Google’s Cookie Replacement Means Nothing Has Changed
When I talk to some publishers that are overly reliant on programmatic advertising for their business, I sometimes imagine a major countdown occurring in their minds. What happens when the clock strikes midnight in 2022 and Google removes 3rd party cookies from Chrome? What will happen to advertising then?
Perhaps that’s very doomsday of me, but I stand by something I’ve repeated multiple times. For publishers that are willing to put in the hard work now, the death of the cookie could be the best thing to ever happen to us.
But that doesn’t mean Google and others in ad tech won’t try to come up with ways for them to retain control of the user data. They’ll present it in proposals that appear privacy focused and good for everyone. In reality, though, the ideas that are presented will help solidify their control over user data with little to show for the publisher.
Take, for example, the recently revealed Federated Learning of Cohorts (FLoC) proposal put forth by Google. Axios published a piece about it on Monday:
– The company said Monday that tests of FLoC to reach audiences show that advertisers can expect to see at least 95% of the conversions per dollar spent on ads when compared to cookie-based advertising.
– FLoC uses machine learning algorithms to analyze user data and then create a group of thousands of people based off of the sites that an individual visits. The data gathered locally from the browser is never shared. Instead, the data from the much wider cohort of thousands of people is shared, and that is then used to target ads.
I decided to dig into that concept a little bit because it sounds interesting in theory. Taking a look at the FLoC GitHub:
We plan to explore ways in which a browser can group together people with similar browsing habits, so that ad tech companies can observe the habits of large groups instead of the activity of individuals. Ad targeting could then be partly based on what group the person falls into.
Browsers would need a way to form clusters that are both useful and private: Useful by collecting people with similar enough interests and producing labels suitable for machine learning, and private by forming large clusters that don’t reveal information that’s too personal, when the clusters are created, or when they are used.
Let me try and explain this in a simpler way. When a cookie is dropped by an ad server, the owner of said server (not the publisher) is able to build a user profile on the individual. That then allows advertisers to target them at the individual level. It’s why you see ads related to things you’ve seen or read (or in the case of our technological overlords, Siri and Alexa, what we’ve said).
Every participant in the ad tech ecosystem of chaos collects this information. They trade it. There are companies whose sole purpose is to collect data even if they don’t sell any ads. They act as backfill for advertisers, giving them a little extra data for a tiny cut of the ad impression dollars.
That’s a great business for everyone but the publisher. But let’s not forget… we’re also to blame. We choose which ad partners are on our site and we’ve no problem being a leaky faucet of user data.
What FLoC is trying to do is change who collects the actual user data. Instead of each participant in the advertising ecosystem, the data is collected at the browser level. Now the browser knows what stories an individual has read, which type of content they’re interested in, etc. If you think about it, nothing has changed really since browsers already know what sites you’ve visited.
The browser would then turn around, analyze all of that data, and then group people together based on their interests. So, everyone that was viewing a site about a particular thing would be grouped together into one cohort. As the user went around to different websites, a flag would go up effectively telling ad servers, “hey, this person is interested in the topic you’re bidding against” without having to share any personal information.
In theory, the idea is interesting. In practice, the idea is just a lot of fancy words that describe the exact same thing we’re working with today with one exception.
Who owns the browser with the most market share? Google. Who is the largest seller of advertising on the internet? Google.
At least with 3rd-party cookies, there’s somewhat of an even playing field amongst ad tech companies. Whether it’s TradeDesk, Rubicon, the multitude of small SSPs, or Google, they were all working with similar data from publisher websites. But in this scenario, every company not named Google would only get flagged cohorts while Google would, you guessed it, have all the personalized data.
How do we classify data collected by a browser? It’s not technically first party data because that should be from the individual website. But since I’m actively using the browser, it also doesn’t feel like third party data. It’s hard to qualify this, so if anyone reading has thoughts, please let me know.
Here’s my problem with this proposal. Because the data is being collected by the browser and since Google owns that browser, it will be able to turn around and offer its advertisers any sort of targeting that it wants. If you’re an advertiser and you work through a third party DSP, you’re going to get the FLoC ad approach, which is 95% good. If you go through Google, well, you can get perfect targeting. When you’re talking about billions of dollars in advertising, 5% matters.
What publishers do with this is hard to say. According to the GitHub, there is a way to opt-out of data being collected. However, if advertisers start reallocating budget toward this approach, publishers will start to feel the pressure to accept.
But here’s the thing… there is very little that is as good as true, 1st party data. This is why I continue to write about this. It’s why I use headlines like Time is Running Out: Get Your Owned Data Strategy Figured Out. Yes, it’s alarmist. But media companies that are able to offer targeting directly to their advertisers will be in a position of increased strength.
It’ll be interesting to see how Google’s proof of concept experiment plays out. Since it’s now in the press, my guess is that it’s going to do pretty well.
Business Insider’s quiet emergence
With a headline that borders on rude (Business Insider Did Nothing When the Pandemic Hit. It Worked.), The Wall Street Journal wrote:
Across American corporations, leaders were responding to the Covid-19 crisis with a flurry of activity and strategy shifts. Mr. Blodget persuaded the company’s owner, German media conglomerate Axel Springer SE, to do nothing and let the storm pass. It worked.
Insider Inc., the parent of Business Insider and related properties, roared back in the second half of the year, posting 30% revenue growth for 2020 while turning a profit, Mr. Blodget said. A person familiar with the matter said the company generated over $150 million in revenue.
Full disclosure: I am GM of B2B at Morning Brew. Insider acquired a majority stake in Morning Brew back in 2020.
With that out of the way, it’s interesting to see where Business Insider has come since its early days over a decade ago. Where every other media company that launched around the same time is just scraping by, Business Insider appears to be thriving. As The Journal reports, it added 200 people in 2020 alone and now fields a team of over 500.
It’s incredible growth. And it baffles me.
For the longest time, I struggled to understand why anyone cared about Business Insider. Wasn’t it the company that popularized the slide show? Pull 50+ images together, inject an ad every third or fourth picture, and you’ve got a great way to build an advertising business. When people referred to clickbait news, Business Insider was one of the first to pop into my mind.
Up until a few months ago, I didn’t even have a subscription to the publication. How could I pay for content that I felt was clickbait?
I finally got one, though. And I have to say, the editorial has really changed. I now use it pretty regularly when I am researching stories to write for A Media Operator. It has quietly built one of the largest teams dedicated to covering the advertising and media business.
But as The Journal reports, it has stiff competition ahead of it:
Meanwhile, a push at Business Insider to develop a subscription business flourished in 2020, with the number of subscribers doubling to just north of 100,000, people familiar with the matter said. The site charges $12.95 a month for a subscription, though it offers significant introductory discounts, they said.
Continuing that momentum will be challenging as all major publishers chase subscribers. Among rival business-focused publications, Bloomberg LP has around 250,000 subscribers to its website and business news site Quartz has around 25,000. The Wall Street Journal had 2.35 million digital subscribers as of the September quarter.
I’ve read reports that The Wall Street Journal’s audience has stagnated. Insiders at The Journal are worried that the business is overly reliant on an old demographic and that their subscribers are going to drop off as they pass away. This is an incredibly morbid way to think about it.
But if that is the case, then who are the other players in town? Bloomberg has done a very good job building its digital business over the past few years. But who will a younger generation of business leaders seek out for in-depth news? It’s very likely the answer is Business Insider.
If doing nothing during Covid looks like what Business Insider has accomplished in 2020, then sign me up. I’ll be sitting over here doing absolutely nothing.
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