Everything seems to go into a frenzy when Google, the gatekeeper of online advertising, drops a blog post. The stock market swings, trade groups scramble and executives across the buy- and sell-side of the ad industry are left searching for answers.
Tumult started in January 2020 when Google announced it will no longer support third-party cookies in its market-leading Chrome browser—a development first reported by Adweek two years ago—beginning in 2022, essentially breaking online targeted advertising.
The ad industry spent the next year building and pitching alternative identifiers based on user-provided data, like The Trade Desk’s Universal ID 2.0, as a fix. But in March, Google said its buy-side products won’t support alternative IDs that essentially replicate cross-site tracking that third-party cookies have provided.
Instead, Google is pushing Federated Learning of Cohorts, or FLoCs, as part of its Privacy Sandbox initiative. FLoCs propose to replace the ad targeting capabilities of third-party cookies, grouping audiences into cohorts as opposed to one-to-one targeting, based on web browsing behavior.
That method will soon be tested. The Silicon Valley-based behemoth will begin FLoC trials in Q2 among a small percentage of users in the U.S., Australia, Brazil, Canada, India, Indonesia, Japan, Mexico, New Zealand and the Philippines. It’s unclear when tests will begin in Europe, as Google is still waiting to see whether its new cohort-level targeting approach is compliant with the region’s General Data Protection Regulations (GDPR).
“It’s quite surprising to see that, given the [Privacy Sandbox] is meant to be privacy compliant,” said Benoit Hucafol, head of product at Paris-based ad server Smart.
Will it measure up?
Third-party cookies did more than track users across websites; they also helped marketers measure campaign performance, conversions and ad frequency. Google is testing several measurement tools and protocols, such as the click-through attribution reporting proposal, within the Privacy Sandbox. But a key concern within the ad industry is whether there will be viable measurement solutions once third-party cookies go away.
“[The Privacy Sandbox and FLoCs are] contextual behavior that is being used to assign people to a group,” said Sara Stevens, vp of digital capabilities at Epsilon, a data marketing company owned by Publicis Groupe. “So will that be enough to drive performance?”
Gone will be the days of targeting individuals within Google’s walls. But the first question for many isn’t if this new practice will work—it’s whether the practice should even be allowed. By undermining support of cross-site web trackers and prioritizing first-party data, the fear is that ad buyers and publishers will rely more heavily on Google, which already has a dominant ad-tech stack and endless amount of data from its Search and YouTube businesses.
“While our announcement to not track users as they browse the web may result in businesses moving off our platforms, we believe it’s the right thing to do for user privacy,” a Google spokesperson said.
The spokesperson said the Privacy Sandbox is “being built for everyone,” but a March survey of Adweek’s audience found that 74% of 113 respondents believed Google is trying to shut down competition.
The digital ad giant is already fighting several antitrust cases, probing its dominance of the online advertising market. Plus, the pandemic saw Google’s share of U.S. digital ad spend surge in 2020 to $67 billion, more than double what Amazon and Facebook earned, according to GroupM data.
Further pushing back against anti-competition claims, Google has said there will be no backdoors to cross-site tracking, meaning the company won’t use data from Chrome’s sync feature for monetization.
Still, there’s no promise of regulation, and the cookie doomsday clock is nine months away from striking midnight. According to Adweek’s survey, 65% of respondents don’t believe Google’s moves mark the end of mass-market retargeting, but 71% believe the changes will negatively impact the ad-tech ecosystem.
Both Hucafol and Stevens said testing the Privacy Sandbox and understanding factors like the size of the cohorts and any performance-based metrics will take time. With Chrome having the largest browser market share of around 65%, and other browsers like Firefox and Safari staunchly anti-tracking, there’s not much for the ad industry to do other than test and hope for the best.
As one respondent to Adweek’s survey put it: “Google say[s] jump, you ask, ‘How high?’”