What Is FLoC?
Even in adtech, where learning new acronyms seems like half the job, it‘s understandable to ask, “What the FLoC is this about?”
Definition:
Federated Learning of Cohorts (FLoC) is an ad-targeting method developed by Google, which would aggregate thousands of Chrome users into cohorts based on similar web browsing patterns. With FLoC campaigns, advertisers wouldn‘t target individuals but instead target cohorts such as “Formula 1 fans,” “home chefs” or “fashion enthusiasts” based on the sites those users visited.
Origin:
FLoC is a feature in Google‘s Privacy Sandbox, the developer toolkit the Chrome group is using to evaluate privacy policies and adtech use cases. FLoC was proposed in 2019 as a way to target users based on common interests, rather than with user-level IDs.
What’s next:
The future of FLoC is being debated within the W3C‘s Improving Web Advertising Business Group. Adtech companies, publishers, advertisers and others can propose and lobby for changes to Privacy Sandbox features, including FLoC, but W3C working groups are helmed by developers from browsers such as Google Chrome, Firefox Mozilla, Microsoft Edge and Apple WebKit (the Safari developer team). Industry suggestions are just that: suggestions. That said, Google has been very responsive through the process so far.
Supporting views:
Google is the evangelist for FLoC-based advertising. The Google Ads business tested FLoC campaigns last year and said it achieved 95 percent of the conversions per dollar that would be expected using third-party cookies for targeting and measurement.
Many see FLoC cohorts as a natural successor to third-party data and would let advertisers use data to target prospective customers based on browsing habits, but without exposing individual user-level data.
Opposing views:
Adtech and digital media companies have pushed back on FLoC. Competitors maintain Google is using privacy concerns as an excuse to establish new online advertising rules that favor its own bottom line since Google‘s O&O business would be relatively unimpaired by these changes while independent adtech and publishers might suffer greatly. For example, Google said in January 2021 that FLoC-based campaigns achieved a 95 percent ROI during testing. But the test campaigns used Google‘s demand-side platform (DSP) to target known Google audiences with its own attribution system.
Google would also still track users across Search, Chrome, Android and YouTube, so it has an immense first-party identity set it can use to target and measure campaigns on its own properties without FLoC cohorts. To wit, Google paused its rollout of FLoC in Europe due to GDPR concerns.
Independent adtech companies own no media channels or consumer apps and so would likely have to rely on FLoCs as a substitute for third-party data.
Advertisers and agencies that have grown accustomed to the precision of user-level targeting also say the jury‘s out on whether FLoC can deliver the same results for their campaigns.
Bottom line:
For advertisers, FLoC is a sign of how online advertising will change, from one-to-one targeting to aggregate targeting. Whichever new technologies are ultimately selected to power advertising on the open web, they will be much more focused on concepts like cohorts that remove the direct links to a given consumer.
Publishers will need to understand how FLoC can modify the way they work with advertisers — both programmatically and direct deals. Since third-party data won’t be available anymore, will FLoC be an adequate replacement?
For consumers, FLoC will be another data-driven feature whirring in the background of their web browser. Right now, the only way to opt out of FLoC is to disable third-party cookies in user preferences, though fewer than one percent of users are part of the initial FLoC trials. If Google gives users clear ways to opt in to/out of FLoC, it could increase users‘ control of their data.
There are also privacy concerns about FLoC. Google isn‘t testing FLoC in Europe because the methodology could prompt a GDPR investigation. For one thing, online publishers and individual users never consented to be involved in FLoC data collection, which is a no-no under GDPR. European regulators would also question Chrome‘s involvement as a first-party data controller since it creates cohorts out of publishers‘ audiences without permission.
Further reading:
TechRadar: Microsoft Edge becomes latest browser to disable Google‘s FLoC
