Tracking the activity generated by affiliates isn't as simple as it seems. Zanox' U.S. country manager describes what can go wrong.

You might think tracking an affiliate marketing program is easy: If a customer is directed to a website by an affiliate and buys something, then the affiliate earns a commission.

Simple, right? Well, not quite. What if:

• The customer doesn't buy anything that time, but returns a few weeks later and buys something?
• The customer does not click through from the affiliate's site but later surfs directly to the merchant's site and buys something?
• The customer doesn't have cookies enabled?
• The merchant's business model is monthly subscriptions, not one-off purchases. How do you reward the affiliate when you don't know how much the customer will spend?

These are just a few of the myriad potential scenarios. Get it wrong, and your campaign will fail. Either your affiliates will lose interest if they are not rewarded for the leads they generate, or you will end up paying too much money in commission.  

So what's the key to getting it right? The bad news is that there are no hard and fast rules. The good news is that the technology exists to support whatever you decide to do, and affiliate networks are adding new and more granular tracking capabilities every day.

The trick to getting it right, in my opinion, is being fair and putting policies in place that are consistent and reasonable. Let's take a look at some of the scenarios in more detail.

The customer buys something later
In this scenario, the customer clicks a link on an affiliate site, is directed to the merchant's site, has a good root around, but does not buy. Days or weeks -- perhaps even months -- later, the customer returns to the merchant's site and makes a purchase. 

From a technology standpoint, the sale can be tracked and commission paid to the affiliate who directed the customer to the site. We call it late conversion tracking. The question is whether the merchant decides to enable late conversion tracking, and, if so, for how long? A day? A week? A month? Three months? All of these answers are possible, but are they fair for both parties?

The choice will probably depend on the merchant's line of business. It's perfectly reasonable that someone searching for flights to Europe might not buy immediately, either because she needs to run it by her significant other, or because she is surfing around for the best price. Similarly, it's highly unlikely that someone looking for a flatscreen TV will buy it on the first visit. 

In both cases, where the purchases involve large dollar amounts, it would not be fair to disable late conversion tracking, not to mention the fact that publishers would never sign up for such a program. In the first case, a customer looking for a transatlantic flight is unlikely to wait more than a week before buying because prices and availability change so rapidly. But when it comes to the flatscreen TV, it could be months before the customer finally proceeds to checkout. 

I usually advise clients that 60 days is a good maximum for late conversion tracking. Beyond that, the customer's purchase is probably completely unrelated to the link he once clicked on a publisher's website. 

The customer goes directly to the merchant's website
Let's say that the customer is on a website, sees a display ad for a bookstore, does not click on it and instead types the bookstore's URL directly into his browser. While there, he buys three books and a DVD. 

As per our previous scenario, that customer's purchase can still be tracked and attributed to the affiliate site that served the ad, if the merchant chooses to enable that functionality. This is what we call "post-view tracking" and it can get quite controversial. The question here is whether the ad influenced the customer at all or is it just coincidence? Did he even read it? Many people will argue that, at the very least, the ad would have a subliminal effect on the viewer, and therefore the affiliate should be credited for the sale.

The situation is further complicated by the fact that the customer may have seen the ad on a number of different websites before finally deciding to check the merchant out. In this case, who should benefit?

I don't think there's a perfect solution to this conundrum, and clearly we will never know exactly what motivated the customer to visit the merchant's site and buy something. The fairest thing, therefore, is to set a clear policy and be consistent. I recommend rewarding affiliates for post-view purchases, but a click should be rated higher than a view. I would also set a limit on the time period between the customer seeing the ad and making the purchase: 24 hours is more than enough in this scenario. And lastly, decide whether to reward the affiliate who first served the ad to the customer or the last, and stick to it. Over time, any potential inequities will even out. 

The customer doesn't have cookies enabled
Using cookies is the traditional way to track online activity for affiliate marketing purposes, but some people choose to turn off their cookies or delete them after a session. This could potentially result in a large number of affiliate referrals going untracked and therefore unrewarded. Fortunately, IP tracking, sometimes called fingerprint tracking, is an emerging alternative that enables an advertiser to track a customer's clicks and purchases, still without invading his privacy. To do it effectively, however, you must go beyond just tracking IP addresses, since many users within the same organization might appear to have the same IP address. Not everyone is using this form of tracking yet, but I expect it to become increasingly popular.

Your business model is subscription based
Just for fun, let's say the merchant is an internet dating site; customers pay a monthly subscription of $10 for as long as they choose. Both Peter and Paul were directed to the site by an affiliate and signed up. Peter quit after the first month, while Paul used the service for six months before he found his fiancée. Effectively, Peter made a purchase of $10, while Paul spent $60. With most tracking systems, the affiliate would receive the same commission for both referrals; a percentage of the first month's $10 subscription. But is that really fair? And does it give affiliates enough incentive to put real effort behind the campaign? The answer to both is probably not.

To address this situation, some affiliate networks have started to offer "pay per lifetime" or "pay per period" tracking. In the scenario above, the affiliate would receive commission every month for as long as the subscription lasted -- six months in Paul's case -- or the merchant could specify a finite period of time. This is a very innovative, and I think exciting, form of tracking. Now affiliates have a real incentive to deliver high-quality leads, and the merchant still only pays commission on what the customer buys. 

With these few examples, I hope I've managed to show the importance of tracking and that not all tracking systems are the same. When considering your affiliate marketing program, be sure to think of all the possible scenarios that could happen, and then make sure you have the technology and the policies in place to handle them. That way, you'll be able to attract and keep the best publishers and your program will deliver the return on investment you're looking for.

Michael Hines is the U.S. country manager for zanox. Read full bio.