Google gets behind FLoCs, but will publishers and advertisers?

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As the phasing out of third-party cookies gets ever closer for users of Chrome, the world’s most popular web browser, it’s looking increasingly likely that Google will settle on its own interest-based identity solution, FLoCs. But will that work for publishers and advertisers?

In brief
  • It is broadly accepted that advertising revenues are the only way to keep the web open for everyone. But there are also very real concerns that, if privacy practices online do not change to give users more control of their personal data, the open web is at risk.
  • Recognising growing calls for better privacy protection and facing regulation like GDPR, the Apple Safari and Firefox browsers began blocking third-party trackers in 2019. Google promised to “phase out” cookies on Chrome by 2022.
  • Last year, Google proposed interest-based advertising as its replacement for cookie-based tracking, introducing Federated Learning of Cohorts (FLoC) as a way for advertisers to serve relevant content and ads to individuals by clustering large groups of people with similar interests, hiding individual identities “in the crowd”.
What’s new?

At the end of January 2021, Google released data to show how developments around its FLoC solution could deliver results nearly as effective as cookie-based approaches.

  • FLoCs is based on the idea that groups of people with common interests can replace individual identifiers. Google says it also keeps web history private in the browser by using on-device processing.
  • In tests, Google’s ads teams have found that FLoC can provide an effective replacement signal for third-party cookies. The approach was said to deliver at least 95% of the conversions per dollar spent when compared to cookie-based advertising.
  • Chrome plans to make FLoC-based cohorts available for public testing with its next release in March and to begin testing with advertisers in Google Ads in Q2.
What’s the problem?

The privacy concerns associated with third-party cookie-based tracking have become very real. But cookies have been the foundation for online advertising for a long time and publishers and marketers are concerned that they don’t suffer revenue interruption when whatever replaces cookies takes over.

  • FLoCs are one of many identity resolution solutions being developed. But Google’s dominance over the online advertising market makes it likely that whatever system it settles for will form the basis for future identity resolution web wide. There are concerns that any moves Google makes will be founded on securing their ad monopoly, a situation being investigated in the UK.
  • Publishers, already looking inwards at their own first-party data solutions, are asking if they will be able to build their own audience cohorts? Google is exploring ways that advertisers will be able to use FLoCs to build audiences so they can remarket to prior website visitors, for example, but there is no clear path to custom audiences as yet.
  • In addition to the operational challenges, there is real concern about revenues and profitability. Patrick O’Leary, CEO at ad-tech firm boostr asks, “Will the money pull out of the market while everybody re-tools?”
  • There are also still concerns about how private FLoCs actually are, with worries that aggregated data may still be associated with individual IDs. Google hasn’t shared data on the level of privacy protection FLoCs will provide, or objective measurements of reader privacy in general.

Publishers may find some reassurance in the idea that identity after third-party cookies no longer needs to be an either or. Identity signals like FLoCs can be layered with other data, providing an additional audience attribute for publishers to communicate to ad buyers.

Long-term, deploying a robust first-party data solution alongside a whatever version of interest-based advertising the industry settles on may prove to be the best solution for publishers and advertisers.

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