Is This the Way the Cookie Crumbles?

Almost from the beginning of the internet’s transition to an e-Commerce superhighway, cookies have been the primary way most advertisers target users online. Cookies track your browsing history, building user profiles about your interests, purchases, time spent on a web page, how you got there, and where you went after. This information is sold to data brokers and advertising networks who in turn use it to make real-time decisions about what targeted advertising to serve you. Third-party cookies are also used for retargeting ads – you know, like the one for the car you researched that follows you around the web for a few weeks.

The creepiness of retargeting, consumers’ concern about the collection and use of their personal information, and abuse of the use of personal information in the name of national security (we’ll save that one for another blog) has resulted in an increased focus on industry self-regulation and data privacy legislation in the US, EU and around the globe.

Enter, Google and other industry leaders looking for alternative privacy forward technologies to replace the use of third-party cookies and tracking capabilities. Apple’s Safari stopped the use of cookies in 2017 and Mozilla’s Firefox in 2019. Earlier this year Apple released iOS 14 and Facebook rolled out its Limited Data Use (LDU) policy.

Google’s approach to third-party cookies is part of its Privacy Sandbox projects. The Sandbox is a set of proposals focused on the elimination of third-party cookies, reducing advertising fraud, improving ad performance metrics, and reducing captchas, without having a negative impact on the ad industry.

One of several technologies Google is testing to replace third-party cookies is an API called Federated Learning of Cohorts (FLoC). FloC is a browser extension within Google Chrome. FLoC leverages browser-based machine learning to log browsing history and combine people into large groups of people with similar interests. That information is then used to target ads.

Of course, no good deed goes unpunished. Digital marketers are concerned about continuing their ability to target ads. The AdTech businesses argues that Google and other tech giants (i.e. Apple, Facebook) are using privacy as a Trojan horse to increase their market power, control the use of consumer data, and direct advertising spend unfairly to their respective businesses. Some regulators are suggesting that move to a new technology will put smaller advertising firms at a disadvantage and out of business.

How this all plays out remains to be seen. Simply replacing cookies is complicated as it will have a direct impact on the current revenue model supporting the AdTech world. I believe that the monetization of data will evolve. The AdTech industry will survive and thrive. The reliance on first-party data will become more prevalent. More importantly, the consumer will be better informed to make choices about IF and how their personal information is collected and used.

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