Separation of your search and affiliate marketing efforts can create internal revenue wars. This problem exists when affiliates get credit for sales that come from search advertising, which otherwise would have been allocated and credited to the search team or managing SEM agency.
Paid search advertising yields excellent benefits when advertisers deploy a search advertising strategy coupled with an affiliate marketing program. Affiliate programs can offer strong results in assisting with brand protection and expanding your keyword reach. However, if not carefully managed, revenue attribution from the affiliate program can "steal" dollars from your search team's bottom line.
The catalyst is a common tendency to manage affiliate programs and search programs using completely separate and disparate teams. For example, a search agency manages your search program, and an outsource program manager (OPM) controls your affiliate program. Each team wants to glean credit for revenue derived from the search channel to propel the metrics that you should and are going to hold them accountable for achieving, like ROI (define) or CPA (define).
Depending on your tracking system, credit for the sale will either go to the last cookie dropped, the first cookie dropped, or to each cookie dropped - in which case you will be attributing the same revenue dollars to multiple channels. Flawed conversion metrics are then used by your search team, your affiliate team, and yourself to measure performance of keywords, maximum CPCs (define), budget allocation, and overall performance benchmarks that can cause you to fire or keep your agency or affiliate vendor.
Any of the following scenarios can cause revenue allocation problems:
Affiliate marketers sponsor prohibited or restricted keyword terms. You may restrict certain keywords because these are part of the search team's strategy.
Affiliate marketers engage in cookie stuffing. Cookie stuffing is when the affiliate marketer directs traffic through a series of redirect links, thereby dropping a variety of cookies from a single paid search ad click - some may be yours, some may be those of other advertisers. The goal is to get as many cookies loaded as possible so that credit for a sale is tracked back to the affiliate. In practical terms, this means the affiliate could advertise on a keyword under the guise of an ad for one of your competitors, and then stuff your cookie through the redirect stream. The consumer then returns through the search channel and clicks on an ad from your search team, but the affiliate gets credit for the sale.
Affiliate marketers are direct linking to you. This means the affiliate is using your display URL in the ad, so the ad appears to be yours; however, it originates from your affiliate and not your search team. In this scenario, there's a CPC war, since only one advertiser at a time can use the same display URL. Your search team and your affiliate team are battling to appear in the search results.
Consumers click on multiple ads before making a purchase. Consumers do not always buy on the first click. This means that it is possible, and likely, that a consumer will run multiple searches and click on multiple ads before finally making a purchase. If during the shopping and researching phase, the consumer clicks on your search team's ad, and also clicks on your affiliate team's ad, and the credit for the sale is given to the affiliate team, then there will be negative repercussions to your search team's metrics, analysis, and decision-making - or vice versa.
Clearly, both the affiliate and search teams are vying to be credited for the ultimate sale. To maintain a healthy working relationship between these two channels, so that you ultimately benefit, you could consider deploying the following practices:
Affiliate rules. Create affiliate marketing rules so that the affiliate program enhances your search program, and does not detract from it.
Prohibit cookie stuffing.
Prohibit direct linking (unless you do not have a search campaign).
On top terms and even brand terms, ensure affiliates have an even playing field with the search team. Meaning, give your affiliates the opportunity to succeed so that they don't need to resort to underhanded tactics.
Monitoring. Monitor your affiliates to ensure that the rules are adhered to:
Watch for cookie stuffing across advertisers.
Watch for direct linking carefully. You should not allow direct linking if you are directly advertising in paid search.
Watch that all rules are being adhered to, which will ultimately curtail channel conflict.
Sales attribution. Attribute sales among both teams so that it's not all or nothing. Consider tracking sales so that you can watch the entire shopping path of a consumer over time. This will give you a greater understanding of the contribution between your search and affiliate teams.
Common management. If you can do it, consider common management for both channels, so that one agency or one group is responsible for both the paid and affiliate channels. It is also wise to consider bringing SEO into this fold as well. A single-source vendor who can handle all three components and operate the program in harmony will yield better results in the long run. In this scenario, the management is credited for both the search and affiliate successes, and therefore, has every reason to ensure that the playing field is balanced.
Transparency in tracking or external monitoring. If you are going to manage SEM and affiliate separately, then you ought to consider some transparency in tracking and/or external monitoring, so that your SEM agency has a way to see which keywords have a strong affiliate presence. This will give the SEM agency a clearer picture when evaluating performance and in decision making. Otherwise, your agency will have a blind spot, which puts the agency at a disadvantage.
Ultimately, channel wars between your search and affiliate stunt your ability to maximize the search channel. You may be over or under-spending, good search terms may appear less viable, or you may wind up firing your agency or your affiliate team for metrics that they cannot control.
This column originally appeared in the March 2010 edition of SES Magazine.
Lori Weiman is CEO of The Search Monitor and a columnist for Search Engine Land. The Search Monitor tracks competitors, trademarks, and affiliates on paid and organic search, shopping, local, and social media. Previously, Lori co-founded KeywordMax.com (now a division of Digital River, Inc.). Recent speaking engagements include SES, SMX, AffCon, Search Insider Summit, and Affiliate Summit. Follow Lori on Twitter at @searchmonitor.