“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Eric Schmitt, research director at Gartner.
Amidst fundamental shifts in privacy norms and regulations, Google has introduced Topics. In Alphabet-speak, Topics is a Chrome Privacy Sandbox proposal and “interest-based advertising” initiative that aims to “show relevant ads.”
The rest of us can be forgiven for simply calling it an ad targeting framework.
Google’s introductory Topics communications suggest a broad, coarse-grained approach to targeting.
But the limited information shared to date raises more questions than it answers.
What we know – and don’t know – about Topics
Simply put, Topics are audience segments organized into a taxonomy, which Google will define and manage. (The company did suggest, though, that it might eventually cede control to an external party.) Google has already published an initial “design” of 350 Topics to give users an early taste.
We also know a little bit about how Topics will work. At any given time, a user’s browser will associate itself with up to five Topics – plus one additional topic chosen at random. To target and serve an ad, the publisher or ad tech intermediary will query the visitor’s browser, which will return up to three topics from the set of six. Browser-Topic pairings (membership in a topic segment) will refresh weekly. Google also promises to mitigate the risk of data aggregation and re-identification and provide end users with transparency and control.
So what don’t we know?
For one thing, the total number of topics, which will be crucial to overall ad precision and efficiency. While Google has said the taxonomy will have a few hundred to a few thousand Topics, a more specific range would clarify just how far Topics will depart from today’s buffet of super-precise, highly customized, cookie- and device-ID-based segments.
A taxonomy of 3,500 Topics, for example, is an order of magnitude more than the “design” sample of 350. In the context of a US population of 268 million adults, this could mean the difference between an average segment size of 75,000 people and 750,000!
The granularity of topics remains a question mark, too. The 1,500-row 2020 IAB taxonomy includes 500 “interest-based” rows, 800 purchase intent segments and 200-plus demographic attributes. These include age, gender, income, education, occupation, marital status, size of household, “life stage,” own-versus-rent and “net worth.” Which of these will Topics include? For now, it’s unclear.
It’s also not certain whether Topics will offer geographic targeting. Depending on how Topics handles geography, US media planners might be able to coordinate digital ad buys with the 210 designated marketing areas used for radio and TV planning, or the ~42,000 postal ZIP codes. Of particular note is postal code extension, which can be an especially precise identifier – and, therefore, a privacy risk.
There is no shortage of additional questions:
- How will frequency capping and incremental reach work? Assuming they will work at all.
- How far can Topics scale beyond Chrome? Non-Chrome browsers – primarily Apple’s Safari – have a one-third share of the global market and half of the US market.
- How (if at all) will Google use Topics with respect to its owned-and-operated inventory? Specifically, when it comes to search, YouTube and display?
- Will Google replace its custom audience targeting capabilities (based on first party data) with Topics-style targeting? This would go a long way toward creating a more level playing field, although it seems unlikely Google would willingly disadvantage itself.
- How do the dynamics of the new Privacy Sandbox on Android come into play? Especially as it pertains to geography and location data.
An unpredictable road ahead
Google’s Privacy Sandbox Timeline offers no insight into the company’s timeline. On the one hand, Topics will need to be production-ready by the time Google deprecates third-party cookies in “late 2023.” On the other hand, Google has already delayed the biggest Privacy Sandbox milestone by two years. It could delay again, especially if extending timelines works to its own economic advantage.
Despite the long list of unknowns, CMOs and ad budget owners have little choice but to keep a close eye on Topics. After all, Google just passed $209 billion in advertising revenue last year and now accounts for a whopping 30% of the overall global advertising pie – $710 billion in 2021, per MAGNA.
Google dominates search and streaming TV (YouTube), has a commanding position in advertising measurement and powers a sprawling ecosystem of ad-relevant Android devices, including smartphones, TVs and speakers.
However Topics shakes out, it seems certain that, sooner or later, Google will weave it into its assets and properties far beyond Chrome.