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The Rocky Path to Digital Advertising's Future

What’s your cookie policy? Years ago, you might have said “no more than one row of Oreos in one sitting,” though that’s a policy we’ve all violated more than once. Today, every website asks you to review their cookie policy. Cookies aren’t some new technology; before last year, websites would just slip them onto your computer without asking first. But websites are now asking permission because of a law passed in 2018 called the European General Data Protection Regulation. A similar law was passed in the US in 2020, the California Consumer Privacy Act, which requires sites to be transparent about what information they are collecting and what they are doing with it, and to give users the option to reject cookies used to collect and sell personal information.

In response to the growing public interest in privacy and their own interest in digital advertising, Google planned to replace advertising cookies on its Chrome browser with something else. The first “something else” was their “Privacy Sandbox” testing environment. Some of the inexplicably bird-themed developments to come out of the Privacy Sandbox were the TURTLEDOVE, PARROT, and FLoC APIs.

From FLoC to Topics and Beyond

FLoC stands for Federated Learning of Cohorts. Instead of using third-party cookies for individual users, the goal of FLoC was to take a high-level snapshot of users’ browsing habits and group them into cohorts. These cohorts would be groups of people with similar browsing patterns who share similar interests. But privacy advocates such as Mozilla, GitHub, and search engine DuckDuckGo weren’t convinced that this would do anything at all for user privacy. These groups object to FLoC on the grounds that it just replaced one type of tracking technology with another, that individual users could still be identified, and that cohort groupings could be potentially discriminatory.

So at the start of 2022, Google ditched FLoC in favor of a new approach: Topics. Rather than collect information on users, and then group those users into cohorts, Topics will take data from your browser and organize the sites you visit into categories, or topics. Instead of a cookie linking you to a specific site, you will be linked only to that site’s topic. Topics will keep this data for only three weeks and then wipe the slate clean. Sites that support Topics share this information with their advertisers to determine what kinds of ads to show each visitor. This information will be transparent to users. They will be able to review their topics, delete topics from their profiles, and even turn off Topics entirely.

Yet those concerned with privacy aren’t totally convinced by Topics, leveling some of the same criticisms at Topics as at earlier attempts to replace cookies: that the information it gathers can still allow websites and advertisers to identify individual users.

Advertisers are skeptical of Topics for a different reason. Many critics find the platform too broad, as limiting users to six cohorts will make it much more difficult for advertisers to granularly target consumers.

Google initially hoped to launch Topics by 2023, but has now pushed that date back to 2024. It’s not clear if other browsers will be satisfied with this proposal after rejecting FLoC, or if another API to come out of the sandbox will take its place.

One such contender is FLEDGE, which stands for First Locally-Executed Decision over Groups Experiment. FLEDGE works a lot like FLoC and Topics, grouping users into interest groups, but the difference is that advertisers from a particular group bid to determine who gets to show their ad to a visitor to a website. This process is controlled by the browser, not by the advertiser or ad platform. It is also a retargeting or remarketing system for showing visitors ads from sites they visited previously. This may end up being the most controversial aspect of FLEDGE, as users tend to find this kind of advertising creepy and invasive, making them feel like they are being stalked online. In theory, however, FLEDGE’s remarketing will be less specific than the kind we see now with third-party cookies. FLEDGE testing begins on August 28, so it remains to be seen if this experiment can successfully balance user privacy and ad return.

Where Does This Leave Advertisers Today?

Right now, third-party cookies are still in use across the web. But once one of these new methods of ad targeting comes to Google Chrome, by far the world’s most popular browser, advertisers will have to rethink their strategies. Topics and similar experiments do not collect the granular behavioral and demographic data that so many internet users object to, so advertisers will have to familiarize themselves with what sorts of topics are associated with individual sites. Larger agencies will have a clear advantage in this landscape, as they will be able to analyze and compare data from all of the websites they manage to create a clearer picture of user habits and preferences.

But there are still too many unknowns surrounding the future of advertising, as Google continues to experiment with different approaches to a post-cookie world. They’ve already pushed back their deadline for launching a replacement for third-party cookies to 2024, and a lot can happen before then. This is a topic everyone in marketing should be following closely, keeping up-to-date on the latest developments from Google’s Privacy Sandbox.