Last week, Google announced a major policy change regarding influences the way users interact with the AdWords portion of Google’s SERP (define). Marketers and their affiliates will be even more affected. E-commerce marketers will likely feel it the most, given they’re the heaviest users of affiliate programs.
The rationale for the policy change is poor user experience for searchers exposed to duplicate ads with similar or identical landing-page experiences. With Google’s single-minded focus on user experience, it’s easy to see why the company would make such a change.
Many marketers empower their affiliates to engage in pay-per-click (PPC) affiliate arbitrage. The affiliate pays for traffic and earns commission on the sale. In some searches, this results in half the results links being for sites that appear more than once in the SERP’s paid portion.
The old policy allowed multiple ads with the same final domain or landing page, so long as affiliates identified their relationship with the marketer/merchant with an “AFF” designation within the ad copy. If you search much on Google, chances are you’ve seen AdWords listings with “AFF” in the title or description. Google’s new policy limits AdWords results to one listing per URL. The affiliate designation in the ad copy will no longer be required.
In contrast to Google’s old policy, Overture has long had a one-ad-per-domain policy, with a clarification that “Web sites may not replicate the exact appearance of another site.” This means affiliates using Overture for arbitrage have had to generate sites with useful content and landing pages that added value to the purchase decision. Such a labor-intensive process made Google an affiliate favorite.
Google’s wording of the announcement leaves some room for interpretation:
With this new affiliate policy, we’ll only display one ad per search query for affiliates and parent companies sharing the same URL. This way, users will have a more diverse sampling of advertisements to choose from. As always, your ad will be displayed based on its Ad Rank for given searches, which is determined by a combination of your ad’s maximum cost-per-click (price) and clickthrough rate (performance).
What qualifies as a distinct URL? Consider the following examples. Which constitutes a different URL based on Google’s new policy:
- Domain: www.domain.com vs. www.domain2.com
- Host name: shop.domain.com vs. buy.domain.com
- Filename: www.domain.com/cameras/coolpix700.html vs. www.domain.com/cameras/coolpix.html
- Directory: www.domain.com/cameras vs. www.domain.com/mp3_players
- Parameter: www.domain.com/cameras.php?source=google1 www.domain.com/cameras.php?source=google2
Most industry experts believe for most sites, the domain will act as the core identifier. Generally, the root domain is considered the identification of one unified site. Obviously, there may be exceptions, such as eBay stores, Yahoo stores, or other sites that provide microsites for small businesses. I checked with Google on this and was told that generally “the display URL is de-duplicated on a root-domain basis.”
Affects on Marketers
Let’s focus on the change and how it affects marketers. First, we must break down marketers into two groups (there are subgroups, but simplicity is better).
Marketers with no affiliate programs may see improved PPC search opportunities. With all but one of the competition’s listings removed, marketers may be encouraged to expand the breadth of their campaigns.
Marketers with affiliate programs who empower those affiliates to bid on keywords (branded, unbranded, generic, etc.) face the greatest negative consequences. Affiliates displaying the destination URL in AdWords gain the brand benefit of the marketer’s URL, resulting in high CTRs (define). When the higher CTR combines with a good user experience on the marketer site, the affiliate sees higher positions and profitability.
To continue in the affiliate arbitrage business, affiliates must develop sites that add value and maintain both a good CTR and excellent post-click conversion. A slip in either area makes arbitrage a money-losing proposition for affiliates.
Are Affiliates Ready?
The affiliate networks think so. Jeff Pullen, general manager of Commission Junction pointed out big power affiliates tend to be smart and often diversified across different revenue-producing methods. Many have already built sites specifically to tap the arbitrage opportunity presented by Overture and other engines with similar policies. These affiliates are well positioned to make the transition to Google’s new policy.
Stephen Messer, chairman and CEO of LinkShare, had this to say about the change:
We don’t foresee any significant impact to our affiliates, but we do anticipate an acceleration to distributed commerce. The biggest challenge facing merchants now is the ability to secure effective inventory on a search results page. Previously, consumers clicked straight to the merchant’s site. Now, it’s more important than ever for merchants to help affiliates create effective jump pages; this will effectively lead to syndication of a merchant’s Web site directly to their affiliates.
James Crouthamel, CEO of Performics also feels better affiliates will have no problem making the transition. “Effective affiliates have their own landing pages and create some value to the consumer. These affiliates still have an opportunity to compete.”
One thing’s clear: Merchants who empower affiliates to effectively monopolize Google search results must prepare for the possibility some affiliates will abandon PPC search in Google.
We’ll get a better idea of the consequences once the policy is in effect. One of my biggest concerns is that major marketers who are building Web services and other affiliate tools to empower “distributed commerce” will provide (intentionally or not) those affiliates with tools that lead to organic SEO (define) spam. If Google sets its sights on affiliate SEO spam as the next target for improved user experience, an even more important source of revenue for affiliate marketers may suffer a huge blow.
Your best bet is to ensure you’re doing the best job running your search marketing campaigns as possible. Make your site organic-search friendly. You may not be able to rely on affiliates to do the job for you in the future.
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