A suggested alternative to third-party cookies may offer insights into the future of targeted ads.
Modern targeting of digital ads is based on individual and personal information. For example, an online retailer can use networks such as Google or Facebook to address potential customers. Some retail companies – omnichannel retailers, e-commerce retailers, wholesalers – have become addicted to such advertisements.
However, cookie-based targeting leads to privacy issues. Imagine you have visited a website that contains a Facebook Like button. This button has likely placed a third party cookie on your browser so that Facebook can track your movements.
It would be great for advertisers to know exactly what websites you’ve visited, but it might be a little unsettling to know that Facebook now has all of your browsing history.
End of third party cookies
Privacy concerns have led to new laws such as the European Union General Data Protection Regulation, California Consumer Protection Act, Virginia Consumer Protection Act, and the like.
These laws and growing consumer privacy concerns have led the makers of popular web browsers like Apple Safari, Mozilla Firefox, Brave, and Google Chrome to stop allowing third-party cookies now or in the near future.
The end of third party cookies could end the targeted advertising.
What is FLoC?
Google has proposed several new standards that work together to enable effective ad targeting and address some privacy concerns. There is something in these suggestions called Federated Learning of Cohorts, or FLoC.
Federated learning is an artificial intelligence technique that accesses data through a network of decentralized devices without passing that data beyond the device. Google has described FLoC extensively in articles and articles such as:
Essentially, FLoC would run in a web browser. Google is already testing it in a few million Chrome instances. (You can test your Chrome browser to see if FLoC is present.)
The FLoC algorithm would monitor a person’s browsing behavior and sort that person into large groups or cohorts of people with similar interests. A person can be assigned to several cohorts.
While a person’s personal history wouldn’t leave the browser, Chrome would share cohort labels for targeting with websites and advertisers.
Targeted ads live on
FLoC and the discussion about it may offer some glimpse into the future of targeted ads. And that future could be important for e-commerce retailers and wholesalers.
The first insight could be that targeted advertising will likely be in place after the third-party tracking cookies expire.
Google generated $ 146 billion in advertising revenue in 2020. Ad targeting almost certainly played a role. Google doesn’t want to stop generating advertising revenue, as FLoC proves.
“It is difficult to imagine the Internet we know today – with information on every subject, in every language, available to billions of people – without advertising as an economic foundation,” wrote David Temkin, director of product management Google, for the privacy of ads and trust in a post from March 2021.
But “people shouldn’t have to accept being followed on the internet to take advantage of relevant advertising. And advertisers don’t have to track individual consumers online to take advantage of the performance benefits of digital advertising, ”Temkin wrote.
With FLoC and other suggestions, targeted and relevant ads survive tracking cookies.
Data protection lawyers
However, FLoC and similar proposals did not end the debate. That is the second realization.
In an article titled “Google’s FLoC is a Horrible Idea,” Bennett Cyphers, an associate technologist at the Electronic Frontier Foundation, a nonprofit privacy group, wrote:
“FLoC is supposed to be a new way of getting your browser to do the profiling that third-party trackers did themselves: In this case, you can summarize your recent browsing activity in a behavioral label and then share it with websites and advertisers. The technology avoids the privacy risks of third-party cookies, but creates new ones in the process. It can also exacerbate many of the worst non-privacy behavioral ads issues, including discrimination and predatory targeting. “
A possible problem with FLoC is that there are initially no cohorts. Rather, the algorithm would create cohorts around the behavior. That way, FLoC could create and share cohorts with worrying labels. Ciphers further:
“Ideally (for advertisers), FLoC creates groups that share meaningful behaviors and interests. However, online behavior is related to all kinds of sensitive traits – demographics such as gender, ethnicity, age, and income; ‘big 5’ personality traits; even mental health. It is very likely that FLoC groups users along some of these axes as well. FLoC groupings may also reflect visits to websites related to substance abuse, financial hardship, or helping trauma survivors. “
Obviously, some people are concerned about FLoC. In fact, the search engine DuckDuckGo has announced that their Chrome extension will block FLoC.
Hence, the discussions at FLoC suggest that the battle over tracking cookies will continue.
Ad targeting alternatives
Ecommerce merchants rely on ads. Consumers want free services, free access to information and relevant advertisements. The advertising is likely to continue in some form or another.
The path for advertisers could be to prepare for changes in ad effectiveness and look for alternatives to targeting.