Verizon Provides FLoC Alternative. Will It Work?

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The global push to boost data privacy is opening the door to new technologies designed to track consumers’ interests and serve them relevant ads without relying on third-party data. While Google was among the first major players to enter the space with its Federated Learning of Cohorts, also known as FLoCs, the company is now facing competition from other industry heavyweights, and the push to take the lead in online’s privacy-first future is heating up.

Verizon Media became the latest player to enter the space earlier this month with the launch of Next-Gen Solutions, a tool that helps advertisers and publishers target audiences without any online identifiers. Using artificial intelligence (AI) trained on first-party data from Verizon Media websites like Yahoo, Next-Gen Solutions infers audience characteristics based on context and real-time signals from devices. Similar to Google’s FLoCs, Verizon’s solution does not rely on cookies, mobile app IDs, or hashed email. What differentiates the product is that Verizon’s Next-Gen Solutions requires no user-level profiles, and it works across multiple Internet browsers.

Verizon’s solution

Verizon’s new solution relies on a first-party data-based Identity Graph to train machine learning modules for audience inference. The modules are enriched with content data and other real-time data signals, like weather, location, and device types. 

Verizon Media Chief Business Officer Iván Markman says when an identifier like hashed email is present, advertisers and publishers can use Verizon’s ConnectID solution. Next-Gen Solutions was developed to meet the needs of clients when an identifier is not present, so advertisers and publishers can come to a single company and get multiple solutions.

“For an industry moving toward a massive shift, and for advertisers and publishers that are trying to simplify and future-proof their businesses, we’ve just made it much easier,” Markman says. “We’re enabling them to take an integrated approach to identity.”

That integrated approach is part of what separates Verizon from competitors in the space. The similarities between Next-Gen Solutions and FLoC are clearly there, and the competition between the adtech giants is likely to get more fierce in the coming months, particularly with the rollout of policies like Apple’s ATT. ATT could have a long-term impact on advertisers’ ability to reach target audiences in the ways they have become accustomed to.

“While there are other contextual solutions in the market, ours is differentiated through the power of our first-party data-trained machine learning,” Markman says. “No other company is providing that type of solution.” 

Although FLoC is also billing itself as a solution for identity-less audiences, Markman says FLoCs and Next-Gen Solutions differ in the method in which they infer audiences and what that means for consumers. FLoC leverages a user’s behavior to create browser-stored IDs that are then grouped into “cohorts.”  It also only works on Google Chrome.

“What makes Verizon Media’s Next-Gen Solutions unique is that we are leveraging our machine learning algorithms — trained on our first-party data — to take a sample of a user and project those learnings to the remainder of the traffic that is not addressable, in real-time,” he says. “We’re pairing content with real-time data signals like weather, location, and device types to infer audiences — and neither store that data nor using it to create user-level profiles.”

Despite shifting consumer privacy preferences — for example opting-out, legislative changes, and the roll out of new policies like Apple’s ATT — advertisers still want to drive meaningful consumer experiences. They’re facing the challenge of fewer identity-based opportunities to understand and reach relevant audiences. Verizon’s solution fits into a broader shift toward contextual, rather than behavioral, ad technologies that maintain consumer privacy while still allowing for targeted ads.

Ad Tech Turns to Context

Patrick O’Leary, CEO of the publisher ad sales CRM Boostr, predicts a growing market for ID-less solutions and says the coming changes will likely increase the demand for contextual advertising capabilities. These changes could even lead to the emergence of contextual ad networks and SSP solutions.

“This is going to fuel the next generation of ad tech solutions,” O’Leary says. “Marketers will likely be confused and will need to run lots of experiments to find what gives them comparable or better ROAS than targeting solutions based on third-party cookies.”

One company touting the power of contextual ad tech is Quintesse, which is using computational linguistics to understand editorial page content and offer comprehensive verification of page safety to clients.

When it comes to contextual advertising, Quintesse CEO and Co-Founder Doug Stevenson believes it’s critical to take an approach that meets consumers expectations and regulators’ policies. He believes there are ways to meet expectations without using third-party cookies, hashed email addresses, or any hashed data.

While it’s unclear how the competition between ad tech heavyweights like Verizon and Google will play out, O’Leary says consumers are likely to come out as the winners as privacy restrictions get stricter. New regulations mean less retargeted ads will follow them around, and that’s usually seen as annoying after an item has already been purchased or when the ad is out of context.

“It’s likely their experience of using a free, ad-supported internet won’t change too much as the ad tech industry finds a way to evolve,” he says.

Stephanie Miles is a senior editor at Street Fight.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.