It's Good to Compete With Your Affiliates in PPC Search

  |  November 17, 2003   |  Comments

Interactive marketing's most counterintuitive idea? Encourage your affiliates to compete against you.

Madness! Why on earth would you allow your affiliates to compete with you in pay-per-click (PPC) search advertising programs? It drives up bid prices! Made no sense to me.

It seems intuitive to contractually block your affiliates from competing with you in PPC search advertising. I discovered the opposite is true; an affiliate network heavily engaged in PPC search advertising can be a strategic advantage that compliments your search engine marketing (SEM) campaign.

I asked a number of our clients about their experience managing an SEM campaign involving competition from their affiliates on paid search terms.

Confession: I went into these interviews with a lot of preconceived notions. Most were wrong.

I also spoke informally with contacts at the various PPC search engines. None would comment on the record, for what you'll discover are obvious reasons.

Various forces impact an affiliate search marketing strategy:

  • PPC search engines Overture and Google allow a company to display only one ad for any single search. You can't purchase multiple spots to get four or five of your own ads to appear in response to a search.

  • These same engines don't currently prevent your affiliates from buying an ad on the same keyword you're targeting. They can drive traffic directly to your Web site -- even to the same page you drive them to.

  • No single search listing, not even an "actual" search result, captures over 15 to 20 percent of clicks. The more real estate you own on the results page, the more qualified clicks.

How should these variables shape an affiliate marketing strategy as it relates to SEM?

First, recognize if your affiliate partner bids on keywords you're also targeting, your brand effectively occupies more real estate on the results page for those particular terms.

As a result, many more searchers will click on a listing that immediately or eventually leads to your Web site. Through your affiliate network, you can dominate a search results page, or the sponsored listings at least.

But remember: Search engines penalize sites that appear in actual search results and simply redirect searchers to someone else's site.

If a keyword search is highly relevant to your brand, you should own as much of the search results page as possible. On your own, you're limited to one ad. With affiliates participating, you not only capture more of that search results page, you also block your competitors out of that page.

Informal discussions with at least one PPC engine suggest it doesn't have an issue with multiple paid search ads leading to one advertiser. It finds such listings don't negatively impact the search experience... yet. This may be a future battleground. If even one searcher complains that all ads go to the same page, the laissez-faire policy could change quickly.

For now, no one appears to be complaining, and the search engines seem willing to pocket the money (no surprise there).

Your Affiliate May Outbid You. That's OK!

Bids for competitive keywords can skyrocket. Some popular terms quickly become too expensive to justify buying. Your affiliate partners may have a higher conversion rate than you and hence justify a costlier term. You may work in a highly regulated industry. Perhaps (as was the case for one company) the regulatory requirement that the Web site contain a specified amount of purely educational content reduced the conversion rate.

Affiliate partners can drop clicks directly onto a landing page with a high conversion rate, then hand off visitors directly to the merchant, bypassing all the mandatory educational content.

Restricting Affiliates Won't Reduce Competition

If you contractually forbid your affiliates from using PPC search advertising or prevent them from advertising on a predefined set of keywords, you won't suddenly face less competition. If they don't buy that real estate for you, they'll probably do so for your competitor.

Affiliates, Extend Your Budget

Marketing budgets have limits. Maybe you have $5 million dollars allocated to PPC search advertising, maybe more. There may be $20 million of additional search real estate you wish you could buy. But the budget's fixed.

Affiliates have budgets, too. If they spend them on PPC campaigns for your product or service, they effectively increase your budget.

Share Keyword Conversion Intelligence?

In theory, sharing keyword conversion information would make your affiliates more effective, right? Our clients discourage the practice.

They rightly point out that affiliates often work both sides of the fence. They work for your competitors, too.

Someday, they may terminate their relationship with you. If they do, they'll take your secret SEM sauce with them. Additionally, everyone seems to agree enforcement of non-competes is difficult, at best.

Do Affiliate Links Help Natural SEO Rankings?

The short answer: No.

By now, most of us are familiar with the importance of link popularity. Search engines consider the quantity and context of links when determining a site's rank in organic results.

Most affiliate links point to a redirect page on an affiliate administration service's site (Be Free, ClickBank, Commission Junction, etc.) so click and conversion can be counted and credited to the affiliate. These links would likely increase the link popularity of the affiliate service provider, not the merchant. (Some SEM firms have strategies that can turn such links to a merchant's advantage. That's topic for another day.)

If you do have the in-house technical expertise and capability to run an affiliate script from your own server, it's possible you could benefit from affiliate links pointing to your own site.

I went into this thinking you should restrict affiliates from using PPC search advertising. Now, I'm thinking about starting an affiliate program of my own and encouraging all my affiliates to PPC and SEM their brains out. Ultimately, they're working for me. They would extend my reach and budget while blocking the competition.

I'm still seeking success stories from folks who tried Google's or Overture's contextual inventory. I have several replies from folks with poor results and need the other side of the story. If you're using contextual ads successfully, email your story.


Fredrick Marckini

Fredrick Marckini is the founder and CEO of iProspect. Established in 1996 as the nation's first SEM-only firm, iProspect provides services that maximize online sales and marketing ROI through natural SEO, PPC advertising management, paid inclusion management, and Web analytics services.

Fredrick is recognized as a leading expert in the field of SEM and has authored three of the SEM industry's most respected books: "Secrets To Achieving Top-10 Positions" (1997), "Achieving Top-10 Rankings in Internet Search Engines" (1998), and "Search Engine Positioning" (2001, considered by most to be the industry bible). Considered a pioneer of SEM, Frederick was named to the Top 100 Marketers 2005 list from "BtoB Magazine."

Fredrick is a frequent speaker at industry conferences around the country, including Search Engine Strategies, ad:tech, Frost & Sullivan, and the eMarketing Association. In addition to ClickZ columns, He has written bylined articles for Search Engine Watch, "BtoB Magazine," "CMO Magazine," and numerous other publications. He has been interviewed and profiled in a variety of media outlets, including "The Wall Street Journal," "BusinessWeek," "The New York Times," "The Washington Post," "Financial Times," "Investor's Business Daily," "Internet Retailer," and National Public Radio.

Fredrick serves on the board for the Ad Club of Boston and was a founding board member of the Search Engine Marketing Professional Organization (SEMPO). He earned a bachelor's degree from Franciscan University in Ohio.

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