Paid Search Affiliate Marketing Guide – Affiliate Brand Bidding or Not?

November 5, 2009

For in-house search teams and agencies, paid search affiliates can either be the best of business partners that generates real value, or the worst of cookie cutters that just steal the traffic you already paid for. So what makes for a successful search affiliate partnership?

Without trying to write a crash-course in affiliate marketing, it’s important to understand the three main stake holders which are the Merchant (brand owner), the Network (the broker and tracking provider), and the Affiliate (the virtual sales force).

Affiliate Merchant Network relationship

Four reasons for employing ppc affiliates:

  1. For smaller merchants it can be a feasible option to have an affiliate managing all their paid search activity. Instead of paying the typical agency management fee the affiliate is usually paid on a performance model which means less risk for the merchant. What to be aware of though is that the network will take a fee that could possibly cancel out this benefit. And it’s also important to consider that an affiliate that is remunerated purely on sales or leads will not be very keen on brand building exercises and provide limited transparency (read more about performance based PPC remuneration models).
  2. Brands with limited in-house ppc activity and expertise can at times use a trusted affiliate partner as an efficient way to plug the gaps in their own ppc campaign.
  3. In highly competitive market-places where a merchant is having direct competitors bidding on their brand terms, affiliates can be used to block out competitors by filling up the paid search results. This is a way around Google’s double-bidding rule, which means that any one company can only have a single advert for each keyword.
  4. Incremental sales through brand bidding. By virtue of owning more screen real-estate, there is a higher propensity for users to click-through and ultimately convert.

The two first scenarios are quite straight forward to evaluate in terms of effectiveness and incremental value for the merchant. Where it gets more difficult and controversial are the last two points where merchants allow affiliate brand bidding. This also requires that the affiliates have their own websites (as per the previously mentioned double-bidding rule) to drive traffic to, and funnel through to the merchant’s site.

To allow brand bidding or not

The skeptics argue that brand-bidding affiliates are merely cannibalizing sales that the merchant already paid for by generating demand through other marketing activity. In addition they argue that since the user already decided on a brand the sale would eventually have happened via the merchant’s own ppc or seo. However, from own experience of running the search department and several high-profile brand-bidding campaigns at one of Europe’s largest affiliates, and discussions with both merchants and agencies, I can confidently say that in many instances having brand-bidding affiliates can be a very efficient way of blocking out competitors and generating incremental sales. My experience is supported by the fact that several merchants and networks that have analysed their total sales performance when temporarily switching off affiliate brand bidding have noticed a significant drop-off in total sales performance.

However, whether brand-bidding affiliates will work for a particular merchant or not is entirely up to its objectives and commercials. Any incremental sales will come at a cost as adding affiliates to the program may increase the cost-per-click (cpc) for the merchant’s agency or in-house team, plus affiliate commissions and network charges will need to be paid, so that at the end there might not be much in terms of increased campaign profits. This is an excercise as individual as any product or service, so will need to be thoroughly evaluated by working closely and transparently with everyone involved.

To further complicate matters, in order to have a sustainable brand-bidding affiliate program it is important to make sure that the affiliates is not merely replicating the merchant’s website experience, but is providing users with a unique proposition. This is an increasingly important requirement, and a reason for Google’s recent crack-down on poor affiliate landing pages. This resulted in affiliate’s AdWords accounts being suspended thus leaving merchant’s without brand protection and loss of sales.

Quick tips for a successful ppc affiliate program:

  • Agree clear terms for positions, bids and keywords and required reporting
  • Have clear communication channels between all stakeholders to react to competitors activity or positional issues
  • Select a mix of affiliates that can provide unique offerings even when they show for the same search so there’s minimal risk of them having landing page related issues which results in down-time
  • Request to see the affiliates quality score information for main brand terms. As this is directly related to how much affiliates will need to bid to maintain position and ultimately increase the merchant’s agency costs

What’s your experience as a merchant, network or affiliate?

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Related posts:

  1. The Last Days of the PPC Brand Bidding Affiliate Cowboys
  2. Brand Building through Paid Search Marketing
  3. SES London – Affiliate Marketing Doesn’t Equal Search
  4. Google Product Ads Lowers the Barriers of Entry to Paid Search
  5. Mobile Paid Search Marketing – The Wait is Over

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{ 2 comments }

M cranmer May 30, 2010 at 6:25 pm

This article basically is just a ” I am a brand bidder, let’s put an article up to justify what i do and hopefully attract more of the same”. No matter what the justification, brand bidding is simply easy money and most often operated by people that wouldn’t stand much of a chance making a genuine sale. I did notice in the article the words “I can confidently say that in many instances having brand-bidding affiliates can be a very efficient way of blocking out competitors and generating incremental sales”. Well if this is the case i can also confidently say that having brand bidders for the great majority of merchants is a theft of their brand value and hard work. I can also confidently say that where your confidence is placed in having brand bidders… there are other ways of doing the same job…. Without giving a load of freeloaders money for virtually nothing.

Magnus Nilsson June 2, 2010 at 9:57 am

Thanks for the frank comment. However, I’m not a brand bidder (have been though, but before the article was written). My only bias comes from empirical evidence from tests as agreed by affiliates, networks, agencies and the brands themselves who have run proper trials.

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