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Why Ad Tech Stocks Rallied This Week

By Evan Niu, CFA - Updated Jun 25, 2021 at 2:46PM

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Google pushes back its timeline for blocking third-party cookies in Chrome, giving the advertising industry more time to prepare for the changes.

What happened

Shares of advertising technology companies rallied this week after Alphabet (GOOG -1.79%) (GOOGL -1.77%) subsidiary Google announced it would delay the rollout of a policy change regarding third-party cookies. Google had said in January 2020 that it would block third-party cookies in Chrome, the most popular internet browser in the world. The change was originally planned to take place by around 2022, but Google has now pushed back the timeline to 2023, which is good news for smaller advertising companies.

As of 11:45 a.m. EDT on Friday, here's how much three leading ad tech stocks had gained for the week:

  • Criteo (CRTO -2.17%) was up 12%
  • The Trade Desk (TTD -4.84%) was up 25%
  • Magnite (MGNI -4.71%) was up 19%
Stock chart going up

Image source: Getty Images.

So what

Google's policy of blocking third-party cookies comes as privacy concerns steadily grow throughout the advertising industry. Aware of the evolving consumer perception, Google is attempting to position itself as more privacy-friendly -- the company framed the initial decision as part of building "a more private web" -- even though eliminating third-party cookies only strengthens its position in the advertising market since it does not rely on third-party cookies.

The change will have monumental ripple effects throughout the advertising sector. Recognizing the magnitude of the impacts, Google is acknowledging that more time is needed to fully evaluate all of the consequences.

"In order to [implement the change], we need to move at a responsible pace," Google wrote in a blog post on Thursday. "This will allow sufficient time for public discussion on the right solutions, continued engagement with regulators, and for publishers and the advertising industry to migrate their services."

Now what

Ad tech companies have already been preparing for the change but welcomed the announcement nonetheless.

"We appreciate Google's decision to create more time for the industry to prepare, but the extended deadline does not in any way change or impact Criteo's strategy," Criteo said in a statement. "We continue to build products that will enable our customers to reach and engage their audiences without third-party identifiers."

The Trade Desk CEO Jeff Green has been arguing that cookies will simply be replaced by "something else that enables targeted advertising," including the Unified ID 2.0 technology that the company has been developing in recent years.

"It's clear that the privacy technology of the open internet, including [connected TV], needs to evolve in a way that gives the consumer more control," The Trade Desk chief technology officer Dave Pickles said in the company's newsletter. "Let's build technology that is understandable, then let customers decide how they want to use it."

Magnite did not respond immediately to the news but had previously expressed confidence in its ability to navigate the new landscape. On the earnings call last month, CEO Michael Barrett said, "The elimination of third-party cookies makes our role significantly more important than in the past."

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of 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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Stocks Mentioned

The Trade Desk Stock Quote
The Trade Desk
$70.17 (-4.84%) $-3.57
Alphabet Inc. Stock Quote
Alphabet Inc.
$119.55 (-1.77%) $-2.15
Criteo S.A. Stock Quote
Criteo S.A.
$27.46 (-2.17%) $0.61
Alphabet Inc. Stock Quote
Alphabet Inc.
$120.32 (-1.79%) $-2.19
Magnite, Inc. Stock Quote
Magnite, Inc.
$9.30 (-4.71%) $0.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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