Another Big Tech’s Move to Ditch Ad Tracking

By: Huong Tran

Announced on February 16, 2022, Google is set to follow Apple in restricting cross-app tracking on its Android devices. This move is part of a broader, multi-year initiative to eliminate app tracking identifiers and limit the sharing of user data with third-parties. This applies to Android's identifier, “Advertising ID” (AdID), which assigns a unique string of characters to a user's device to allow advertisers to track user activity as they move between apps. Similarly, Apple's “ID for Advertisers” (IDFA), a randomly generated code that Apple assigns to its devices, works the same way as Google’s AdID. The adoption of these privacy controls will certainly put restraints on the advertising industry which leverages the identifiers to track consumer behavior online. 

Google stated that no immediate changes will occur for at least two years, giving the ad industry time to adapt and participate in a consultation process. The tech giant plans to collect feedback from developers, privacy advocates, and other interested parties and begin testing by the end of this year. Further details and specifics around this change may depend on the results from the collected feedback. 

The New Norm

Regardless, new solutions and alternatives will be needed to keep the ad industry running amid the growing restrictions around online user tracking. Some proposals have been suggested, including one where Android devices will track and analyze app usage directly on the devices and provide advertisers with meaningful insights about users without sending raw data (such as identifiers) to third parties. The turn towards more privacy-safe, on-device tools for targeted advertising seems to be the win-win alternative, giving end users more control over their data, while still providing third parties with what they need to deploy effective, relevant ads for their businesses.

Google’s Privacy Sandbox

The Android privacy changes are an extension of Google’s Privacy Sandbox, an initiative launched earlier by the company to set web standards to limit access to user data. This now includes the switch from FLoC (a.k.a. “Federated Learning of Cohorts”, Google’s previous replacement for third-party cookies) to “Topics”,  an approach that will categorize users in different interest groups based on their web activities for a set period of time before purging the association. Google indicated that these topics are associated with the users directly on their devices, then shared with external advertising parties. Topics will not include and place users in sensitive interest categories (such as race, gender and religion) and eventually down the line, allow users full control to manage the topics associated with them. Under Google’s Privacy Sandbox, both Android and web initiatives toward better ad privacy for  users will share many common themes, however the difference may be in the implementation and technologies leveraged to reach those goals.

Impact on Ad Revenue

What we can learn from Apple since it started to require apps to collect consent for user IDFA, is that it had a significantly damaging impact on the ad industry. It is especially the case for Meta (Facebook), which has built a large portion of its business on digital ads and user targeting. Meta has reported to its investors that it expects Apple’s privacy changes under the App Tracking Transparency (ATT) framework to cost the company more than $10 billion USD in lost revenues this year. 

So, What’s Next For Marketers?

If your business heavily relies on online identifiers to track and collect user data for marketing and advertising purposes, consider shifting the method of data collection to end users directly. Ensure that you are effectively communicating to your customers the value of opting-in to tracking and or providing information to your business (e.g. for a seamless, personalized experience). Ensure you gain consumer trust. Consider a branding and marketing strategy that will demonstrate to your consumers that they can trust you with their data. That involves revisiting your personal information handling practices and implementing a privacy by design approach to your business model. Minimize the personal information you are collecting to only what is required. Be transparent about what you are collecting, why you are collecting it, and who you are disclosing the information to. Ensure the user has control over their personal information, including withdrawing their consent. 

And as the importance of online user privacy grows, the shift will move from behavioral targeting to contextual targeting. Behavioral targeting relies on the user’s historical digital data that may include browsing history, searches, clicks, and past purchases, to determine the relevant ads to that specific user. Contextual targeting focuses on matching the ads to the environment in which the users are browsing, disregarding the individual user and their online behavior. Behavioral targeting requires a large amount of user data that is (or will) become increasingly difficult to collect, while contextual targeting still provides a level of ad relevance without the overcollection of information and intrusive profiling of end users. 

Businesses will have to pivot their marketing strategies as ad privacy gains traction within the online space. And now with Google following suit to restrict cross-app tracking, it is undeniable that there is a major disruption happening in the digital ad industry.