Affiliate Marketing and SEM Revisited

In the first round of interviews, I discovered all my initial assumptions were wrong. My position was if you ran an affiliate marketing program, you should prohibit your affiliate network from engaging in any paid search advertising. It would drive up bid prices. You'd end up competing with yourself, effectively, for a finite number of paid search positions on a finite universe of keywords. What I learned convinced me I was wrong. To review, the merchants I interviewed taught me three things:

• Affiliates extend your paid search advertising budget.
  
  
• Competing with affiliates on the same keywords is valuable because they help you dominate the page.
  
  
• If your affiliates are restricted from paid search advertising, they'll simply switch teams and bid for the same keywords on behalf of your competition.

The new round of interviews reconfirmed these positions. Yet some merchants identified new areas of disagreement and highlighted one important new trend.

Should You Allow Your Affiliates to Bid On Your Trademarked Terms?

One merchant strictly forbids his affiliates from bidding on his company's actual name. His position is multiple advertisements in search results all lead to sites other than the "official" company Web site, which creates a bad user experience. He noted, "When a customers searches for our company name, they want to find us, not a Web site that leads to us. It's all about the user experience."

Other merchants simply set bid limits on their company name and branded terms, allowing their affiliates to fight it out below a certain bid threshold. This ensures the trademark holder will always appear in the top listing. This may be a strategy worth exploring for companies concerned about the user experience and their affiliates' interests.

A final position worth noting: One merchant's strategy was to bid only on trademarked terms because of the higher conversion rates while ceding all unbranded terms to its affiliates. It didn't restrict its affiliates from bidding on trademarked terms but seemed to believe bidding effectively on the unbranded keyword real estate was too costly.

This position carries much risk for the merchant. The merchant's gaining no experience with this much larger universe of keywords. If the affiliates that are best at bidding on these keywords switch to a competitor's network, the merchant could suddenly find itself scurrying for a solution. It'd be forced to pick up the ball and run with it, facing a significant learning curve that could cost much money and time.

Should You Share Keyword Bidding Intelligence With Your Affiliates?

Last time, every merchant emphatically replied "no." Their worry was affiliates often work both sides of the fence. They may terminate with you and work for your competition. You wouldn't want to share precious your search advertising "secret sauce" for the eventual benefit of competitors, would you?

In this round of interviews, most merchants still agree with this position, with one exception. One very wily merchant made this statement:

We asked Commission Junction who their best paid-search-marketing affiliates were. We approached the top three and offered them our list of our top-100 highest converting keywords as a way of luring them into our affiliate program. It worked. All three are now our affiliates.

This merchant made a very strategic decision that wasn't without risk. The gamble paid off. If it maintains solid relationships with these three super-search-affiliates, the decision will pay dividends for years to come.

Affiliates Leveraging Natural SEM