directly in a client-side auction via prebid, creating a more level playing field and speeding up web transactions significantly. 

Most worrisome, however, is the 33% decline in CPMs on Sandbox-enabled impressions compared with impressions where a third-party cookie was present -- compared with 36% lower CPMs in impressions without both Sandbox and cookies.

While Sandbox APIs did help fuel about a 3% increase, they did not close the gap with the available features set.

It appears that the level of adoption will not prevent significant revenue consequences for publishers, according to Index Exchange.

Others have also said that with Privacy Sandbox current limitations it may yet be an effective tool for general use, but may become too costly for technology companies to implement.

There are major risks to publishers, and the overall programmatic ecosystem the industry must address to make it easier and more efficient to scale. 

Index Exchange has been collecting performance data around the Topics API -- the topics most often seen.

The company in April released a Topics reporting feature to share insights, but it's still unclear how useful observed topics are to marketers to inform bidding or optimize campaigns.

In a study, Adobe found that brands have become less reliant on cookies, with 49% saying their company's marketing strategy still depends on this data, compared with 75% in 2022. Still, only 60% of brands said they feel "mostly" or “very” prepared for the deprecation of third-party cookies, down from 78% in 2022.

More than one in three marketers also said the deprecation of third-party cookies has negatively impacted the company's ability to track, target and measure consumer engagement, which coincides with Index Exchange findings.

With brands relying less on third-party cookies but also feeling less prepared, there are unmet needs from organizations and technologies.

Adobe conducted the survey, fielding about 2,841 marketers in the U.S., Australia, France, Germany, India, Japan and the U.K. to learn more about how company leaders are preparing for success in a world without third-party cookies.

The study also found that 78% of brands have adopted a customer data platform (CDP).

While building a first-party data strategy often is successful, scale can be limited. Brands still need the ability to execute key use cases for which they relied on third-party cookies, such as discovering new audiences for prospecting and acquisition, and enriching data for increased personalization. 

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