The next big step for Google is to remove third party cookies for good. This change will have a major impact on the ads industry, which rely on using the data collected from these third-party cookies to drive targeted ads. Both Safari and Firefox have made the decision to block these cookies already but with Google Chrome dominating the market, the switch over to new third-party cookie technology is big.

The new leap into a cookie-free future is fantastic news from a user perspective in terms of privacy, however, where does this leave the ads industry and what will be replacing the old third-party cookie? Google has specifically outlined they are not replacing third-party cookies with an alternative method to track individuals as they use the internet, however they’ll be introducing a more complex set of technologies that are meant to let ad companies target specific demographics whilst allowing the browser to remain anonymous to the company driving the ads.

A Federation Learning of Cohorts (FLoC)

Typically, Chrome browsers will use algorithms (FL – Federation Learning) to create a vast number of groups (C – Cohorts) incorporating a variety of individuals with shared interests and demographics. Each individual profile will be kept private and not shared with any third-party websites therefore ads are no longer targeted in such ways. You will now receive ads that are based on the specific cohort you are placed in as an individual user. Instead of third-party cookies tracking your usage, the browser itself will now quickly investigate your browser history and place you into your designated group.

Here is a simplified example of how FLoC will work:

Picture Netflix and all the recommendations you are shown each day. You have two individuals, person A and person B watching the same category of films, in fact, they have watched five of the same horror films on the online streaming service. If person B watches a sixth horror film, the chances of person A enjoying that same film is high, therefore this is driven onto the recommendations of person A’s Netflix account. This very strategy is magnified on a large scale, we’re talking billions, processed by Google Chrome itself.

Interestingly, Google isn’t labelling the cohorts you’re placed in, this is being left to the ad tech industry to figure out, therefore an individual won’t be able to open a private browser page to be presented with what it believes you to be interested in.

What does this mean for online merchants and how can you adapt?

There has been a fundamental shift in the way individuals interact on the internet. The transformative event over the last year has encouraged a spike in online shopping and the way we, the user, browse the web each day, with 15% of daily searches being entirely new, it is now encouraging merchants to get creative in how they display their products and how we can purchase at ease.

Two key factors to consider when the shift takes place:

Customer relationships can be improved by respecting privacy
Predictive marketing means we can look at key patterns in trends within cohorts through automation technology and adapt to meet the needs of our consumers
We are essentially preserving the future of measurement by ensuring user privacy and adapting to new ways of learning about our consumers. There will be huge improvements to conversion modelling through enhanced conversion measurements with clear cut strategies for collecting first-party data by allowing users to make their own choices on their personal data. Engagement will now be driven through automation, showing the right person the right ad at the right time to drive results and long-term resilience.

Shoppers are seeking value and too much choice can be overwhelming when you’re looking for a quick purchase, therefore the success of Google’s new curbside pickup is going to grow more and more successful in the coming months with the new shift in marketing online. Price-conscious shoppers will be easier to connect with allowing you to connect with the customer throughout their entire journey, presenting the best products for them.

It’s important now more than ever to share your brand identity, allowing you, the brand, to become more personable and approachable with 71% of consumers preferring to purchase from a brand that aligns with their values. For example, if you ethically source your products and are striving to make a positive impact on climate change then it’s time to scream it from the rooftops, keeping those loyal customers engaged and encouraging new consumers to your brand family.

If you’re looking to improve your online advertising and enhance your PPC performance, get in touch today to find out how we can help.

All information taken from the Google Marketing Livestream 2021.

Olivia Ball

Content Marketing Executive