Life with rotting apples, crumbling cookies and a FLoC

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How much of your current marketing strategy is aimed at solving for the deprecation of 3rd party cookies and Apple’s recent IDFA changes? Sunsetting 3P cookies will fundamentally change how companies reach consumers through addressable advertising channels while Apple has created a fundamental change to emulate. Are you ready for this change?

Since the 1990s, marketers have increasingly built their businesses with digital channels, relying heavily on their ability to recognize users via cookies and more recently, to strategically deliver content accordingly. There can be no doubt, these changes represent a monumental shift and as an industry, we have a lot to do, in order to maintain the ability to addressably deliver relevant advertising. However, this change also represents an opportunity for growth and to rebuild an outdated system. In this blog, let’s take a look at Google and in particular, one of their approaches, FLoC.

Since the initial announcement over a year ago, Google has come out with a series of alternative solutions to third-party cookies for marketers, called the Privacy Sandbox, or ‘open source initiative to make the web more secure.’ The sandbox will include Federated Learning of Cohorts (FLoC), Turtledove, SPARROW, FLEDGE, and Dovekey designed to replace cookies and protect privacy. These initiatives will continue to evolve as testing is underway, and those who are building adaptable, flexible solutions in the face of deprication are best-positioned to navigate the ongoing evolution.

An opportunity to rebuild
Cookies are just one tool to deliver on and other alternatives have always existed. Maybe this is what ad tech has needed, an opportunity to rebuild the ecosystem more effectively, and to finally measure truth in a privacy-first environment. Safari and Firefox have already blocked third party cookies. With Apple’s changes to IDFA, the industry is moving in a new direction with the goal to deliver ads in a brand-safe and compliant way that still provides value to consumers.

More importantly, not all cookies are facing their demise, as first party cookies continue to be an effective way for brands to connect with consumers in a more personalized way via owned and operated domains or to partner with publishers for syndication. This still available data will continue to influence and be integrated into future-resilient solutions. The challenge for marketers is how to operate effectively in an ecosystem where not all your audiences are customers.

Preparing for the future
In addition to Google’s response, the industry has been flooded with a myriad of new approaches to solve for this changing era in ad tech such as the Unified ID 2.0, MAIDs, etc. It’s both an exciting and at times overwhelming challenge to solve for. Kinesso recognizes the merits of each and believes in a multi-layered approach to enable the best outcomes for brands and people alike. Partnerships with big tech, ad tech companies and vendors is what will ultimately lead to a successful outcome for people, advertisers, and privacy advocates.

At Kinesso, we appreciate Google’s dedication to a privacy standards-based approach.Their FloC approach is looking to solve one use case and we’re looking forward to evaluating its performance across traditional methods. Below we’ll examine the impacts of FLoCing for audiences, measurement, identity and marketers’ CRM data.

Welcome to the FLoC
A key piece of the Google’s Privacy Sandbox is an algorithm called FLoC (Federated Learning of Cohorts) that effectively camouflages individuals ‘in the crowd’ to preserve privacy. Meaning, brands can select audiences with similar interests to receive their ads instead of relying on third-party cookies, which are individualized. Google has said that you can still upload 1st party data to their platform via CMU, but it is not clear if that can be used in a FLoC buying use case or only against their O&O inventory.

1. New measurement tools are needed
Information from your Chrome browser will be bucketed into cohorts, based on a person’s general interests and/or browsing history. It is unclear how this new approach will be measured. The key to this solution, according to Google, is that dependency is on the browser and any ‘non-transparent’ data capture would be removed (third-party cookies, fingerprinting, etc.). The central idea being that the attributes tracked by the algorithm are held local in the browser and not transferred or uploaded someplace else.

Separately, Google has been scaling and delivering a measurement solution in Ads Data Hub (ADH). ADH is a safe alternative to log data where outputs are shared in an aggregated fashion. The downside? ADH solves for Google, but not for platforms like Facebook or Amazon. Meaning brands will need a solution and strategy for each of these platforms or walled gardens.

2. Less precision
How effective are these alternatives compared to third party cookies? It may be difficult to achieve the same level of targeting and reach. Brands will need to compensate for a less focused approach and adjust ad spend allocations since online ads will be more generic. Cookies deliver a more precise method of targeting compared to FLoC and precise frequency capping isn’t available. The reality is it may take time for the cohorts to build up enough valuable data to create meaningful groups. So, in the beginning the ability for brands to reach people with relevance will likely be limited.

3. The right identity solutions are crucial
If we weren’t losing third party cookies, would we have taken the time to re-evaluate privacy improvements from an industry-wide perspective? The loss of cookies has created not only a greater need for identity solutions but makes identity business-critical. Identity graphs ethically combine online and offline data sets to resolve individuals across multiple devices and channels. This unified picture of a customer or prospect can then be used for people-based marketing and personalization. According to Prohaska Consulting, there are 37 ID partner options in the US, and 54 globally.

4. Brands with strong CRM systems in play will hold an advantage
Brands who are already using CRM data to inform their marketing and audiences are ahead of the game. For example, using e-mail addresses of registered users, previous purchase history from brands, user actions taken online or universal identifiers, all help to personalize ads and reach the right people. First party data is extremely valuable because it’s the people already interested in your brand (think qualified leads) who will likely purchase or convert. By using CRM data, coupled with third party data, marketers can develop detailed lead scoring programs that funnel people into tiered re-marketing campaigns based on interest level. Now is the time to build momentum. Brands that lean into resilient signals or sources, like high value audiences, will be faster to market when the cookie and FLoCing changes take place. It’s a good reminder that quality data underpins the success of effective marketing and reach.

5. Compelling reason for audience transparency
As FLoCs evolve, it will be interesting to see how information is released for what signals determine the categories people are grouped into. Many large tech companies use pre-built audiences to establish who is most likely to buy a product and for campaign setup. The challenge with pre-built audiences is the lack of transparency into the methodology. Pre-built audiences are not always based on an informed audience seed, so there’s high likelihood for errors and reaching the wrong people.

At Kinesso, we have a custom audience building platform (Audience Console) where users can leverage thousands of demographic, attitudinal, behavioral and location attributes to create an audience. The audiences are people-based, not cookie or device based; we link to a persistent, people-based ID that goes beyond specific actions or signals. As more parameters are added to an audience, the total audience updates in real-time, so users have total transparency. From there, users can determine match rates to activate across various platforms such as Facebook, Twitter, MediaMath, The Trade Desk, Videology, and more.

Navigating a new reality
It’s worth noting that FLoC and Google’s other Privacy SandBox initiatives are still evolving. The idea is to learn from the initial trials (currently underway in Australia, Brazil, Canada, India, Indonesia, Japan, Mexico, New Zealand, the Philippines, and the US). Trials will most likely run through early Q3, and eventually result in over 33,000 cohorts for Chrome.

There’s a lot of talk in the ad tech industry about future proofing your solutions, which is tough since ad tech is constantly in flux so it’s a bit like chasing a moving target. The goal is to future proof your approach for leveraging first and third-party data while keeping execution platforms diverse to allow for change.

This is a good time to re-evaluate your tech solutions to ensure they solve for the complex approaches and challenges in market. Take a look at the quality environments, audience data, measurement tools, insights and identity solutions currently in your mix to create the most powerful marketing presence possible. If there’s one thing you can be sure of in a world of constant change, which is relying on one way forward, is relying on a lot of risk.

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