Tuesday, October 9, 2012

Making Money with Cookies (No, not that kind!)




Before we can get into making money online, we need to know what cookies are. I’m not talking about the kind that Grandma used to bake… I’m talking about tracking cookies used in internet work.

What is an “IP” address?

Every computer has an IP address (Internet Protocol) built into it by the manufacturer. That IP address is what is used to identify your computer to anyone else who sees it on the web, and that address directly relates to how cookies are used.

What are cookies?

Internet cookies are little pieces of script that are used for various reasons, but mostly for tracking purposes. From there, they can be used to identify what ads you click on so that other relevant ads can be shown to you based on your past choices of what you looked at. They can be used to identify your computer to remember passwords and other information so that you don’t have to enter it each time you visit a site. But for our purposes, we will be discussing how they are used in making money… and I don’t mean selling them at a bake sale.

An ad banner like this one from Amazon, comes preformatted with my affiliate ID already embedded into the html code, so they know that it was me who sent them a customer. At their end, they keep track of when that cookie was activated, when it will expire, and any other information relative to a paid click, or an actual sale, and they enter all that information into my affiliate dashboard on their site so I know how much I made, from where it came, what the product was, and other useful information that can guide me in future sales efforts.

How are cookies used in marketing?

In marketing, a vendor will either use their own software for setting up and tracking affiliate programs, or they will contract with an aggregator to manage those links. If they manage their own links, they might use a program like Affiliate Royale, especially for WordPress.

What if a vendor doesn’t want to manage his own affiliate program?

If a vendor chooses to let someone else manage their links, then they might choose an aggregator… someone like Commission Junction, Linkshare, Link Connector, Avantlink, Shareasale, or any of numerous others. The drawback is that there are usually hefty fees involved to set it up and then there may be an ongoing percentage of sales paid to the aggregator.
One company that handles most of the major aggregators plus individual vendor accounts is Skimlinks. The costs involved might be offset by the sheer volume that these aggregators handle. They already have other marketers signed up with them who can help sell the vendor’s products, so they don’t have to recruit a whole new sales force from scratch, as the vendor would have to do when managing an affiliate program by himself.

What are the pro’s and con’s?

There are advantages and disadvantages with each company and each method, and rules must be read and followed. For instance, Skimlinks is very convenient for both vendors and marketers to sign up with, there are fewer rules involved, and all payments come through one dashboard. On the other hand, they use mostly text links, and most banners and other creatives must still come from the vendor or the aggregator, or you must create your own, using product pictures and doing your own linking. (Update: Skimlinks now has “Showcase” banner ads available, but as of this writing they only work with Amazon. If you live in one of the sales tax nexus states, they probably won’t do you any good.) If obtaining your own product pictures from the web, you may have to get permission to use them from the vendor or manufacturer, but that’s usually not a problem if you attribute the photo properly. Still, ALWAYS check with them on proper procedure.
Also, most stores run special sale promotions that only registered affiliates would know about. If you are using only word links, generic banners or photos, you may never know about such promotions and won’t be able to pass them on to your readers.
When using an individual store that runs its own program, you have one dashboard and access to creatives and special promotions, but one store, or even one aggregator of many stores, is very seldom going to be sufficient for a professional marketer. Each store or aggregator requires signing up for an account and a new dashboard to monitor sales stats.
A marketer who signs up with an aggregator (except Skimlinks) will get more stores per dashboard, but they still have to apply to both the aggregator AND then get individual permission from the store to join its affiliate program and have access to it’s banners and promotions. If the marketer uses more than one aggregator (which he will likely have to do), he will also have more than one dashboard to monitor, which obviously creates more work.
Skimlinks, on the other hand, has over 18,000 vendors and aggregators that it manages accounts for, and you only have to apply to Skimlinks…NOT all the individual vendors… so if text links and/or creating your own banner links works for you, then it can greatly simplify your link management and save you a tremendous amount of time!

How does one manage all that information?

As you can see, an affiliate marketer must have a good head for organization, and have a plan in mind ahead of time to keep track of all this information. They may have to create a spreadsheet to keep track of the vendor name and address, the URL, the affiliate link., the log-on information to their affiliate portal, the commisson percentage, and much more. On top of that, it must be kept in a secure place, and backed up off site in case their computer is stolen, crashes or destroyed, any of which can put a marketer out of business.

How long do cookies remain active?

No matter what type of affiliate program is used, they ALL rely on cookies to manage their accounts. Each time a reader or customer clicks on a link, a tracking cookie is set connecting their computer’s IP address to that vendor. The cookies can vary in length. Some may be programmed to disappear when they close out of the store site, and some may last a “lifetime”. Most will expire within 30 to 90 days, and then erase themselves from the store computer’s memory.

Also, most cookies are reset to the last affiliate’s computer. So if a visitor has clicked on your link and visits the store but dosen’t buy, and then comes back later through another affiliate’s link, the last one clicked on will be the one credited with the sale. If they come to the site later without using an affiliate link, it will still revert to the last affiliate link used to get there. On some cookies, especially the “lifetime” cookies, the link will still remain even after years, and will not be overwritten by a new one, therefore assuring the marketer of a sale regardless of when the visitor returns to the store (as long as they have not changed computers).
Obviously when they say “lifetime” links, it usually refers to the lifetime of the visitor’s computer. If it crashes or becomes unusable, and they have to get a new one, then obviously the IP address and link are lost, also. However, if someone steals the computer, or it is sold to someone else, and they happen to visit that same store, the original marketer will still get the credit for the sale, even though it is a different customer!
And even if a customer deletes the cookies on their own computer during routine maintenace, it isn’t “their” cookies that matter. They can’t erase their IP address, and it is that address that registers on the store or aggregator’s computer system that matters. As long as their systems stay intact, the cookie will still be good, as long it sees the original computer’s IP address and matches it with the marketer’s link to the store.

How does software manage cookies?

An affiliate program software such as Affiliate Royale simply matches up IP addresses with affiliate links and monitors how much each sale was, so that it can sort out how much to pay to the affiliate (the marketer). It may even monitor what items were sold, so that the marketer can actually see what items are selling best, so that he can optimize his sales tactics and product offerings.

Summary

Unless you are a programmer or developer, that’s about all a marketer needs to know about cookies. The management of them is normally someone else’s responsibility, unless you are selling your own products and want other people to help you do that. In that case, you will either want a program like Affiliate Royale, or hire someone else to do it.
Either way it will come at a cost… for the program, for the time in learning it, for the time implementing it and managing it, or in fees for someone else to manage it for you. It all boils down to the bottom line, and whether it’s "cost effective”. If it can increase revenue and profits by 10% or more, then it’s worthwhile. Anything less than that may not justify the cost of such a program. As a marketer, it will be your job to run the figures and decide.
Now, please excuse me while I go get a glass of milk. That old “power of suggestion” is kicking in. And then the big decision… peanut butter or oatmeal raisin?