Until now, digital advertisers have relied heavily on third-party cookies for targeting. Third-party cookies work by obtaining a pixel from PPC platforms such as Facebook or Google ads, and placing it in the website code. When a new user visits your site, the pixel drops an anonymous browser cookie. However, the cookie is not domain hosted, and the tracking information goes to the third party, not the website owner. This is how PPC platforms have tracked user activity across sites historically, making retargeting possible even after users have left your site.
However, third-party cookies are the main culprit of online privacy concerns, and there are increasing regulations and policies to protect user privacy and limit third-party cookies. The GDPR requires that users give explicit consent for cookies, and other regions and countries are continuing to update their data privacy laws as well.
Apple iPhones use app tracking transparency, where each iPhone has an identification code for advertisers (IFDA), which is a bit like third-party cookies but for apps. In recent iOS versions, users have been able to manually disable IFDA. But since iOS 14.5, Apple has changed the settings so that IFDA is off by default, and users can manually opt-in to allow app tracking if they prefer.
Google has announced that it will remove third-party cookies from Chrome in 2023 (delayed from 2022), to give users more control over their online privacy. This will significantly change the digital advertising industry. Chrome is used by over 60% of Internet users, and remarketing has been an extremely effective ad strategy because it focuses your ad budget on users who have already shown interest in your services. Usually, retargeting results in a much higher ROI than other audiences in a PPC campaign.
One of the alternatives to third-party cookies is FLoC, Federated Learning of Cohorts technology. FLoC creates lookalike audiences by using machine learning to process web activity, so we would be targeting audience groups instead of individual site visitors. There isn't a lot of specific information available about how FLoC works and whether it's really as precise as third-party cookies, but Google says that advertisers can achieve at least 95% of the conversions that they are currently getting with cookie based marketing.
The future of remarketing without third-party cookies is still quite uncertain, but one thing marketers can start doing now is to increase their first-party data as much as possible. There won't be any change to first-party cookies, which are stored by your own website. So in-house marketers can build out email campaigns, gated content, etc. to gather data via first-party methods. It'll be interesting to see if this leads to companies building more genuine online communities and having a stronger digital connection with their customer base.
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