Affiliate Marketing and SEM Revisited

Several months ago, I discussed affiliate marketing and search. I interviewed a number of rather large, successful merchants about how their affiliates were using search marketing methods and challenges they face in governing those initiatives, especially their affiliate’s paid search engine marketing (SEM) bidding activities.

In preparation for a keynote at the Affiliate Summit a couple weeks ago, I conducted new interviews to see how these issues had evolved and what new ones are cropping up.

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

During round one of interviews, very little was said about natural SEM. During the more recent interviews, natural search marketing was a notably more important topic.

The merchants reported natural search was staging a comeback, in a somewhat unexpected way. What’s new is how key affiliates leverage natural search. These two responses from merchants were of particular interest:

Our affiliates who are making the greatest gains are those most invested in attaining natural search rankings.

Some of our affiliates are moving out of the affiliate role and becoming full-blown content sites… When your affiliates focus on natural search, it leads them to become more of a content destination and a better affiliate.

The merchants reported several long-time affiliates had grown their affiliate sites to a point at which they really became branded content destinations. These affiliates were leveraging pages of keyword-rich text and working their natural SEM campaigns effectively, attaining top rankings in the natural search results. The merchants reported they now benefit from this increased traffic, and the increasingly qualified click-throughs, their affiliates’ natural SEM efforts produce.

This benefit is in large part because the majority of all search clicks occur in natural search results.

Interviews with experienced marketers are a treasure trove of valuable strategies in this fascinating arena. I’d love to interview any affiliate marketers or merchants out there with additional insights. Contact me!

Meet Fredrick at Search Engine Strategies in San Jose. Also, join us at ClickZ’s upcoming AdForum.

Nominate your favorite product or campaign from July 7 through close of business July 14.

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