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FLoC: Google’s New Privacy Initiative And How It Impacts Advertisers

People don’t like websites tracking what they do.

But websites (like Google) need to track users to get paid by advertisers. With privacy policies like the GDPR and their warning to advertising platforms, Google has to choose:

Advertisers or users?

The answer: FLoC—a new way of tracking users while maintaining a “privacy-first” future for web advertising.

Introducing: FLoC

The Federated Learning of Cohorts (FLoC) is Google’s attempt to track internet users in groups rather than individually.

Google explains that FLoC “…proposes a new way for businesses to reach people with relevant content and ads by clustering large groups of people with similar interests.”

Proclaimed as a valiant move for internet privacy, Google continues “…this approach effectively hides individuals ‘in the crowd’ and uses on-device processing to keep a person’s web history private on the browser.”

Sound a little too complicated to understand? You’re not alone.

In this article, we’ll explain what FLoC really is in a way that anyone can understand: why it’s important and how it affects both users and advertisers.

But first, let’s take a look at the main culprit and how Google’s new privacy initiative came about–cookies.

First Party Cookies Vs. Third Party Cookies

First-Party Cookie

A first-party cookie is a piece of code that helps a website identify who the user is and what the user does.

Think of it as a surveillance camera–it can see what you’re doing as long as you stay within the area it covers.

In other words, the cookies can track whatever you do, as long as you’re logged in to that website.

So, every time you sign up for an account on a website, you use your own unique credentials, like your email address and password. The website then gives you a ‘cookie’ that helps identify you as a ‘user’ or ‘member’ of that site.

That cookie can also be used to distinguish you from other users and track any activity you do within the website. It knows whether or not you logged in today, read a blog, or watched a video.

The cookie that’s unique between you and the website is called a first-party cookie. But what if you visited a different, unrelated website—can it still track you?

Not really, unless that website is using a third-party cookie.

Third-Party Cookie

Unlike a first-party cookie—which tracks your activity inside that website alone—third-party cookies can track activities you do on any website you visit, as long as it’s installed.

Let’s say you own xyz.com and you installed a tracking code like Google Analytics’ “UA-ID.”

Now, whenever a user visits your site the tracking code will collect information about that user. That information is then stored in Google’s database (the third party).

In a nutshell, third-party cookies collect information based on:

  • What websites you visited
  • What actions you took
  • How long you stayed on those websites
  • How you engaged with the website

You’re probably thinking, “I get this whole third-party cookie thing… but what’s the big deal?”

Google FloC

It All Boils Down to Privacy

If tracking codes like the UA-ID are installed in millions of websites, then Google can track every user who interacts with those websites.

Using the data collected from users, it creates a “profile” of the user based on interests, behaviors, and other demographic factors–age, gender, and location.

This means, users don’t have full control over their privacy, and advertisers can use this data to target specific profiles and show ads relevant to them.

FLoC: Good For Users, Bad For Advertisers

To protect users’ privacy, Google initiated FLoC.

Instead of targeting individuals, each user is put into a cluster of groups based on similar interests, called Cohorts. Therefore, advertisers aren’t bidding for people anymore, they’re bidding for “Cohorts.”

Remember that surveillance camera analogy?

Imagine having that camera in a room filled with thousands of people wearing white shirts, and your job is to track a specific person, Bob, who’s also wearing a white shirt.

It’s almost impossible, right?

As explained by GitHub, “Advertisers can serve ads based on an interest, but cannot combine that interest with other information about the person — in particular, with who they are or what page they are visiting.”

So, FLoC is, in many ways, good for users because they can protect their privacy by “hiding” in “groups.”

It’s bad for advertisers because there’s less retargeting, less personalization, and ultimately, less conversion.

… And how will Google do this? By removing third-party cookies.

The Death of Third-Party Cookies

In an effort to comply with privacy policies and principles, Google announced that they will eliminate third-party cookies and move towards a privacy-first web.

The question is, how can advertisers measure campaign performance without third party cookies?

One of the ways that Google proposes to solve it is through the Privacy Sandbox.

Browser-Level Consent for Data-Tracking

You’ve probably visited a website and seen a pop-up asking for consent for data tracking before. With the Privacy Sandbox, users only need to give consent one-time using their browser–instead of having to accept (or decline) a cookie consent every time they visit websites.

Browser-Level Consent for Data-Tracking

While this is more convenient for the users, it poses huge problems for advertisers:

  1. If a user does not give consent, advertisers can’t target them and show relevant ads.
  2. Only users who use Google Chrome browser can be targeted. If you are using a browser like Safari, Firefox, or others, you won’t see any type of Google Ads.

Basically, the browser, not the advertiser, holds the information about what the advertiser thinks a person is interested in—and what ads can be shown to those people.

Is It All Bad News for Advertisers?

We have yet to see the impact of FLoC on advertisers. Without using third-party cookies, it’ll be very hard for advertisers–specifically small business owners– to get the data they need in order to make the right decisions.

Google’s promise? “Advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising.”

While it may be hard to believe in that statement, all we can do right now is to keep our fingers crossed…

And hope that this path leads to something that works for both users and advertisers alike.

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