Affiliate marketing is facing a huge challenge. Cookie tracking is currently an essential tool in being able to allocate commissions to the right affiliates. But legal regulations, along with big-name browsers, are limiting their use.
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Tracking cookies – what are they exactly?
Tracking cookies identify and follow the digital footprints of internet users using so-called cookies. These are small bits of information in text form which store a website, which a user has visited, in the user’s browser – enabling the website to recognise the user in future. For instance, the user does not have to enter her login data every time she visits a password-protected site. In this case, talk is of a first-party cookie.
Tracking via cookies is also very helpful in affiliate marketing. If a person places a link or an ad on a website on behalf of an advertiser, this person normally receives a commission based on success. Cookies recognise him and allocate the profit share to him. As, in such cases, the profit is not paid out by the owner of the website himself, but by the person who has commissioned the advertising, the cookies are called third-party cookies.
European Court of Justice limits the use of third-party cookies
However, tracking cookies are controversial in terms of privacy policy. With the introduction of the General Data Protection Regulation in May 2018, website operators must receive permission from their users to store cookies. Without this permission, the identification measure may not be used.
In 2019, the European Court of Justice handled this case. It’s judgement: third-party cookies are only allowed when the user actively agrees to their use by basically ticking a box.
In terms of affiliate marketing, this judgement has devastating consequences. That’s because affiliate marketing only works if successful recommendations can be reliably measured. And this is not possible if the user does not agree to the use of cookies.
Limitations to third-party cookies in the browser
Even before the judgement on cookies was announced by the European Court of Justice, browser providers were battling their own fight against cookies, with the aim of protecting consumers’ privacy. With Apple (Safari) and Mozilla (Firefox), two of the largest providers heavily limited the storage of third-party cookies. Today, Google has announced that it will block such cookies on its Chrome browser from 2022 onward. Back in February 2020, the so-called SameSite Update for Chrome resulted in a number of changes. The characteristics of cookies must be adapted for these to even be able to be read.
Alternative tracking methods
Thanks to an increasing number of regulations, affiliate networks are striving to develop tracking technologies and new tracking mechanisms which conform to the data protection laws. For instance, user tracking can be pushed over to first-party cookies of the website operator if the data is synchronised in the background between the business partners.
Another idea is server-to-server tracking. In this case, the advertiser collects the profits in his database and then transfers it to the affiliate network, without the need for the placement of cookies.
Despite all the challenges, the industry is quite certain that the limitation of third-party cookies will not have any huge impact on the significance of affiliate marketing. According to the Affiliate Trend Report 2020 from the marketing agency xpose360, 78 per cent of companies that advertise, as well as 61 per cent of affiliates, expect higher profits in 2020 compared to 2019.
