The end of Google cookies does not kill advertising technology actions

Sundar Pichai, senior vice president of Android, Chrome and Apps for Google Inc., speaks during the annual Google I / O Developer Conference in San Francisco, California, USA. UU., Wednesday, June 25, 2014.

David Paul Morris | Bloomberg | fake images

Google’s announcement on Tuesday that third-party cookie support would end hit Criteo’s actions and weighed on the actions of other advertising technology providers because of the concern that they will have less data to use to target and redirect ads to consumers.

Advertisers and ad networks add cookies, or small code snippets, to browsers so they can track the sites that consumers visit, creating profiles that help them target messages and campaigns. With Google facing increasing pressure from regulators to reinforce privacy protections, the company now plans to eliminate third-party cookies in its Chrome browser within two years.

While the announcement was felt immediately among investors in advertising technology companies, analysts responded throughout Tuesday and Wednesday, noting that the industry was expecting this type of exchange from Google, and the relevant companies have been preparing for a transition . They also noted that two years is a sufficient amount of time to allow more companies that rely on cookies to diversify and collect data in other ways.

That does not mean it will be easy, especially for companies that rely more and more on the data of the most popular websites and online publishers.

This is what analysts had to say about some of the biggest advertising technology companies after the Google ad.

Criteo

Criteo fell 16% on Tuesday, closing at a record low, before dropping another 7% on Wednesday. It lost more than 40% in the last year, which brought the market capitalization of the French company to around $ 900 million.

In a statement on its website, Criteo said it is diversifying its identity solutions to work beyond third-party cookies and said a “significant and growing participation” is no longer based on that technology.

Citigroup analysts called the drop in stocks “exaggerated” in a note to customers and said Chrome’s changes “are not necessarily bad for advertising technology,” citing the Google blog post, which indicates that it has the intention to work with players in the ecosystem to find an alternative solution while eliminating the use of cookies.

“In our opinion, the biggest advertising technology players can probably participate and weather any potential change in 2 years,” they wrote. It also “has the potential to accelerate consolidation within the ecosystem as smaller players struggle to adapt.”

Keybanc analysts, who have a neutral rating on the stock, are more skeptical, claiming that uncertainty about how Google will allow targeting and reorientation in Chrome will delay actions.

“We still believe that the most likely outcome includes an identifier specially designed for advertisers similar to what exists in the Apple and Google application ecosystems,” they wrote. “However, this will remain unclear in the foreseeable future, suggesting that the risk for Criteo’s actions will likely persist.”

The potential inconvenience is dramatic, they wrote, because “if Google moves away completely from individualized guidance, Criteo’s business could be seriously damaged.”

SunTrust analysts Robinson Humphrey, who recommend buying Criteo shares, underlined that uncertainty in a note, writing that “the announcement prolongs the uncertainty (as opposed to resolving it) that we cannot resolve because we do not know and do not know for some time how CRTO solution / effectiveness will be affected by the changes. “

Liveramp

LiveRamp, which helps advertisers identify consumers across all devices and channels, fell 3.2% on Tuesday.

Morgan Stanley analysts wrote Wednesday that they saw the ad “as at least a net and potentially positive neutral” for LiveRamp.

Analysts, who recommend buying the shares, wrote that a move towards less dependence on third-party cookies “has long been valued in RAMP actions,” and could help LiveRamp promote its product that allows inventory purchase. No third party cookies.

“More than anything, we see today’s announcement as a broader message for the advertising industry for greater collaboration in creating a [privacy-centric] web, where do we see [LiveRamp] fitting very well, “they wrote.

Jeff Green, CEO of The Trade Desk

Scott Mlyn | CNBC

The commercial desk

The Trade Desk, which is working on new approaches to generate relevant advertising without having personally identifiable information about consumers, fell 1.4% on Tuesday.

Citigroup analysts wrote that the company “did not seem to be affected by the news and was largely down with its peer group” at the close of the market.

Trade Desk has been the only advertising technology company that has exploded in public markets in recent years, rising more than 480% in the last two years to a market capitalization of about $ 13 billion.

Dave Pickles, the company’s founder and chief technology officer, wrote in a blog post on Wednesday that cookies are an “archaic technology” and argued that the relevant advertising will remain.

“Most of the ad impressions that The Trade Desk processes today are not based on cookies,” he wrote. “This is because the fastest growing segments of the industry, such as the burgeoning connected television market, rely on newer identity solutions. Advertisers on The Trade Desk platform can now operate effectively in an environment no cookies. “

As for cookies, “We do not use this information today, and we have never used it,” he wrote.

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