Google’s new Federated Learning of Cohorts (FLoC) initiative is a “viable privacy-first alternative” to soon-to-be-defunct third-party cookies that can “help publishers and advertisers succeed while also protecting people’s privacy” — according to Google.
The truth is relying on anonymized, short-lived visitor data included in Google’s Privacy Sandbox project to target relevant audiences across the web is a short-sighted move.
The better, long-term approach to deal with the deprecation of third-party cookies and implementation of privacy-centric browser changes while respecting individuals’ privacy and consent preferences is to instead collect and utilize first-party data.
Google FLoC: A breakdown of the cohort-centric cookie alternative for companies
Google FLoC — which is still in the testing phase, as of mid-2021 — aims to help publishers and advertisers adapt to the “privacy-first world.” Here’s how it works, in a nutshell:
- Google Chrome users will be grouped based on shared interests and behaviors. (Per Digiday, “there’s no consent mechanism in place” yet for users, meaning they can’t opt out of having their interest and behavioral data included in FLoC. This has led to a pause on the FLoC trial in the EU, as the initiative isn’t deemed GDPR-compliant.)
- Users’ browsing history remains private, but it informs their cohort assignments. The websites individuals visit and their pages’ content also influence user ‘clustering.’
- Visitors’ interest and behavior data is stored for up to a week in a given cohort. Each week, cohorts are updated based on the prior week’s interest and behavior data (i.e., individuals can enter and fall out of certain cohorts, based on their site activity).
- Google wants companies to use these anonymized cohorts of individuals with similar interests and behaviors in place of third-party cookies, which it will retire in 2022.
At first glance, it seems like a win-win for advertisers and publishers as well as internet users:
- Advertisers and publishers can deliver targeted, personalized ads for products, services, and/or content of interest to relevant cohorts based on their recent browsing history.
- Chrome users don’t have to worry about Google tracking their browsing activity. Their data is anonymized and grouped with other users with similar interests and behaviors.
But these cohorts present the same problem third-party cookies created for publishers and advertisers: an incomplete, time-sensitive, browser-level view of their audience that limits their ability to engage them in a timely, relevant manner across channels.
As with consumer engagement strategies centered around third-party cookies, orchestrating intelligent messaging and delivering bespoke experiences to individuals in these semi-specific cohorts across their customer journeys is impossible. That’s because tracking their customer journeys is impossible, due to the cohort data’s restrictive, transient nature.
For Chrome users, third-party cookies won’t be a problem much longer, but Google will still provide their browsing data to companies that use FLoC. (Millions of these users were also automatically included in the FLoC’s pilot without knowing, according to Malwarebytes.)
Why the business community is skeptical of Google FLoC as a viable data resource
Google said FLoC will ultimately help publishers and advertisers adjust their customer engagement programs accordingly in a post-cookie world and generate roughly the same return on investment as they did with third-party-cookie-based ad targeting.
Many growth-focused professionals and business leaders aren’t so sure:
- Google reported advertisers saw 95% of the same conversions per dollar with FLoC-based ads as they had with third-party-cookie-based ads. But DeepIntent Founder and CEO Chris Paquette told Marketing Dive “Google shared little information about how they achieved that 95% number.”
- Wpromote VP Digital Intelligence Simon Poulton noted FLoC “has the potential to make cross-channel data and attribution more challenging for marketers.”
- Several marketing experts and technology executives told CMSWire they’re unsure the aggregated, unauthenticated, anonymized data Google FLoC will offer businesses will prove valuable (and fruitful) in their targeting efforts, given FloC’s effectiveness as a marketing resource is still unknown.
- What’s New in Publishing (WNIP) contributor Dr. Mattia Fosci stated how black-boxed cohort data limits one’s marketing options. “FLoC only works in the Chrome browser, leaving cross-browser, cross-device, and offline data out of the picture,” Matti explained.
It’s not just business professionals and thought leaders that have issues with Google’s cohort initiative. Consumer-rights groups also have concerns. The Electronic Frontier Foundation wrote it thinks FLoC will lead to new privacy worries among internet users.
Confusion regarding how to utilize these cohorts (the organization and labeling of which is TBD) in their existing engagement programs and if Google FLoC will actually alleviate consumers’ privacy concerns has ultimately led to skepticism among many companies.
“The point of getting rid of third-party cookies was always to be able to put customers at the center” of one’s customer engagement model and in a privacy-centric manner, BlueConic Director of Product Marketing Sam Ngo recently told MarTech Today.
As Sam noted, a customer engagement strategy based on first-party data collection and utilization is the only practical path forward for publishers and advertisers today.
How first-party data helps publishers and advertisers realize greater long-term ROI
Publishers want to better monetize their data and build long-term relationships with their readership and ad partners. Advertisers want to reach the most relevant audiences based on their ‘owned’ customer data and data shared by trusted partners.
Both can execute their respective growth initiatives and key programs and realize their desired ROI by unifying first-party data in a customer data platform (CDP) like BlueConic.
They can’t do so — at least in a scalable, sustainable fashion — when relying on Google and other walled gardens (Apple, Facebook), who control the data they need to succeed.
Consider how two BlueConic customers use our CDP to accelerate growth: one to enhance its subscription business model, the other to elevate its targeted advertising ROI.
Northwest Arkansas Democrat Gazette (NWADG)
The publication wanted to increase subscriptions. That required a greater understanding of its readership, including the ability to distinguish subscribers from non-subscribers so it could target the latter with promotional messaging for its subscription offering.
Unifying all known and anonymous reader data in BlueConic enabled NWADG to personalize subscription messaging to non-subscribers based on their historical attributes, interests, and behaviors in our customer data platform’s (CDP) persistent profiles.
Targeting these non-subscribers via on-site dialogues, ads, and emails based on this dynamically updated first-party data led to 100% subscription growth for the publication.
The multi-brand company used to rely on cookie-based segments in its data management platform (DMP) to advertise. So, HEINEKEN USA replaced these segments (and its DMP altogether) with dynamic, multi-dimensional segments built in BlueConic.
This allowed the business to create customer segments based on consumer interests, behaviors, demographics, marketing consent, and other attributes in minutes (and without the need for technical support from their data science or IT teams).
HEINEKEN USA could then deliver a seamless ad experience to segments in each customer lifecycle stage, which also helped the company improve its media-spend efficiency.
Both NWADG and HEINEKEN USA, along with many other companies that use our pure-play CDP, continue to increase their ROI in terms of both revenue and efficiency.
A big reason for that growth is the fact they built customer engagement strategies around first-party data and a CDP — not fleeting, partial, anonymized data (which their competitors could also access and utilize in their engagement strategies.)
“With a pure-play CDP, there’s very little reason to use third-party datasets,” BlueConic COO Cory Munchbach stated in WNIP’s 2021 report on the post-cookie landscape.
Google FLoC and the cookie’s demise may appease consumers’ privacy worries.
But leveraging persistently stored, dynamically updated, consented first-party data in a CDP is how modern advertisers and publishers realize sustainable revenue growth, transform their relationships with their customers, and experience better business outcomes.
Watch our “Identity Crisis” webinar to learn how publishers and advertisers are navigating the death of third-party cookies and building their own first-party data assets with a CDP.