Federated Learning of Cohorts (FLoC) is a proposed browser standard that will enable interest-based advertising on the web without letting advertisers know your individual identity. Instead, you’ll be associated with a cohort of users to make you semi-anonymous to the companies targeting you.
FLoC is proposed within Google's new privacy sandbox, a series of plans to satisfy third-party advertising use cases without the need for cookies or other tracking mechanisms. The pivot is designed to head off incoming laws targeting the use of individual user level data.
It’s not just Google. Several other advertisers are pivoting into the same sort of federal learning cohorts. Facebook and Twitter are both looking at similar approaches to FLoC targeting, within their own ecosystems. It's less of a step for social platforms as, to a greater or lesser extent, advertising targeting on their platforms has often been undertaken in a ‘grouped’ manner.
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Eugene Levin is Chief Strategy Officer at Semrush
What does FLoC do?
Instead of individually tracking what a user does and grouping them into that specific interest, they instead get allocated into an anonymized group of people that have the same interests.
Picture it like this. Let's say I'm a fan of football. With FLoC I will not be identified individually in a crowd of football fans, but I will be grouped and tracked within a collective of football fans. In this way, advertising can still be made relevant by those defining characteristics, rather than my personal identifiers.
Individuals can also move between FLoCs. You may become a fan of a different sport or you may switch brands from Nike to Adidas and now all of a sudden you're grouped differently.
Individual numbers of FLoCs will be tracked to identify web visits and how users interact with specific sites as part of that ‘herd’. So instead of your brand being able to identify a specific individual's path through a website visit, aggregated FLoC insight will be analysed to look at typical site visits. Brands will learn from the wisdom of the crowd rather than a hyper personalized individual approach.
What are the benefits?
We are still able to build out interest based targets in a very similar fashion as third-party cookies. A lot of sites and browsers have already killed the third party tracking cookie. For the user, it will mean no more cookie permission pop-ups, but targeting and relevance of advertising will instead be based on this aggregated ‘group’ behaviour.
All of this is designed to improve the user's privacy. What it may not improve is if you enjoy and rely on targeted ads to purchase your goods. You may see an increase of ads that are not relevant to you. And you may no longer find new products that come out based on things that you like.
FLoC-on effects
This approach removes the cookie-led ‘free for all’ when a visitor browses a site, as far as what information is gathered and stored. It means no one brand or entity can triangulate to a T what a single user's habits are.
What is the industry's response?
Facebook has claimed that this will be a huge detriment to small businesses, claiming the only way they can compete is to find the very niche individual that will go out and purchase their items. The Walmarts of the world can basically target broadly as they have more widespread appeal. Industry giants that have a broader appeal and stronger margins to sustain the increases in acquisition costs could be positioned stronger against their small business counterparts.
FLoC could impact small businesses more sharply than the larger businesses and we will undoubtedly see how that plays out over time. It will then become more important for all businesses to improve and increase their MarTech stack so that they can better understand their data (the limited data that they're going to have) and how they can better put it to use, create better targeting and of course, compliant targeting as well.
When FLoC comes into action
Harry Sanders, CEO at Studio Hawk, has seen a surge in people becoming more hands-on with their digital presence, as a result of the FLoC plans.
“Google cannot effectively show advertisers or brands specifically what they're getting for their money so there is potential that they will lose a lot of advertisers if they already aren't. From the perspective of an SEO agency, we've seen a surge in people asking us and getting involved directly so they can own more of that brand and control of the market through that channel rather than traditional advertising return on ad spend approach.”
“I think a lot of advertisers are going to see around 70% of what they're used to. It will be trickier for everyone to do conversion mapping and monitoring for the time being.In the long term, it will improve the user experience.ue to privacy concerns this approach means the web is still a strong avenue for advertisers, but it opens opportunities for channels like SEO to add greater value,” Harry explained.
Kean Graham, CEO at MonetizeMore, says despite being more convenient for the user, it gives them less of an incentive to actually consent.
“This move is problematic for ad-monetized publishers because consenting users are worth more than non consenting ones. If a user does not consent they will only be shown non personalized ads and brands have to rely on contextual advertising.Interest based advertising via options like Google FLoC monetize much more than non personalized ads. We are talking about 3X to 5X difference - a big difference for publishers and advertisers,” Kean stated.
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