Google's decision to end support for behavior-based targeting creates questions for identity resolution companies, advertisers, and publishers.
- Google shifts from behavioral targeting to cohort-based FLoC, confirming they do not have plans to build or support alternate identifier solutions to track individuals.
- Publishers without good first-party data may take a hit and see some brand budgets flowing more to platforms in the near term.
- There were immediate mixed reactions from the ad industry as well as the Identity Resolution vendors, regarding Google's motives and the future for ad targeting.
Digital advertisers have relied on cookie tracking and targeting users as they search the web. The folks at Google played a significant role in enabling the digital infrastructure to make it happen. With growing privacy concerns and pending legislation, the search engine juggernaut has announced it will not support the targeting or cross-site tracking of online users outside its own apps and properties.
Most marketers and publishers knew this was coming, as the regulation of GDPR and CCPA pointed to a more privacy-first future for the web, with 3rd party cookies in the crosshairs. Identity resolution platforms grew as the industry considered the question of how to effectively target ads after the death of the 3rd party cookies. Because Google was so deeply embedded in advertising and had made so much revenue from precise targeting, many marketers assumed Google would find a way to ensure privacy while maintaining the best targeting possible.
However, Google added a powerful side note to its announcement. “Today, we’re making explicit that once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products,” wrote David Temkin, Google’s Director of Product Management, Ads Privacy, and Trust in a blog post.
The reaction from Identity Resolution platforms was immediate, with concerns of Google not supporting unique identifiers on the buy side. Gartner VP Analyst Andrew Frank says, “Google’s affirmation of its intention to scrap user-level tracking and targeting across its ad products increases the tension between approaches based on consented matching of personal IDs and those based on cohort-level identification and targeting like the Privacy Sandbox.”
Enter the Federated Learning of Cohorts (FLoC)
It follows the Google announcement last year that Chrome, the world’s most-used browser, would phase out third-party cookies. Instead, Google is supporting the idea of Federated Learning of Cohorts (FLoC). Instead of cookies for targeting, FLoC reaches online users by using de-identified data that represent clusters of people with similar interests. Google said it believes advertisers using FLoC to reach audiences can be an effective replacement for third-party cookies.
“Our tests of FLoC to reach in-market and affinity Google Audiences show that advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising,” said Chetna Bindra, Google’s Group Product Manager, User Trust, and Privacy.
Jason Hartley, Head of Search, Shopping, and Social at PMG was less enthusiastic. “It could have a significant impact on the way we activate and measure audience strategies because it will reduce the pool of addressable audiences as well as our understanding of the consumers in those pools,” he told Digiday.
On the Interactive Advertising Bureau’s TechLab blog, they summed it up like this: Google Ads are walking away from granular, open web user tracking, and going all-in on Privacy Sandbox and first-party data.
Here’s a quick summary of what the announcement means for publishers and marketers using Google advertising products.
How the Google Announcement Impacts Publishers
Once Google stops supporting cross-site tracking and targeting people outside of Google’s properties, those publishers without robust first-party data and relying on the open marketplace will take the biggest hit initially. Publishers risk more ad budget flowing to platforms that are less reliant on cookies, till they can fill the data gap. Publishers can relinquish their data to use privacy sandbox tools such as FLoC to create affinity audiences based on behavioral targeting.
For non-Google programmatic demand, even if using Google Ad Manager to serve ads, publishers will be able to use data from third parties in some circumstances. For example, when a publisher and advertiser both have a direct relationship with a user that creates a user-enabled ID, Google will accept the information for targeting if it’s encrypted.
Strategies publishers should be discussing:
- Build trusted and authenticated visitor relationships
- Implement and test the impact of Unified ID options
- Engage visitors with site registration, value exchanges and email signups with Admiral VRM
- Diversification of revenue streams with options like paid subscriptions
- Focus on delivering quality, value, UX, and appropriate ad density to support the value proposition in visitors minds
- Leverage already-owned user segments
How the Google Announcement Impacts Advertisers
When buying inventory on Google’s products, advertisers will have these options:
- First-party data
- Privacy Sandbox/FLoC
- Using Google’s contextual categories or audience segments
However, Google’s data will only use data from user’s direct engagement with Google properties and will not include open web user data. Retargeting may not be the same afterwards, though Google Ads can likely retarget on their own properties (Search, YouTube) without invoking a 3rd party cookie.
When buying ad inventory on the open web for non-Google-owned sites, advertisers will be able to use publisher first-party data and privacy sandbox options.
It’s also relevant to remember that Google Chrome does not cover 100% of the web, so other solutions to targeting, like UID's and people-based marketing will be working to prove their effectiveness vs cohort and contextual targeting.
AdTech and Industry Reactions: Solving the Cookieless Future
“With the end of the third-party cookie and Google’s plans of not creating an alternative, this will hinder programmatic advertising measurement and performance, making it harder to reach audiences, and result in a painful loss of transparency for advertisers,” Alon Leibovich, CEO and Co-Founder of Brand Total told Admonsters.
“Now, it’s on advertisers to make the industry relevant again." - Alon Leibovich, Brand Total
Nick Morley, Managing Director EMEA at Integral Ad Science believes contextual advertising will be key. “Google’s latest announcement reinforces the revolution in digital advertising from audience-based targeting and towards contextual targeting once again,” he says. “Context has evolved, and sophisticated technology can help brands reach the right audiences within contextually relevant environments.”
Google’s plan puts more emphasis on the advertising industry’s effort to create universal identifiers, a cookieless way to track users in a more privacy-conscious method, such as encrypted email addresses or login information. In either case, however, users are providing unique identifiers which can be used as first-party data by publishers and advertisers.
The team at The Trade Desk has stood firmly behind an open-source industry alternative to tracking, Unified ID 2.0. “The consumer's information is not identifiable. The consumer controls how their data is shared,” said Jeff Green, CEO, Founder & Chairman at The Trade Desk. “And the consumer gets a simple, clear explanation of the value exchange of relevant advertising in return for free content.”
Green says UID 2.0 threads the needle between privacy and relevance. “It answers the question of how the internet is going to pay for itself without everyone having to resort to unsustainable subscription models,” said Green.
UID 2.0 faces some challenges in adoption. “This whole thing only works if users consent to a targeted internet by providing their email,” said Tom Kershaw, CTO of Magnite and chairman of Prebid.org, an early supporter of UID 2.0. In an article for AdExchanger's Sell-Sider, Kershaw adds: "In fact, most analysts feel that 20% is the upper bound of how many users we can expect to opt-in to a targeted ad experience." He believes that publishers are "best-positioned to obtain meaningful consent from consumers."
Over at LiveRamp, Travis Clinger said they had already been talking to customers about the need to move away from the third-party cookies and rallying around Authenticated Traffic Solution (ATS) an authenticated approach for identity resolution incorporating first-party data. LiveRamp provides their customers an action plan and calendar to prepare for the cookieless state, and Clinger suggests “the race is on to secure a leading identity solution beyond Google’s control.”
Some Concerns Over Platform Data Consolidation
“One big piece that needs to be called out here is that Google has a huge first-party data set of billions of people’s browsing, search, and location histories,” said Jolin Kleveno, SVP, Addressable Media at Tinuiti. “So, their move to not permit the use of alternative identifiers (authenticated users) on their products will make Google more of a walled garden.”
The big tech platforms, such as Google, have a massive amount of first-party data. They’re impacted less if tracking cookies no longer exist. No publisher will have that kind of scale in its first-party data for ad targeting.
“We also believe that this further highlights Google’s “predatory privacy” practices. In their blog post, Google says that people shouldn’t have to accept being tracked across the web in order to get the benefits of relevant advertising,” said Mathieu Roche at ID 5. “What they don’t say is that billions of people continue to be tracked every day across the Google-owned part of the Web (i.e. Search, YouTube, Maps) using the most personal and permanent ID possible: their email address.” By doing so, Roche said, Google increases the gap between what they can do and what’s possible for everybody else on the Open Web.
Andy Monfried, chief executive of DMP Lotame, echoes those concerns, suggesting Google “uses privacy as a shield to weaponize its ‘moat’ – the YouTube and Search businesses – and strengthen its market dominance”.
These moves may further consolidate the power in the hands of the big tech companies. Since consumers must provide their email addresses to trigger universal identification, will the power players that control the UID have an unfair advantage by gathering even more first-party data for their use?
In the End, What Replaces Third-Party Cookies?
Whether email-based authentication, other methods of identity resolution, or Privacy Sandbox solutions such as FLoC are the answer, Gartner's Frank suggests “marketers should remain open to multiple scenarios and be ready to experiment with a variety of targeting and measurement approaches.”
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