Calculating the Revenue Effects of Cookie Deletion

Cookies Detected by Anti-Spyware Programs: The Current Status

When users delete cookies, advertisers' partners (e.g. affiliates) risk losing credit for sales they sent to merchants, for which merchants will be unable to properly credit affiliates. How much revenue is lost? The calculator below gives answers, as a function of the advertiser's conversion speed and the percent of the advertiser's cookies that are removed. Additional discussion of revenue losses and advertisers' responses.

Advertiser's intended dollar payout for each actual conversion		(a)
Percent of conversions that occur on the first day		(b)
Percent of conversions that occur on subsequent days (within return-days period)		(c) = 1 - (b)
Weighted cookie removal rate (see separate tables)		(d)
Percent of conversions not credited		(e) = (c) * (d)
Percent bonus required to pay affiliates the amount specified in (1) for each actual conversion		(f) = 1 / 1 - (e)
Per-sale payment required to pay affiliates the amount specified in (1) for each actual conversion		(g) = (a) * (f)

Suppose a merchant wants to pay its affiliates __ for each completed sale. The merchant knows that __% of its sales occur within the same browsing session, right after users click through an affiliate link. But __% occur later -- perhaps the next day, next week, or otherwise within the merchant's preset return-days period (during which the merchant still wants to pay a commission to whatever affiliate sent the user to the merchant). Of the cookies that track ads shown to these later-buying users, __% will be removed by anti-spyware programs. As a result, __% of the merchant's sales wil not be credited to the affiliates who caused them. But with a __% bonus to affiliates, raising the nominal payment per successfully-tracked sale to $__, the merchant can restore the effective payment of __ per actual sale.

This analysis assumes that anti-spyware programs are installed with frequencies yielding the weighted cookie removal rate specified in line (d), as to the tracking cookies used by a given merchant. This analysis assumes that users run their anti-spyware programs once per day, e.g. as they turn on their computers each morning, and that users remove all cookies detected by their anti-spyware programs.

When setting their payouts to affiliates, some advertisers may have considered affiliates' losses due to cookie deletion. Such advertisers are unlikely to want to grant their affiliates a further bonus; in their view, the affiliates' existing compensation already reflects estimated payments for untracked sales.