Over the past few years, personal privacy has been one of the most pressing subjects facing the tech industry. Faced with increased pressure, both from legislators and the general public, companies like Google have begun to seriously rethink the means they use for harvesting, storing, and using personal data.

While these efforts are often admirable, they do present some challenges for advertisers, who often depend on user data to help target their campaigns and track their efforts.

As such, many in the marketing industry have been talking about Google’s “federated learning of cohorts,” or FLoCs… essentially, a newly proposed method for ad targeting. What are these FLoCs all about, exactly? And should advertisers be excited, skeptical, or downright worried?

Introducing FLoCs

Right now, Google is testing FLoCs in its “privacy sandbox,” with the intention of offering it as a new method for ad targeting. In theory, FLoCs will safeguard consumer privacy while still providing advertisers with some useful data. How will this work, exactly? Instead of targeting users on the basis of their individual behavior, FLoCs will group thousands of users together into cohorts that are based on common interests.

That might sound good in theory, but a few advertising professionals have already sounded the alarm: FLoCs may not be as helpful as it sounds. There are a few specific concerns that are worth addressing.

Will FLoCs Really Improve Privacy?

First, there are some salient concerns over the extent to which FLoCs will do what Google intends, which is to bolster consumer privacy.

It may seem at first like placing users into big, generalized groups, as opposed to targeting them based on their personal information, is a step in the right direction. And it’s true enough: If the FLoCs technology works the way Google says it will, then that should result in less personally identifiable information (e.g., fewer cookies) floating around cyberspace.

But there are skeptics who say that FLoCs won’t deliver on this promise of increased privacy; and more specifically, that this technology will simply provide Google with more control over the digital ads market, a space where they already have a sky-high level of clout. Basically, ad industry veterans assume that, behind Google’s stated intentions, they have found a way to deploy FLoCs in a way that increases their built-in advantage.

How Effective Are FLoCs?

The flipside of the coin is that, beyond enhancing user privacy, FLoCs also need to serve a practical purpose for digital advertisers. Here again, there is mounting skepticism.

Google has claimed that FLoCs are about 95 percent as effective as cookies, a number that most advertisers could probably live with.

The issue is that there’s no real proof of any of this; advertisers simply don’t know how well FLoCs are going to work, and until there is some evidence put forth by independent, third-party testers, there is likely to be some lingering skepticism about Google’s efforts.

Additional Concerns About the State of the Industry

The advent of FLoCs is really just one piece of a bigger puzzle, namely the thought of a cookie-less Internet. Indeed, Google Chrome is poised to eliminate cookies sometime in the not-too-distant future, probably 2022. Many in the ad industry already wonder how this is really going to play out.

While cookies certainly have some problems, and the concerns over user privacy are well-founded, they at least provided the digital ads industry with a uniform standard. Now, the concern is that this uniform standard will splinter into many conflicting solutions, with FLoCs being just one example. As a result, advertising costs and complexities will rise, at the same time that transparency goes down. And while this may all be to the ultimate benefit of big advertisers, smaller players may suffer.

Many in the ad industry hope that a more unified solution will emerge to replace cookies, but for now, there’s simply a lot of uncertainty. Advertisers everywhere are going to spend the next several months searching for some sense of what their margins and budgets will need to look like in the coming years.

Stay Prepared with the Help of enCOMPASS

At enCOMPASS, we’ve been preparing for cookie-less advertising for some time now, employing a number of tactics to make sure our client’ ads are targeted and effective. And while these recent changes raise an alarm for the industry as a whole, if you have a good agency you can stay ahead of the changes and keep your business on top.

We’ll keep you posted on any new changes to cookies, targeting, or digital advertising in general. In the meantime, to learn more about connecting with your audience in the cookie-less future, reach out to us at any time.