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November 17th, 2003, 08:27 AM #1
It's Good to Compete With Your Affiliates in PPC Search
By Fredrick Marckini
November 17, 2003
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 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, e-mail your story.
November 17th, 2003, 09:24 AM #2
Interesting article.. I hadn't thought about it like that, but I guess you'd still want to make sure you didn't end up in a bidding war.
I find that if I bid on a very specific keyword and drive the visitor to my site to a single product page, then the CTR to the merchant is usually in excess of 90%, so I don't really lose anything by not sending them directly to the merchant. It also means that I'm not going to be duplicating WidgetCo's ads in any way.
Don't forget that most affiliates are probably bidding on rock bottom bids, but doing so quite smartly. Most merchants can afford higher bids because of their greater margin. So, typically I don't see much competition between the two.. basically, affiliates (or at least the succesful ones) are leaner and meaner than the merchants and don't generally want to go head-to-head anyway.
But it does sound right.. a smart affiliate manager could definitely push the envelope back on this to get maximum effect. Hmmmm....
"All your commission are belong to us." - Slimeware Corporation
November 17th, 2003, 05:23 PM #3
November 18th, 2003, 12:20 PM #4
- Join Date
- January 18th, 2005
- United Kingdom
Good old Frederick, going where only some of us have been before. Still his name carries a certain amount of weight, so maybe some AMs will start to understand the real issues surrounding this area of SEM. I'd point you to a post I made on another board that says much the same thing only better, but it's against ABWs TOS.
Search Engine Positioning - 1 Design 4 Life
November 19th, 2003, 08:54 AM #5
Agree. Sometimes a merchant gets a new affiliate manager who thinks they’re going to impress the bosses by cutting every affiliate out of PPC. They think all the PPC traffic they see converting from affiliate sites will convert the same for them. AM’s that do this=greedy merchants who are mistaken.
Hopefully some AM's will read this and think before they act.
"Merchant with no cookie get no clicky"
November 19th, 2003, 05:16 PM #6
July 15th, 2005, 10:15 AM #7
As a merchant, I agree. In fact, I just had this argument with the Powers That Be here about PPC and affiliates.
I used many of the same points to illustrate why it's important to keep affiliates in the PPC world.
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