The Sandbox's Death Meets Agentic Fever

I’m Alan Chapell. I’ve been working at the intersection of privacy, competition, advertising, and music for decades, and I’m now a regulatory analyst writing for The Monopoly Report. Find me at Marketecture Live as Rob Leathern and I explain why FIRST-PARTY DATA IS BS!

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 This week, I welcome Connecticut State Senator James Maroney to the pod. The Senator and I talk about how and why he got involved in advocating for a privacy law in Connecticut, how those efforts were impacted by lobbying efforts, and how different states are collaborating to create the current U.S. state privacy and AI patchwork.

What’s the future of ad tech without the Sandbox?

In what most are describing as a complete non-event, Google announced last week that it’s all but shuttering the Privacy Sandbox initiative — on the same day that the UK Competition and Markets Authority closed the Sandbox case file. The responses from the ads space to this news have ranged from sentimental (i.e., happy for what we learned and friends made along the way) to snarky (i.e., Lucy pulling the football again). But the most noteworthy response to all this Google-imposed fun has been some flavor of “meh… we’ve got other things to worry about.”

It seems almost poetic that the AdCP agentic advertising effort was announced the very week the Sandbox sang its swan song. I’ll have more to say on AdCP down the road, but I can only hope that AdCP is evaluated via a more rational, fact-based lens than the Sandbox was by many around here.

Winners and Losers

I’m not going to write an entire piece on winners and losers, but I’ll say this: The only winner as far as I can see was Google. It’s great to be so rich and powerful that you can literally afford to burn money in order to force your competitors to use up so much of their time and resources. And to boot, they’ve managed to normalize the browser as an ad platform.

And the losers?

1. Privacy - Too many companies in the ads space are exactly where they were in 2019 when it comes to privacy. Sure, there are a number of engineers (though mostly at big companies) who have made incremental discoveries. But overall, the Sandbox effort didn’t move the ball forward on privacy. If you see it differently, please write an article to tell me how I’m wrong, and I’ll convince the Marketecture folks to publish the best one.

2. The companies that invested heavily in the Sandbox - I’m not trying to rub anyone’s nose in this. But if one wants to avoid repeating mistakes, one needs to acknowledge that mistakes were made. Some of this was mitigated by the fact that Google was literally paying many of those who participated in the Sandbox. But anyone that was hoping to get a leg up by mastering the Sandbox hadn’t been paying attention to Google’s approach to SEO over the past decade.

3. A few so-called thought leaders - I’m not going name names here, but there were more than a handful of industry thought leaders cajoling everyone to lean into and support Google’s plans unquestionably. Some of them went as far as to criticize journalists who wrote articles that were a bit skeptical of the value of the Sandbox tools. (Again, you know who you are. Do better.)

What does the future hold?

There are a number of interesting ideas that started to matriculate over the past few years. Some were born out of the confusion around Apple’s ATT and the Sandbox as more than a few companies placed bets on how the market would develop. For example:

• ID-Less - There was a period of time when it appeared that the UID was going away entirely. Given that this no longer appears to be the case, what’s next for these companies? There is certainly some value in having an ID-less solution in your tool kit. Does ID-less work as a standalone product? With the possible exception of AI contextual, I’m not sure.

• Privacy-Enhancing Technologies (PETs) - True, the Sandbox tools didn’t work at scale. But is there something to be said for cohort advertising or other PETs? I’m not sure here either. There’s a plausible argument that PETs don’t meaningfully address the privacy issues that consumers really care about (h/t Don Marti). And then there’s the problem that PETs tend to exacerbate the very trust issues that are endemic to the ads space.

• Clean Room Tech - Clean rooms suffer from some of the same issues as most other PETs when applied to the ads space. To the extent that they are viewed as a core component of ad tech moving forward, it’s worth noting the following: (1) they also don’t necessarily address user privacy concerns, (2) they muddy data flows, which can be good for privacy but makes it harder to engender trust, and (3) it’s not even clear which clean rooms address core legal requirements. For example, is the transfer of data into a clean room a sale of data under the CCPA?

• Enhanced / AI Contextual - I suspect that some might be sleeping on the power of these types of tools. They will be essential in any build toward agentic ads. While this tech can work in the absence of a UID, I suspect that the best implementations will continue to use one.

Does Privacy Matter?

About a year ago, I did a back-of-the-envelope evaluation of different tracking and targeting techniques being used. I measured each on two axes: privacy and business utility.

It seems like the chart below needs a refresh for a few reasons:

1. To better clarify what we mean by privacy, and

2. To focus more on the value of transparency and trust.

As many of us march into the agentic age, it’s more important than ever to have clarity on the above — or the ads space will be at risk of repeating the sins of the past.

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