Video – Q&A: What Do Digital Marketing Leaders Need to Know About Google Topics?

Video – Q&A: What Do Digital Marketing Leaders Need to Know About Google Topics? - –


The following interview has been edited for length and clarity. Gartner clients are encouraged to review the related advertising and privacy research included at the bottom of the transcript.


Interview Transcript
Kyle Rees: This week, Google announced the arrival of the Google Topics API, a new privacy sandbox proposal for interest based advertising. According to the company, Topics is meant to reflect community feedback on its earlier FLoC (Federated Learning of Cohorts) trials, and which it has now abandoned, and serves as a possible long term replacement for third party cookies. Now, instead of targeting a user with more personally invasive tracking mechanisms, like cookies, advertisers will be able to serve ads based on a pool of 350 topic tags that their web browser, Chrome, assigns to them as they surf the web.

The immediate response to this new proposal for marketing and other industry professionals has been mixed. Some see this as the next best, or perhaps most realistic, alternative to FLoC. Others are more skeptical suggesting, in fact, a strong argument can be made that less precise in browser display advertising actually drives up the value of Googles other media related assets and capabilities.

Here to help us understand what digital marketing leaders need to know about Google topics is one of our resident advertising tech experts, Gartner Senior Director, Analyst Eric Schmitt. Eric welcome. Thanks for joining me this morning.

Eric Schmitt: Thanks Kyle.

Kyle: I’m glad to have you here. I have a couple of questions that I just want to ask you within the context the historical body of inquiry that you’ve taken on this, and other privacy related topics, especially as it relates to advertising.

I know that you’ve been tracking Google Post Cookie moves. Help me breakdown what this development means for our clients. How should they think about this emerging story and what impacts should they be preparing for now?

Eric: I think the first thing is, as with many things in life, perspective helps. And so coming into this topic space, [this development] really concerns a piece of advertising, a smaller piece of overall advertising and digital advertising. So, the news really speaks to the experience that people have with advertising in the browser. Not all browsers, but the Chrome browser, which is a slice of the bigger advertising and paid media universe.

It is an important slice, but it’s also important to call out that this conversation does not have any direct bearing on, let’s say search, YouTube, Hulu, Spotify, Twitch in-game advertising billboards, direct mail, and all of the other many other corners of advertising.

That said, display and video advertising in browsers is a part of the mix for many brands, so this is a concern. It is something to watch. We’ve known that cookies are going away. Google has said stated that, and they’ve postponed the deadline. We now know that FLoC is DOA. It didn’t solve what it set out to solve. It didn’t address the privacy concerns and was hopelessly convoluted. Now we have this much simpler, topic based approach. It’s something that advertisers can readily use.

[Topics] is simple, but it’s going to mean a big hit in the precision of banner ads and of other in browser ads. They’re not going to be nearly as precise as they were in the past. With cookies, you have infinite segments. With 350 topics, even if you have 3,500 topics, you’re going to come nowhere near the precision.

You’re also still confronting a couple of other major issues. The loss of frequency capping – the ability to control how many times somebody sees your message, a critical tool in the ad toolbox – there’s no sign that there will be a mechanism for that in Topics. And then, also on the measurement side, because of the absence of those individual identifiers…[marketers] can’t hold out control groups, it will be difficult to assess incrementality, and there will be some real measurement hits as well. It’s going to be a fact of life that browser based advertising is going to get less personalized, less specific, a little bit more broad.

Kyle: Thanks for that. Now there’s also a sense from some of the clients that you’ve spoken with in the past that, even preceding the announcement of Google Topics, Google’s evolving set of Privacy Sandbox proposals required them to start increasing the level of attention that they were giving, or were planning to give, to the collection of first party data. So, for our clients who are struggling to understand how to go about this, what they should they be thinking about now?

Eric: First party data…You know it’s like motherhood and apple pie. Nobody can argue with the strategy. You certainly want to gather as much consented, data about your customers, and your perspective customers as possible. But it’s important to, I think, highlight two points around first party data. One is, it’s not a strategy that’s going to work for everyone. If your business is selling fast moving consumer goods, let’s say paper products, or cleaning products in grocery stores, you’re going to have a hard time collecting a lot of data from your millions of customers at any substantial scale.

The second point is, when we talk about first party data…let’s cut to the chase: email address or mobile phone number are really the two key bits of data that are most important. Those data elements, if you can get consented use of that data from your audience, you can use those email addresses and those mobile addresses to create custom audiences. You can load those custom audiences into Facebook into YouTube into Amazon, and you can use them for retargeting and remarketing. You can build look alike models off of those audiences.

When you’re talking about first party data, make sure you’ve got a realistic business plan that is honest about how much data you’re going to be able to collect, number one. And then number two, focus on the important stuff, like email and mobile identifiers.

Kyle: Great advice there. And finally, I was looking at some of the comments you shared with me before our interview and I’m paraphrasing a bit, but you believe that Google might be able to afford deprecating in browser advertising because the real value creation is happening elsewhere. What do you mean by that?

Eric: There’s a good argument that Google is incentivized here to just prolong the uncertainty around what’s happening in the browser. In the bigger picture, this is a bit of a sideshow. Google is a $150 to $200 billion ad business. They are capturing somewhere between a quarter and on their way to a third of all advertising spend globally. Everything. So, they’ve got an enormous amount of cards in their hands. They have an enormous amount of leverage.

They have a controlling interest in search. They have a dominant position in streaming TV with YouTube. They’ve got Google Analytics for web and app analytics, and they have billions of first party relationships with Gmail accounts. They have all the cards, all the assets, here. Much of the advertising that they run, that benefit that they get, happens in those other media. So, browser can be a bit of a sideshow.

Yeah, cookies are going away. OK, it’s not going to work as well. Maybe banner ads get cheaper, but guess what? Everything else just got more valuable. Targeted display doesn’t work in the browser so well? Hey, guess what? Search still works pretty well, custom audiences in YouTube still work real well. Economically Google will likely be able to more than offset any decreases in the value of banner ads display ads with revenue from these other segments.

Kyle: Great. Eric Schmitt, Thank you so much for your time this morning. It’s been a pleasure speaking with you. And, for our clients who are watching this. Be sure to read up on all of Gartner’s ad tech and privacy related research in our recommended reading section below.

Eric: Thank you.

Recommended Reading for Gartner Clients
3 Scenarios for Privacy’s Impact on Targeted Advertising

Brands Retreat Behind Walled Gardens as Data Privacy Efforts Take Root

Apple Upsets the Digital Advertising Cart

Google to Drop Cookies, but Still Hold the Cards