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Photo: STR/AFP via Getty Images

Google on Monday said new test results show promising signs that the technology it's hoping will replace cookie-based ad targeting is working.

Why it matters: Google and web browser rivals Apple and Mozilla have all introduced sweeping privacy changes recently that will collectively phase out cookies, an internet tracking tool that tracks users' web browsing history.

Catch up quick: Cookies are considered third-party data, or user data that's collected indirectly from users via browsers or websites. Third-party data is often bought and sold at scale via online data exchanges.

  • For decades, cookies have been the primary way most advertisers target users online, but privacy concerns are making it less viable going forward.
  • Finding a replacement for cookies is a massive challenge, given that the entire digital ad ecosystem, worth $330 billion USD globally, has been mostly built around cookies.

Details: Google has been testing a new API (a software interface) called Federated Learning of Cohorts (FLoC) that acts as an effective replacement signal for third-party cookies. The API exists as a browser extension within Google Chrome.

  • 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.

Be smart: It's a big deal that Google says it's close to coming up with a technology that will replace cookies, because one of the toughest parts of phasing cookies out of internet ad-targeting is that there hasn't been a great solution for what to replace them with.

  • Many publishers have started to lean into using first-party data, or data uploaded to a site directly from the user, to target ads instead.
  • But not all publishers have strong enough customer relationships to gather such data, and would've been paralyzed without the ability to use some sort of anatomized data to target people with ads.
  • The effort is part of a greater Google initiative called the "Privacy Sandbox," a proposed set of rules to phase out cookies in a privacy-friendly manner with in conjunction with industry consultation.

The big picture: Google's privacy efforts are happening alongside sweeping changes from Apple that similarly make it harder to track individual user data online. These major changes come amid a privacy reckoning in the U.S. and in Europe over online data.

  • Google is trying to implement a more gradual and collaborative approach to its privacy changes than Apple, which has been criticized — mostly by Facebook — for rolling out sweeping changes to its "Identifier for Advertisers" (IDFA) user tracking feature without providing advertisers a better alternative.
  • Chetna Bindra, Google's head of user trust and privacy for advertising, told Axios that an industry-first approach made more sense for Google.
  • "The way we see it is that there is a lot of technical innovation at the heart of this, and what we've been focusing on is not blocking 3rd-party cookies right away," she said. "We are intent on engaging the entire advertising community and really leaning into the kind of collaboration that's critical to make such massive change."

What's next: Google has other proposals to replace cookies in the works, so it's not guaranteed that FLoC will be the answer, but the company said it's highly encouraged by what it has seen so far.

Go deeper

Jan 28, 2021 - Technology

Exclusive: Snapchat launches new digital literacy program

Snapchat

Snapchat on Thursday unveiled a new digital literacy program aimed at educating its users about issues like data privacy and security.

Why it matters: Snapchat intends to help its young-skewing user base understand the risks associated with navigating an under-regulated web.

Jan 29, 2021 - Technology

Facebook developing a tool to help advertisers avoid bad news

Photo Illustration: Avishek Das/SOPA Images/LightRocket via Getty Images

Facebook on Friday said it's testing new advertiser "topic exclusion controls" to help address concerns marketers may have that their ads are appearing next to topics in Facebook's News Feed that they consider bad for their brand.  

Why it matters: As Axios has previously noted, the chaotic nature of the modern news cycle and digital advertising landscape has made it nearly impossible for brands to run ads against quality content in an automated fashion without encountering bad content.

Scoop: Biden admin call on Putin pipeline provokes GOP anger

Putin chairs a video meeting in July 2020. Photo: Alexei Druzhinin/Sputnik/AFP via Getty Images

A briefing between the State Department and congressional staff over Vladimir Putin's Russia-Germany gas pipeline got tense this week, with Biden officials deflecting questions about why they hadn't moved faster and more aggressively with sanctions to stop its completion.

  • The Biden officials also denied negotiating with the Germans over a potential side deal to allow the pipeline to be finished.

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