Trends Report – Affiliates and Search
In only a few years, search has gone from the new kid on the block to the de facto method for driving traffic. While most likely not intentional, the increased popularity of search has been accompanied by an ever increasing learning curve to use search effectively. No longer is profitability guaranteed. This has helped make the case for leveraging the affiliate channel with respect to gaining access to search traffic. Affiliates bare the media risk; they pay the engines the necessary CPC’s while only getting paid when an action happens. The complexity of search and the risk-carrying nature of the affiliates have led to this being a contentious topic as the two parties have similar objectives but different comfort thresholds. In other words, what is good for the affiliate isn’t necessarily good for the advertiser, and clashes do and will happen.
Affiliates come in all types, from hundred person companies that possess sophisticated technology to the often, stereotyped, basement dweller working from home. Regardless of their size, engaging affiliates to promote your offer means putting your brand in someone else’s hands. Today’s article covers the wide range of issues related to allowing affiliates to run paid search campaigns whose traffic ends up on your offer(s). We cover the topic from an advertiser-focused point of view although the information is designed to engage publishers as well. Sophisticated marketers likely know much of what we cover but will hopefully find it a good overview that can be shared with newer members of the team and those less familiar with the intricacies and nuisances of Internet advertising.
If you have an affiliate program, chances are your offers are being run through search whether you know it or not. Publishers, as indicated earlier, because they bare the media risk, won’t often act with your brand in mind. They tend to act with their profitability in mind. Finding a happy medium takes effort, and can only be achieved by understanding the medium, i.e. search. That understanding we can start here, but ultimately, there will still be more questions than answers, and it will be up to you to determine which of these questions matters and to create the internal processes for answering them. By the end of this article, you should have a solid grasp of the pros and cons of allowing affiliates to leverage search traffic to run your offers as well as being able to embrace search as a means for affiliates to generate traffic, feeling like a seasoned marketer even if you aren’t.
Most affiliates will turn to Google first to test an offer’s viability from a profitability standpoint. If you have been following the Google vs. Geico case as well as seen the signup page for Google’s AdSense program, you’ll know that the engine has a liberal policy towards what ads can run with which keywords as well as offering the ability to generate traffic in as little as 15 minutes. The ads that affiliates place appear, depending on the keyword volume, either on top of the search results and/or along the right hand side of the page. Google used to have a policy that required affiliates to identify themselves to the end user by placing an “aff” in the text. They no longer require such identification, instead allowing only one unique display URL per paid result. That means the ad from the affiliate will appear the same as the ad from the product or service owner. This differs from Yahoo where the person placing the ad must own the site that the user gets directed to; Google simply restricts results to the best bidder (price * conversion rate) so that a non-owner of the site can still bid for a keyword.
Remember, at the core, search is merely a channel for affiliates to drive sales. As an advertiser, this means that you must still be comfortable establishing an affiliate program (or working with a company that can such as Commission Junction, LinkShare, or AzoogleAds’ Mport). You will also need to know what your action is and the cost per acquisition you can pay. One thing to note is that the traditional price / volume discount actually works in reverse. The more traffic an affiliate or network can drive the more money they will expect you to pay to them. The discount in this situation is on your margin. And, while counterintuitive at first, it does make sense as the owner of the service, you, generally gives a margin break for those who consume a lot of the product or service.
When it comes to running your ads via affiliates and search, three big decisions arise. The first is whether to work directly with affiliates, indirectly via affiliate networks or both. The second is whether to allow affiliates to bid on your company’s trademarks. The third is how to deal with the natural conflict that will occur from those within the company doing search feeling threatened by the affiliates. Regarding the first, with whom to work, that generally depends on your level of experience and the sophistication of your internal (tracking) systems. As a general rule, the more relationships you have and the more you create a market dynamic within your affiliates, the more you will make. Many companies though do not have experience dealing with multiple relationships; these companies should start by dealing with an affiliate network that has no difficulty managing hundreds of active relationships. With more experience, I recommend investing in internal technology and working with the larger affiliates directly as it will allow for closer coordination, which ultimately will be needed as you scale the business.
With respect to trademarks, this is a less straightforward decision. For a live example of the issue, head to Google and type in almost any brand, for example “Ameriquest” or “AIU Online” or “University of Phoenix Online.” The uninitiated will have a hard time telling the advertiser’s actual site from the affiliates. Even more confusing to those unfamiliar with Internet advertising and lead generation is the fact that almost all of the affiliates in the latter query examples have created their own pages, each trying to find the right combination of elements to yield the best conversion. The best conversions and often the highest volume come from terms based on your marks. Whether you give free reign or partial reign to affiliates will depend on your comfort level and need for strict control. One reason to consider allowing them to bid on your behalf comes from the fact that if you prohibit it, they might bid on your marks on behalf of your competitor.
Lastly as far as major issues are concerned, is the likely conflict between an internal search team and the external team, your affiliates. Unless a brand advertiser, those internally should be held to similar backend accountability as the affiliates. Your goal should be to obtain the greatest number of conversions possible, and an internal team alone cannot accomplish this. If internal politics are an issue, it is possible to help the internal team by providing them a higher CPA (which is usually the case) or exclusive access to certain keywords. The gut reaction of many companies is to create prohibitive measures to limit affiliate activity such as capping the max bid on certain keywords or prohibiting them from occupying a position higher than the company. Policies such as this only limit maximum growth. A policy of openness and communication with affiliates will go a lot further.
Unfortunately, as is more often the case than I’d like, we can only paint with a broad brush in these articles rather than diving in deep to a specific piece of the puzzle. There are some worthwhile topics and examples of affiliate search yet to cover. These include the registration of domains by affiliates that contain your brand (see the “University of Phoenix Online” query results for an example of the issue), along with a discussion of the various types of pages created by affiliates – from their simply directing traffic to your site to biased comparison pages. Topics such as how to police and monitor affiliate activity and judge quality must also be saved for another time. Ultimately though, affiliates can be your best ally or a big headache. The best bet is to embrace affiliates and search, cultivate some key relationships and watch them not only grow your business but aid you in designing best practices and keeping a fair and effective marketplace.
