Over the past 18 months or so, a number of reports relating to the high rate of cookie washing (users erasing cookies from their browsers) have been reported. Affiliates, need to ensure that they receive compensation for the entire length in which a merchant promises to pay within, if a referred user makes a transaction.
From our internal numbers, we had begun to see the return rates of cookie’d users declining, with some of the
affiliate programs that we work with. We figured that there could be a number of possibilities relating to this, including, but not limited to:
A) Changes in online user’s behaviour (i.e. they tended to either purchase immediately or not)
B) Changes on the merchant’s side (not following up with email
marketing etc.)
C) Cookie Washing
In order to determine the extent of cookie washing, we decided to outsource the creation of an independent study to Ben Edelman, a known expert in this space. The main purpose of the report, was to provide Clicks2Customers with a detailed overview of the state of cookie- based tracking within online advertising/affiliate marketing.
This report was initially intended to be for internal purposes only, but we decided that it would best serve the industry if it was released, so this is exactly what we are doing. Ben Edelman has retained full editorial control over the work, as an independent party to this research (he is neither an affiliate nor a software provider).
The report is located here and my analysis of it is as follows: The scope of the report was limited only to cookie based tracking, and some/most networks do use alternative methods (session/URL, batch, etc). In many cases, a large portion (40-50% of the transactions, from our stats) occur on day 1. The tests that Ben conducted related to cookie erasure when the program was initiated, potentially the next day when a computer is restarted, or perhaps longer. It is unlikely that the first day cookies are erased in large numbers but potentially this erodes future return sales.
Merchants are theoretically able to take advantage of affiliate activity, when their users delete cookies with anti-spyware, but only in short term. In the long term affiliates would lower their media spend or even decide not to participate in campaigns, because of too low ROI. Thus, merchants on the one hand sometimes don’t pay pay when cookies are deleted, but on the other hand the overall sales volume decreases in the long term.
The findings are as expected - the larger and more prominent networks are being unfairly (in my opinion) targeted by anti-spyware/adware companies. This does however present the problem that affiliates are often not compensated enough by merchants for users that purchase, post cookie-erasure. If this trend continues, it will potentially undermine the hard work that affiliates put into marketing campaings.
Remember, affiliate networks typically get a cut of affiliate commissions, so it is in their best interest to ensure tracking compliance, however, given the fact that this piece of market intelligence has not been available up to now, I can understand why there has been a perceived complacency on their part. The main issue here is, that these anti-spyware providers tend to see 3rd Party cookies as a risk to the user, but as we all know, in almost all cases they are completely harmless.
My recommendation to affiliates networks is that they implement “Private Labelling” of their services for their clients, so that cookies can be placed by sub-domains which the merchants own (i.e. www.vinnylingham.com would CName www2.vinnylingham.com to the service provider’s server and then when that server wishes to cookie the user, it will not appear as a 3rd Party cookie, but as one placed by www2.vinnylingham.com).
Ben also discovered that Google’s tracking system works very well technically, and from our experiences, the tracking is very accurate - it is worth noting the system that they use, as outlined in the report. Based on this report, up to 43% of cookies are potentially being erased (on a weighted basis), post the initial session the user conducts. This is scary thought for affiliates and I’m sure that this report will spark a lot of debate - so please feel free to post comments on this blog.
Update: I neglected to mention that Ben also put together this nifty cookie calculator, which calculates potential losses from cookie washing.
Aloha!
