Why is Google Changing its Ad Policy?
Google is looking to disrupt the ad industry. Again. This one will blow your mind. Sit back, and read on.
Recall that one time you checked out a book on Amazon, decided against it and then have it follow you around the web for days afterwards? Or, that pair of shoes you saw online that stared you down till you finally gave in and bought it for 5k? Couldn’t resist, huh? Well, you’re not the only one to blame here. There’s something called “cookies” that munch on your web activity (very much like you munch on them i.r.l). Except that online cookies are more… bittersweet.
That’s why Google has announced that they’re planning to do away with third-party cookies and will not be using any new technology to replace them. This move is going to completely revolutionize our ad experience on the internet. And is a big pain to the advertisers who enjoyed being on your trail.
But, wait. What are cookies?
Well, remember when you dream about something and Google advertises it to you the very same day? That’s what cookies do!
Hansel and Gretel can now leave cookie crumbs to lead their way to you!
Cookies are a string of letters and numbers – more like a unique ID code – that websites save on your browsers when you visit them. There are 2 types of cookies on the internet: first-party cookies and third-party cookies.
First-party cookies are used directly by the website that you visit and stores information about what you clicked there so that you are recognized when you refresh the site or move onto another page on the same site. Third-party cookies are used by advertisers who track your activity across the web to show you ads personalized with the not-so-discrete information they have received.
If we didn’t have first-party cookies, Amazon would forget who you are and what your order was by the time you got to the payment page!
Basically, first-party cookies make our digital world possible. They also give websites lots of data about their consumers. However, such first-party cookies set by one website could not be read by another. So, once you log out of Amazon or close your browser, your interaction with them would come to an end. Now, online platforms weren’t thrilled about that. They wanted more. They wanted to be able to play around with the invaluable data that they had.
And, to do this, the ingenious tech junkies of the world devised third-party cookies.
The purpose? Targeted advertising.
Expanding the Trail
Third-party cookies are like an entire universe built after the Big Bang moment of first-party cookies. They’re technically the same thing (a random mix of numbers and letters) but they follow you around the internet, building a profile of you. (Marketing peeps in their meeting rooms call it a persona). So, when you visit Amazon on Google Chrome, Amazon would not only add first-party cookies onto your browser but would also add cookies for platforms such as Facebook and Google. This would enable Amazon to go to Facebook/Google and ask them to display their ads on the sites you visit next.
Does it now make sense why that book you decided against buying on Amazon keeps popping up wherever you go?? Because platforms such as LinkedIn are being paid by Google and Facebook to display these targeted ads to you.
Doesn’t it make you uncomfortable that your profiles are being built and sold to platforms/publishers around the web? Don’t worry, you’re not alone here. Owing to popular concern, browsers like Safari and Firefox have already blocked third-party cookies by default.
But the elephant in the room continues to be Google, for it comprises about 65% of the global browser market share and still continues to indulge third-party cookies.
Why so? Because Google makes tons of bucks from selling these ads. Google accounted for over 50% of all digital ad revenue last year. Its browser – Chrome – makes most of its money by selling keyword-based ads and acting as a bidder for ad exchange through Google Adwords. This allows companies to bid for keywords and the highest bidder would get its website placed right on top for keyword-based Google searches.
Not convinced? Let’s consider some figures from Alphabet’s (Google’s parent company) Q4 2020 financials. Advertising revenue for the last 3 months of 2020 alone came out to a whopping $46.20B - with YouTube bringing in $6.89B – accounting for over 81% of its $56.90 total quarterly revenues.
Birds of a feather FLoC together
So let’s get this straight. Third-party cookies are the most plum cash cow for Google and Google is planning to kill that cow, for the sake of privacy. Sounds too good to be true? Do you really reckon they’d be willing to terminate their major revenue contributor altogether? ‘Course not!
Google’s currently working on a technology called FLoC (Federated Learning of Cohorts) whereby, through their own first-party cookies, they’d keep track of a person’s browsing habits (remember how Google owns Gmail, YouTube AND Chrome?). They’d then put the person in a sort of “cohort” of individuals and target advertisements to the entire cohort. The best part about this is that the FLoC system won’t reveal individual data to the advertisers but only the data of a particular cohort, which protects a person’s personal data from leaking into stranger websites.
This means that Google would now be selling a profile of a cohort of individuals interested in a particular book to Amazon, and they’d have absolutely no idea that you’re part of it!
Sceptics may call this move anti-competitive because now platforms such as Facebook and some smaller websites that use third-party cookies as part of their ad networks would no longer be able to do so with all web browsers blocking them. Google is creating a sort of ecosystem where all the data they collect from you will remain with them. An absolute barrier to data entry and exit. This means that other websites won’t be able to build a profile of you and only Google would have the liberty to do so, thus prompting them to buy ads directly from Google (for perhaps a higher price?).
This move could potentially end up leaving a lot of companies out in the cold, shunning them from the privilege of personalized advertising that in reality is perfect to gain consumers in the digital world.
But, why should I bother?
The benefit of not having your personal data floating around sounds sweet! Every single web page you glance at won’t end up stalking you around. It is like being incognito in a crowd of other similar incognitos who would be grouped together for personalized advertising. Saves you a persona by the marketing folks and gives you an existential crisis if all of this goes wrong.
Is this move just a tactic to build a monopoly where Google rules data and data rules the world? Only time will tell. Until then… read on.
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