Is the Digital Advertising Industry on the Cusp of Wholesale Upheaval? Google to Phase Out Personal Ad Tracking

Announced on Wednesday 3rd March by Google’s parent company, Alphabet, has announced plans to scrap selling ads based on individuals’ browsing histories in what some consider to be a landmark moment for the digital advertising industry.

This comes after other notable browsers have committed to eliminating third-party tracking cookies. So, why is this so important? Well, for starters, users’ can rest assured that their data won’t be made available to advertisers through third-party cookies.

This means that much of the personalised ad content (or advertisements targeted at individual users’) will be scrapped, meaning that when using Google Chrome, users won’t receive ads for products and services that are related to their previous search history.

What Are Cookies?

Everyone who has ever browsed online will have come across a disclaimer informing them that the website they’re browsing uses cookies. They’re then asked if they’re happy to accept this. We’d hazard a guess that 99% of people accept this to view the content they’re searching for.

What effect does this have? Well, if you’ve ever wondered how websites remember your password, keep items in your shopping cart as you continue to browse, or how your laptop remembers which sites you’ve visited and display these on your browsing history, the answer is: cookies.

Simply put, cookies are little bytes of data. Servers send these groups of data to your computer when you land on a website and your computer stores the data as files in your browser cache. The process can be broken down into five actions as follows:

  • You visit a website
  • The web server sends a short message to your web browser (for most people it’s Google)
  • Google saves this message in a file called ‘cookie.txt’ or something similar
  • You click on another page (for example, product listings)
  • Your browser sends a short message back to the server that reveals a little bit more about what you’re looking at

A third-party tracking cookie can be used to follow your online activity from site to site so that the website knows what you’re looking for, (for example, clothes, furniture, cars, houses) and this data is then gleaned and used by advertisers to target their products or services to you.

Now, of course, cookies are valuable for advertisers to sell what they offer to you, however, some have long considered this type of targeted advertising intrusive to their online experience. After all, just because consumers have thought about buying a new suit, it doesn’t mean that they want to be bombarded with ads when they’re browsing for the latest football scores or reading about Boris Johnson’s latest lockdown guidance.

The Effect This Will Have on the Advertising Market and New Websites

So, there’s no denying that Google’s planned phase out of personal ad tracking could have a significant impact on news websites and the digital advertising market. Publishers have raised concerns that if they are unable to run personalised ad content, their profits are likely to take a notable hit.

However, the upcoming change has been met with some trepidation from advertisers who fear that Google’s considerable clout will allow them to reshape the digital ad business. This opinion holds considerable weight, especially when you consider that Google accounted for 52% of last year’s global digital ad spend which amounted to $292 billion.

What’s become apparent since the move was first mooted is that some advertisers are opposed to the idea citing that Google has other ways of obtaining personal data beyond third-party cookies and therefore any policy change would not greatly affect their business.

It’s become clear that advertisers will have to rethink how they choose to run targeted ads to customers. After all, when Google decides to react to consumer behaviour and change their model, businesses need to react or risk falling into search engine obscurity.

Years of Tightening Regulation and Enhanced Consumer Awareness

Google’s decision to move away from cookies is, in part, due to years of tightening regulation and a fundamental shift in consumer awareness. Years ago, very few consumers were aware of just how much of their online activities are tracked. More recently, alarm bells have been raised and consumers are now more cautious than ever when it comes to safeguarding their privacy online.

By eliminating third party cookies, the online sector will be forced to come up with more creative ways to generate consumer data… it doesn’t mean that personalised tracking will cease, far from it.

Even something as innocuous as fingerprint recognition can be leverages to learn what device consumers are using, the browser they use to search for content online, language, IP address, and even the font consumers use. They might not know who you are, but they can still track what user’s do online.

Google will continue to sell ads, after all, they still contribute massively to their revenue. Eliminating third-party cookies just means that companies will have to come up with a new solution that allows advertisers to continue to use personalised content to appeal to prospects and customers.

What Will Replace Third-Party Cookies?

As we speak, Google is experimenting with new ad targeting technology called FLoC (pronounced flock) which uses its search engine, Chrome, to analyse users’ browsing history and grouping them with other browsers with similar habits.

FLoC (or the Federation Learning of Cohorts) is mooted as being the most likely replacement of third-party cookies with some industry forecasters believing that advertisers can expect 95% of conversions per dollar spent. The difference between FLoC and third-party cookies is that whereas cookies understand browser behaviour and interests on an individual level, FLoC looks at groups of users.

Using an algorithm built into the Chrome browser, FLoC observes users’ website visits and then groups users with similar browsing habits together (a cohort.) This can then be used by advertisers to target groups – potentially increasing their reach, without invading individual’s privacy.

Contextual Analysis

However, FLoC isn’t the only option for advertisers. Far from it. Another alternative to using third-party cookies is contextual analysis – or targeted ads based on the content of a website as opposed to users’ personal data.

In many ways, contextual analysis could prove a much more effective way of targeting prospects and customers. Why? Let’s say that a user visits the Sky Sports website or Contextual analysis allows advertisers to promote ads relevant to what users are interested in, not who they are. This means that they can run ads for online retailers who sell sports equipment or paraphernalia.

Should users be browsing for information about their favourite band or artist, contextual analysis allows advertisers to run adverts for upcoming gigs or merchandise… you can begin to see just how relevant and effective such insight and ads can be.

A Wholesale Upheaval or Evolution?

It’s true that digital advertising is on the cusp of change. However, rather than a wholesale upheaval, any change is likely to be an evolution of current advertising models.

Google is not going to write off its near $300 annual ad spend. It’s not going to happen. However, what will happen is that advertisers are going to have to be more creative in how they choose to market personalised content to prospects and customers.

Any business that has enjoyed years of attractive ROIs on their ad spend will need to rethink their strategy and evolve with the times. Fortunately, this is nothing new. After all, in the history of online advertising when hasn’t there been a time when strategies didn’t have to evolve? The answer: never.

Interested in learning how Jungle Marketing can help you grow your business with Google 2021? Get in touch with us today to find out more.

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