The future of affiliate marketing in a crumbling cookie world – ET BrandEquity

Ratan Tata backed company Earnkaro is a website that offers users an opportunity to earn an income via affiliate marketing. With the third party cookie crumbling, Earnkaro is adopting local storage, a technology that stores data directly in the user’s browser. Local storage uses the capabilities of a user’s browser, to establish tracking mechanisms. This technique involves storing data on the user’s device to track interactions and transactions, operating independently from traditional cookie-based systems. It enables Earnkaro to accurately track when a transaction leads to cash flow to a partner site, by storing information about the transaction directly on the user’s device. Essentially in a browser, there are three types of storage – localStorage, sessionStorage and cookies. This is where first party, second party and third party data come from. Earnkaro also uses a technology called server to server integration – which it already has in place with its partner sites like Myntra, Nykaa and Flipkart.

“As we transition away from using cookies, we’re adopting a method known as server-to-server integration. Instead of relying on cookies to track purchases and activity, we monitor these transactions through a session that’s saved on the retailer’s server. Once a purchase is made, the transaction details are tracked and shared directly with the affiliates from the server, eliminating the need for third-party data sources,” says Rohan Bhargava, co-founder of Earnkaro and Cashkaro.

Earnkaro is 60% into implementing these technologies to prepare for a world where the third party cookie has crumbled. The main reason a cookie was needed is to solve for the challenge of marketing attribution challenge. Everytime someone visits a web link from a certain source, the cookie captures the source of traffic.

Addressing the attribution challenges in the absence of third-party cookies, Pradeep Kumaar, the CEO of NP Digital India, mentions the viability of contextual advertising and new tools like Google Fledge as potential alternatives for tracking engagement and behavior. “Contextual advertising and technologies like Google Fledge represent a new frontier for tracking user engagement in a privacy-conscious world,” he says.

What needs to happen at a technology level, for affiliate marketing to carry on smoothly is that the cookie needs to be replaced. “If anybody carries out a transaction, when the pixel fires right at the transaction stage, you identify who is the last click attribution – who’s the person with the last cookie. Obviously with the world we’re moving to, you can’t store third party cookies. We’re using local storage instead of the cookie for last click attribution,” says Bhargava.

Bhargava explains that another alternative is using a Mobile Measurement Partner (MMP), such as Branch or AppsFlyer, which is used to determine where a user’s last interaction came from before making a transaction, whether it’s Google, Facebook, or another source. MMPs are crucial for advertising in an in-app environment where cookies aren’t used. As we move towards a world without cookies, brands are incorporating MMPs’ software tools, known as SDKs (Software Development Kits), into their websites. SDKs provide the necessary tools to integrate with these MMPs, offering a unified view of where traffic is coming from. This approach ensures a consistent source of information, avoiding discrepancies between different data sources. According to Bhargava, using these technologies, the affiliate industry can smoothly transition to operating without cookies.

The world of affiliate marketing is bracing for a significant shift as Google prepares to phase out third-party cookies from its Chrome web browser by the third quarter of 2024. On January 04 2024, Google Chrome began its phase out of third party cookies from its browser to 1% of its users. With the removal of these cookies, marketers will need to find alternative ways to gather user data for targeted advertising and personalisation. For affiliates, who generally work on a ‘pay per performance basis’ – the challenge lies in tracking user journeys from an affiliate link to a purchase, which could potentially affect the accuracy of attributing sales to the correct affiliate.

The phase out of the third party cookie is largely driven by growing user concerns around privacy as well as regulations passed by other countries such as General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). GDPR was passed in the European Union in May 2018. Under this regulation, websites cannot store third party cookies without user consent. CCPA was passed in the same year and it mandates that websites must offer an opt-out option for users regarding cookies that sell personal information.

30% of Paisabazaar’s business comes from its affiliate marketing efforts, but Sachin Vashishtha, the chief marketing officer at Paisabazaar is not worried. “Affiliate marketing makes up a small part of our media mix spending. However, it’s worth noting that affiliates that rely on third party tools to capture convergence would be in trouble, with the demise of third party cookies, these tools would face challenges and so would affiliate marketers who use these tools,” he says.

Paisabazaar relies on first party cookies and data and does not encourage the use of third party tools. Vashishtha also mentions that Paisabazaar has server side attribution in place. Affiliate marketing campaigns for the brand are only limited to a few channels like email marketing.

“We are anyway advertising on platforms like Google and Facebook and that’s why we discourage affiliate campaigns on those platforms,” he says. He emphasises that in general, the brand’s reduced dependence on third party cookies and data means it will not be affected overall by the cookie phase out. He also stresses the importance of investing in robust data architecture and having a good CDP in place to try and capture as much data as possible using first party cookies. These platforms help create unified customer profiles from direct interactions, significantly reducing the dependency on third-party data.

In a world moving away from third-party cookies, affiliate marketers must explore fresh avenues for partnership with influencers and content creators. With influencers also dabbling in affiliate marketin, adapting strategies to maintain these collaborations becomes essential. “Most social media users are creators and influencers who focus on first party data. They can directly present to their audiences about a brand and can share the link and affiliates and marketers can make use of the data from that link,” says Kumaar.

Publishers will also have to figure out ways of diversifying traffic sources in the new cookie-less environment and according to Kumaar, the only way to do this is by creating more interactive and engaging content. Consent based marketing which builds trust between the consumer and the brand is the way forward as the third party cookie crumbles.

Kumaar also underscores the potential of deep learning and AI in maintaining hyper-personalised targeting capabilities through contextual advertising, similar to the precision previously enabled by third-party cookies. This advancement is beneficial for advertisers by facilitating more accurate campaign planning and audience targeting based on consumer behavior insights. “The integration of deep learning and AI with contextual advertising brings us closer to achieving the level of personalisation we had with third-party cookies,” Kumaar remarks.