This article was originally posted on Business 2 Community.
As anyone in the advertising industry well knows, Google is in the spotlight. After announcing their identity management changes, it seems as though Google has thrown the entire advertising industry into a tailspin; one that has left most scrambling to understand what this means for their business. This could mean the end of 1:1 identity as we know it, or a new perspective on the identity conversation.
Google’s proposed plan includes the introduction of FLoC (federated learning of cohorts); a substitute for third-party cookies that groups users into cohorts based on their browsing patterns. In their essence, FLoCs take away from 1:1 personalization and instead create cohorts where individuals are indistinguishable from one another. As you might expect, the advertising industry was not thrilled by these changes. Oddly as it turns out neither are some regulators.
Why is this happening?
To be fair, Google isn’t exactly the bad guy here. Consumers, it seems, are torn between their desire for more personalized experiences and the protection of their data. Many of them don’t realize digital marketers rely on data to create relevant personalized experiences. This happens today primarily through the use of third-party cookies; a flimsy mechanism that does little to help brands identify and personalize because of their inaccuracy. Take, for example, each device, like a phone or computer. It would make sense that one device equals one person, right? Not the case. Each browser identifies you as a different person, making it difficult for brands to paint a concise picture of who you are, what you’re interested in and how you engage with them.
Understandably, brands are concerned about Google and Apple’s decision to join other internet giants, like Mozilla and Microsoft, to remove such essential technology with no clear alternative.
How do privacy regulations come into play?
The problem with Google’s changes that concern the ad industry is their insistence that they don’t plan to provide any sort of replacement for 1:1 identity purposes — but would instead allow other adtech platforms to do so. Google doesn’t believe that people-based identity solutions have a long-run future with the increasing privacy concerns of consumers.
However, this simply is not true. Sure, privacy regulations such as CCPA and GDPR require the consent of users and a designated opt-out policy, but as long as the consumer consents, there are no regulations against brands collecting emails and other personal information from consumers. If there were any regulations of the type, every app, website and service would virtually become unusable. Digital identity has become such a staple of everyday digital use that the impact of preventing it would cause an almost complete digital meltdown.
What does this mean for the future of identity?
People-based IDs currently (and will continue to) face challenges revolving around scale and reach. Having seen significant growth in direct-to-consumer sales from brands wanting to increase their website traffic and build out an eCommerce strategy, most brands will continue to seek consent to use for their marketing efforts.
Google’s pivot from 1:1 identity will likely lead to a windfall for martech and adtech platforms that have built robust alternative identity technologies for 1:1 personalization. As a result, we should anticipate further growth of independent martech and adtech platforms as Google backs into its own walled garden, cutting itself off from the open web and leaving plenty of room for other platforms to thrive and help deliver for marketers in the space.
It’d be wrong to assume that Google will lose any traction with these changes. The tech giant will continue to gain momentum and use its plethora of consumer data to improve advertising on its owned media. In some sense, it feels like Google is reading from the Facebook playbook. While search and Youtube are the biggest revenue drivers for Google’s business, they also provide a hub for Google to continue its internal data mining as that data is often collected while consumers are logged in and constitutes consented “1st party” data. This will mean search and Youtube will become Google’s most important products over display advertising in the open web.
Could we see Google retreat entirely from selling ad tech tools altogether for the open web? Only time will tell.