How and Why Google Is Embracing Consumer Privacy

Google has launched a new approach to ad personalization which no longer relies on third-party cookies. Click to learn on how Google is embracing consumer privacy.

Since 2020, Google had made it clear that it’s going to put the onus on brands to personalize their content by organizing and managing their first-party customer data. In 2020, the company announced that over a period of time, it would stop permitting businesses to use third-party cookies to personalize advertising on Google Chrome, which is the world’s most popular browser. This announcement sent shockwaves throughout the advertising industry. Since then, Google has delayed the roll-out of its consumer privacy initiative (until 2023) and rolled out tools to help companies work with Google to manage their first-party data in Google’s Privacy Sandbox. The recent announcement of Topics is Google’s latest push toward the embrace of first-party personalization.

What Is Topics?

Topics is a new approach for businesses to personalize ads to site visitors (without relying on third-party cookies). Here’s how Topics works:

A person’s browser notes the topics that are related to participating sites a person visits.
For example, if a person has recently visited sites featuring sports content, their browser might notice that “sports” is one of that person’s topics.
That person’s topics will help determine the ads they see.
A site won’t know who that person is in order to serve them sports-related ads.
Users can remove certain topics from their browser or turn them off completely.
Specific sites a person visits are not shared across the web as they might have with third-party cookies.

In a blog post, Google added, “More importantly, topics are thoughtfully curated to exclude sensitive categories, such as gender or race. Because Topics is powered by the browser, it provides you with a more recognizable way to see and control how your data is shared, compared to tracking mechanisms like third-party cookies. And, by providing websites with your topics of interest, online businesses have an option that doesn’t involve covert tracking techniques, like browser fingerprinting, in order to continue serving relevant ads.”

Here’s how Google illustrates the difference between Topics and third-party cookies:

Google said that soon, Google will launch a developer trial of Topics in Chrome that includes user controls, and enables website developers and the ads industry to try it out. To learn more about the details of the Topics proposal, including other design features that preserve privacy, see an overview on privacysandbox.com or read the full technical explainer.

What Happened to FLoCs?

Topics is not Google’s first attempt to come up with a first-party alternative to third-party cookie tracking. In January 2021, Google said it had developed an open-source program where businesses, using on-device machine learning, could group people based on their common browsing behavior as an alternative to third-party cookies. This was referred to as FLoC (Federated Learning of Cohorts). Google pushed FloCs hard. The company crowed, “Our tests of FLoC to reach in-market and affinity Google Audiences show that advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising.”

But one year later, Google replace FLoCs with Topics. Why? Well, buried in a technical explainer, Google shed some light on the situation. One problem: FLoCs added too much fingerprinting data to the ecosystem, meaning information collected about the software and hardware of a remote computing device for the purpose of identification. In addition, FLoC cohorts risked being correlated with sensitive information categories. Here are all the reasons Google cited:

Bottom line: FLoCs is dead. But will Topics take off? Time will tell. Google could very well walk back Topics, too, if Topics gets the kind of pushback that FLoC experienced. But one way or another, Google is going to develop a workaround to third-party cookie until Google gets it right.

Why Is Google Even Trying to Get Rid of Third-Party Cookies?

Google is evolving with the times. We’re living in a more privacy-centric world now, and Google wants to apply privacy controls before someone makes them do so.

Legislators are putting more pressure on businesses everywhere to protect consumer privacy, as we have seen with the advent of General Data Protection Regulation

(GDPR) in Europe and California Consumer Privacy Act (CCPA) in the United States. This legislation is all about giving consumers more control over their data. In addition, consumers are becoming more aware of how their data is used in advertising online, which is something I recently illustrated for a client discussion:

Google is at the center of this discussion because digital advertising is a multi-billion dollar industry. Google needs to protect its interests – it is the largest online ad platform in the world – which is why Google is being so proactive about ushering in new tools for advertisers with the onus of regulation looming.

And there’s something else bearing down on Google: Apple. The company actually beat Google to the punch by degrading third-party cookies on Apple’s Safari browser. But this was not huge news because of Safari’s smaller marketshare. But things got really interesting in 2021 when Apple unleashed Application Tracking Transparency privacy control, which requires apps to get a user’s permission before tracking their data across apps owned by other companies for advertising or sharing their data with data brokers.

As many as 96 percent of users in the United States are opting out of having their behavior tracked. Oh, and guess what? A number of businesses are shifting their ad budgets to the Google Android operating system and away from Apple’s iOS.

Should Businesses Be Concerned?

Businesses need to pay very close attention to what’s going on. With 90% of third-party cookies being blocked, it puts business critical digital advertising and attribution functionality at risk. With the potential of limited reach and targeting, it is possible the efficiency of media will decline. This may lead to decreases in budget and revenue loss from those specific channels.

But businesses should not panic. As I noted, Google derives the majority of its revenue from advertising sales. For every step made toward increasing the privacy of their users, Google has also worked toward development of a replacement methodology to ensure their revenue streams, and your advertising programs are not adversely affected by these changes.

What Should Brands Do?

Despite major platforms like Google developing workaround solutions for digital advertising and user targeting, brands need to be focused on decreasing their reliance on any third-party data providers and building their own first-party data as the momentum behind privacy laws continues to accelerate and erode the marketplace.

To deliver a first-party driven approach brands must:

Build a foundational customer data pipeline for your business (real-time, channel independent, trusted)
Collect every first-party interaction with consent, rely on more accurate data
Integrate data into the marketing and analytics tools to deliver customer-first experiences

What Are the Benefits of a First-Party Data Approach?

Brands that get out in front of the advent of a privacy-first word will enjoy benefits such as:

Increased Customer Trust

Collect privacy-conscious data (first party) and create a unified customer profile to honor customer preferences
Visualize and create audiences based on consent status before propagating out to third party technologies

Increased Efficiencies

Once your customers have opted into your data pool, you gain the ability to create audiences based on business-defined customer attributes, journey stage, behaviors and create predictive audiences to anticipate behavior
Increase conversions, upsell and cross sell opportunities by personalizing each step of the customer journey with first-party data

Increased Agility

Decrease the reliance on third-party data vendors to provide insights into your audiences
Trigger owned and paid communications based on real-time data and events, quicken time to value for new venues
Set up automated flows and marketing/analytic tool triggers based on customer data to save time

What Should Brands Do Today?

We recommend that brands do these things today:

Build a solid first-party data core. Capture and integrate durable first-party ID’s via server-side tools. Enable collection and matching across all owned online / offline systems and partner platforms.
Adapt Digital Media and Measurement Strategies to reduce dependency on cookie-based targeting and streamline analytics across data sources.
Develop a strong digital value exchange. Enhance digital resources to provide the most personalized experience as possible. Current and future customers will be more likely to opt into exchanging data through a strong value exchange.

If you work with a partner to manage your advertising and personalization approaches, make sure you understand your partner’s strategy for making the transition. Work closely with them. At IDX, we collaborate with our clients to manage content (both advertising and organic) and protect consumer privacy amid this rapidly changing environment. We also closely follow privacy legislation. We subject ourselves to third-party audits for data privacy and security that go far beyond what you will see from other communications firms. We actively deploy solutions to help our clients maximize engagement with their audience, while respecting a newfound demand for privacy.

Contact IDX

To learn how you can succeed in a privacy-first world, contact us. We know the terrain and how to help.