In 2020, Google announced that they were going to disable third-party cookies in the Chrome browser as a way of improving user privacy. Since the early 2000s, third-party cookies have been the main tool that has been used for companies to be able to hyper-target audiences that are relevant to their business.
In October 2021, the Chrome browser represented 60-65% market share according to StatCounter, meaning the disabling of third-party cookies within Chrome would have a significant impact on the advertising industry. With third-party cookies on the decline, Google had plans for a replacement approach that was to be called FLoC (Federated Learning of Cohorts).
When Google announced FLoC, there was skepticism about its ability to target the right consumers in a meaningful way, but there were also concerns that it would dramatically reduce the ability to effectively target consumers and it would also be ineffective at protecting privacy of consumers. A group of MIT researchers conducted a thorough analysis that looked at the FLoC algorithm on 90,000 devices to see how effective the FLoC approach would be in actual practice.
Then, in a surprise move in early 2022, Google announced that FLoC would be abandoned in favor of a new approach called Topics.
What was FLoC?
FLoC was meant to use an approach of creating cohorts of “similar” users so that third parties could serve users ads based on those similarities without putting the individual’s privacy at risk. The cohort approach was meant to eliminate the tracking of individuals while focusing on group similarities.
Google indicated that cohorts would be large enough to protect the privacy of users and would be based mainly on general browsing interests, which Google has unprecedented access to via its properties and search insights. The size of the cohorts was meant to be no smaller than 1,000 users.
Still, without having insights into conversations internal to Google, we do know that Google decided to go a different route after testing FLoC in 2021. The MIT study does provide some interesting potential reasons for Google’s abrupt change.
Why did FLoC fail?
For undisclosed reasons, Google decided to discontinue the FLoC approach and decided to go a new route entirely.
What we do know is that Google ran a preliminary test of the FLoC approach in 2021 based on the data of millions of Chrome users. There are at least 3 interesting things that this group of MIT researchers identified:
- While we are uncertain of Google’s specific reasons, a group of MIT scientists recently were able to discover that after just 4 weeks of using the FLoC approach, 95% of user devices would have been uniquely identifiable.
- FLoC did not eliminate the possibility of individualized tracking, as it was intended to.
There are likely other reasons for Google’s deviation, but the privacy concerns that the MIT researchers identified would certainly stand as reasons enough.
What does the demise of FLoC mean for digital marketing?
In 2020, a staggering 54% of the digital ad market was claimed by Google and Facebook. However, the demise of third-party cookies has most definitely had an impact on the monopoly that Google and Facebook have created. Google and Facebook have been able to provide digital marketing professionals with high targeting capabilities at high scalability.
With the demise of the third-party cookie, there is an even greater need to find ways to efficiently spend marketing dollars while being respectful of users’ privacy. Privacy is important and is a good trend, but privacy can exist alongside efficient targeting capabilities. It is not a “this or that” situation.
Programmatic marketing does an exceptional job of providing highly targeted ads at a reasonable price. In 2021, programmatic buying reached nearly $455 billion. In 2022 programmatic advertising is expected to hit $524 billion. Digital advertising and marketing professionals are flocking (no pun intended) to programmatic approaches to marketing.
If you are interested in learning more about programmatic or have questions about whether programmatic makes sense for your company, we would love to help.