What does Google's new third-party cookie alternative mean for digital ad industry?

Topics API is receiving mixed reactions from the industry as some feel that it will need further iterations while others say it will provide better insights to advertisers

e4m by Javed Farooqui
Published: Jan 28, 2022 8:31 AM  | 6 min read
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Tech giant Google has revealed that it will be scrapping Federated Learning of Cohorts (FLoC), the tool which was expected to replace third-party cookies, in favour of a new solution called Topics API. According to Google, Topics will enable interest-based advertising, unlike the present mechanism of tracking individuals to collect their behavioural and browsing data.

Interest-based advertising is a personalised form of advertising which entails the collection of data across multiple domains/websites to serve advertising which is based on the user's interest. According to Google, Topics will allow the browser to determine a handful of topics that represent a user's top interests in that week based on his or her browsing history.

exchange4media spoke to a cross-section of stakeholders to get their views on the new solution unveiled by Google as a third-party cookie alternative. The digital advertising industry has mixed views on Topics API as some feel that it will need further iterations to benefit publishers and advertisers while some feel that the focus on individual interests rather than a group will provide better insights to advertisers.

Vishal Jacob, Chief Digital Officer, Wavemaker India, said there won't be a single solution to replace third-party cookies going forward and advertisers need to work on multiple approaches to meet their marketing and business goals. He also noted that Topics will focus on contextual advertising whereas many small publishers rely on behavioural advertising for monetising their content.

"We at Wavemaker are always supportive of privacy-first solutions that help create a more responsible advertising ecosystem. The pivot from FLoC to Topics is a key shift that suggests Chrome browser-based tracking will not generate and surface up insights beyond what a publisher could understand on their own and will focus on creating more “contextual” based solutions. We expect this approach to continue to evolve, but we believe any future iterations/proposals will lean more towards leveraging contextual vs behavioural signals," Jacob said.

"It's also unclear if this approach will prove to be valuable for small/local/independent publishers who have historically relied on behavioural advertising to monetize their sites/content. Clients will need to explore combining multiple approaches and capabilities to create the optimal solution mix based on their requirements as there won’t be a single solution to replace third party cookies in the future. To support this, Wavemaker/ GroupM has been developing a suite of capabilities to better assess a client's readiness, benchmark readiness against overall vertical, and create a customized roadmap of priorities to support the transformation of data and signals post third-party cookie depreciation," he added.

Abhinay Bhasin, Vice President (Asia Pacific), Data & Product Solutions, Data Sciences, dentsu international, believes that the shift from FLoC to Topics is a good move. He also feels that Topics will offer a lot more insights to advertisers since it focuses on the interests of individuals rather than groups.

“Google’s recent move towards Topics as an improved upgrade over the much-contested proposition of Federated Learning of Cohorts [FLoC] would be a good move overall. It will impact the way the industry measures and targets opt-in users. While it may be too early to comment on the full scale of impact, in my view, there could be positives and negatives depending on the degree of implementation, how fast Google adapts to it and people respond to it. One impact could be on accurate reach and frequency, given the assumption that people broadly fall under five topics in a week category – which may well be different. The premise of focusing on an individual rather than the overall browsing history trends of a group of people is more solid in accuracy and as it evolves to expand audience bucketing, it will be more powerful and a lot more insightful for advertisers," he elaborated.

Voiro Founder and CEO Kavita Shenoy commented, "UX on an ad-supported publisher page without any prior ad preferences set is a nightmarish experience. Topics API provides a clear, user & time-controlled way of enabling relevant ads and hopefully, unlike FLoC, browser vendors will warm up to it and implement it."

The Trade Desk Country Manager Tejinder Gill pointed out that Topics is limited to the Google Chrome channel whereas most consumers spent a lot of time on the open internet. “We support efforts to develop privacy-friendly alternatives to cookie-based targeting that help marketers meet their goals and provide consumers with relevant ads. Here in Asia, we spend way more of our time on the open internet binge-watching OTT video content, engaging on mobile apps, and audio streaming. Google’s latest proposal on Topics is limited to one channel which is the Chrome browser."

He added that Topics cannot be applied to the multiple devices which most consumers use to access their favourite content on the open internet. "This means that marketers are restricted to basic targeting approaches, which limits their full potential. Users, in turn, also receive a suboptimal experience online. Additional iteration will be required to address key advertising use cases and adequately answer the question of funding great content on the internet."

Gill also said that the Unified ID 2.0, an industry-wide identity solution, is reflective of today’s contemporary digital marketplace as it solves marketers’ need for a solution that helps them manage activation, measurement, and frequency across all the channels where consumers are spending a majority of their time. "It was built together with leading industry associations and partners to ensure the benefits could be enjoyed by all - from publishers to agencies to the public. We continue to work with all partners on solutions that help preserve free access to great content across the open internet, for all."

Aqilliz Global Chief Business Officer Rajeev Dhal feels that the scrapping of FLoC is a move in the right direction. He, however, added that Topics might lead to erosion of digital advertising revenue since it lacks effective solutions. Dhal also believes that decentralised advertising & marketing technology companies will see more adoption going forward.

"Google’s acknowledgement of issues with FLoC is appreciated but suggesting solution in form of Topics looks half-baked. We need effective solutions and not just easy-sounding solutions. I am confident that this move will cut the ice with regulators, but it will erode a significant amount of revenue from the digital advertising value chain. Irrelevant signals will lead to ineffective targeting negatively impacting the performance of every campaign. With the drop in outcome, the impact will soon shift towards pricing and this will ultimately impact the yield for publishers and will ultimately trickle down to all other components of the value chain. The only silver lining I see is that decentralized advertising & marketing technology companies will see increased adoption and there will be increased collaboration between brands and publishers to get their mojo back," Dhal expounded.




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