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  1. #1
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    Trademark bidding
    There are pros and cons to allowing affiliates to bid on a company trademark. I am surprised to suddenly hear it referred to "poaching" especially since competitors can bid on trademarks and frequently do. If a company decides to allow affiliates to bid to occupy the spots that competitors would, is that now poaching?

    When talking to new merchants we discuss the advantages and disadvantages, it sounds like I need more feedback on this issue.
    Deborah Carney
    TeamLoxly.com BookGoodies.com ABCsPlus.com

  2. #2
    Affiliate Manager PetsWarehouse.com's Avatar
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    Debbie, this issue needs to be broken down into two sub parts, authorized use by agreement and unauthorized use.

    In Trademark law the primary issue is dilution of ones mark to identify the goods and services.

    Trademark dilution occurs when a use of a trademark by someone other than its owner impairs the mark's distinctiveness, whether or not the mark is used on a competing product or in a way that is likely to cause customer confusion.

    To understand the law, one must understand the distinction between trademark dilution and trademark infringement.

    Infringement occurs when someone other than a trademark's owner uses the mark in a way that is likely to cause customer confusion. For example, if someone other than the Kodak Corporation started marketing film under the mark KODAK, customers would likely be confused, because customers have come to associate KODAK film with a specific source and would likely believe that any KODAK film they see comes from that source.

    The law defines the term "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of

    (1) competition between the owner of the famous mark and other parties, or

    (2) likelihood of confusion, mistake, or deception."

    Courts have previously found that dilution can occur as a result of either "blurring" or "tarnishment". "Blurring" typically refers to the "whittling away" of distinctiveness caused by the unauthorized use of a mark on dissimilar products; while "tarnishment" involves an unauthorized use of a mark which links it to a product that are of poor quality or which is portrayed in an unwholesome or unsavory context that is likely to reflect adversely upon the owner's product. The legislative history suggests that both of these concepts are encompassed within the new law. In addition, the legislative history cites, as examples of the uses which would fall within the new law, the mark DUPONT for shoes, BUICK for aspirin and KODAK for pianos.

    Now in the context of affiliate marketing, if the mark owner allows anyone to use the marks it will imply to others that the mark owner allows it’s use with out licensing.

    If that use continues unchecked for period of time it can be argued that “I used the mark for X years and nothing was said” that can be construed as acquiescence.

    Acquiescence is the failure to take action against infringing parties, or otherwise indicating, implicitly or explicitly, that nothing will be done about the infringing action. Acquiescing can lead to abandonment of trademark rights.

    Therefore, if a later time a mark attempts to enforce his/her rights in that mark it becomes extremely difficult to prosecute such a case.

    On the other hand if you show that you have guidelines for it use or prohibition of its use published in case in a Terms of Use statement of the merchant you can pursue certain remedies under the law such as getting injunctive relief to halt its use.

    That is why I believe a merchant or Mark owner should not allow its use in affiliate commerce.

    Hope that helps

    Bob Pets Warehouse
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  3. #3
    Influencer Marketing GravityFed's Avatar
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    We have a network blanket policy that prohibits Affiliates from bidding on merchant names and/or trademarks unless the merchant states it's ok to do so in their PPC policy.

    Merchants of course have different opinions on this and some allow it, but most do not. In addition to Bob's points, I think another big reason why most merchants don't allow it is because they are 1st in the SERPs organically for their company name, anyway. For example, if someone is searching 'Moosejaw' in Google there is a high probability they are looking for Moosejaw the merchant. Moosejaw is no. 1 in Google for their own name and therefore they don't want Affiliates having PPC ads showing up (or any PPC ads for that matter) and potentially paying a commission on a sale that they would have had anyway (many Google users/shoppers do not know the difference between paid PPC ads on the right and the organic listings...so they could just as easily click on the Affiliate's ad).

    I can appreciate both sides of the coin on this issue, but by default we're protecting the merchants name and/or trademark on PPC bidding unless they address it otherwise in their search engine marketing policies.

  4. #4
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    There's both sides of the argument, here is some for:

    http://www.revenews.com/davidlewis/archives/001327.html

    Now if the merchant has their competitors bidding on them, it makes sense to have their own afffiliates instead, control it.

    This is an old discussion but brands use their competitors brands/TM all the time. You see a Liquid Plumber commericial saying they're better than Drano. Coke better than Pepsi etc. There's no problem with that. I used to work in the grocery business and you can scan certain items and get coupons for their competition. Anytime I bought a 12 pack of Coke, I got Pepsi coupons. Pepsi was targetting that TM. That's legal.

    There are also cases where the merchant is pretty much the TM. Nike.com, Toshiba, Dell, Gateway, Kodak, Adidas, Timberland, Oakley etc. These are cases where the brand/TM is the product you're trying to sell. It makes sense to bid on that TM because people are usually going to use those TM to search.

  5. #5
    Affiliate Manager PetsWarehouse.com's Avatar
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    Quote Originally Posted by Trust
    This is an old discussion but brands use their competitors brands/TM all the time. You see a Liquid Plumber commericial saying they're better than Drano. Coke better than Pepsi etc. There's no problem with that. I used to work in the grocery business and you can scan certain items and get coupons for their competition. Anytime I bought a 12 pack of Coke, I got Pepsi coupons. Pepsi was targetting that TM. That's legal.
    Correct, comparison use of Marks is permitted.
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  6. #6
    Newbie holmesstamp's Avatar
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    Here is my Newbie take on trademark bidding.

    Im not a fan of it, My company has been in business for 50+ years, while our website has only been around for 9+ years, because of our good name in my local community we get alot of local sales on our site. I do not feel that I should have to pay commissions on customers of mine that simply goto Google or yahoo to look up my site and click on one of my affiliates PPC campaign.

    But it happens...almost every day... I have talked to my OPM about it and we are going to change it soon...

    Am I wrong here??

    Just my thoughts on a Sunday afternoon

  7. #7
    Affiliate Manager PetsWarehouse.com's Avatar
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    IMO, you're correct, they would be capitalizing on your companies Goodwill, therefore, diluting the Mark.
    Worse part is they would make money on it
    Bob Pets Warehouse
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  8. #8
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    What do you mean dilute the mark?

    As far as his situation, do you have competitors bidding on it? I know some merchants just contact Google and shut it all the way down. No affiliates, no competition like Kohls:

    http://www.google.com/search?sourcei...0US230&q=kohls

    But then you have merchants like Golfsmith that used to allow TM bidding:

    http://www.google.com/search?sourcei...30&q=golfsmith

    They now have their competition bidding on their TM. They could have their affiliates bump them down.

    Another situation. Once UGG Australia allowed TM bidding, I was doing good with that. Then they said no. So then the sales just went to Zappos. When I do PPC, I want to get it as targetted as possible. Not boots, not sheepskin boots, I want Ugg Australia boots.

  9. #9
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    This situation is so misunderstood by many, I think it requires more than a thread at times, like it's own (one-time) summit.

    We should start with two biggies... we're not really talking about trademarks most of the time and this is not something requiring trademark law to govern. As long as we keep talking about the law and the fair use doctrine, we are missing the entirety of the points that really matter.

    trademark... most often, the problem is with people bidding on your domain name. You do not need to have a registered trademark for your domain name to protect it from use by your affiliate partners. They are your partners and are governed by the agreement you have in place with them. As a merchant you can decide to disallow anything you want - it does not have to be a trademark at all.

    I once worked with a merchant where I reported to them that they had an affiliate bidding on their domain name, they thought they couldn't do anything about it because they had never trademarked their domain name. They were considering sending a letter from their lawyer, to their affiliate, threatening some trademark legal action, but were holding back because they weren't sure they had the right to do so - since they didn't actually own a trademark for their domain name. All they had to do was remind their affiliate of their rules - if that aff didn't comply, boot them. There's no lawyering needed here.

    This discussion really is about value - what value do your affiliates provide. You should decide that on your own, like everything else you decide as a merchant with an affiliate program.

    There are many things you might consider different strategies for...
    domain names
    brand names
    model names
    product names
    third tier ppc engines
    legal trademark and servicemark names
    and so on...

    But I'd say most merchants need to decide on just one issue... do we allow affiliates to bid on just our domain name?

    Why do I say just one issue? 99.9% of the time, the problems we associate with "trademark bidding" in affiliate marketing are affiliates bidding on your domain name. Very few "trademark bidding" affiliates are bidding on anything other than your domain name.

    If you have things besides your domain name that need attention, you already know who you are - you're likely a reseller of some sort that has an arrangement with OEMs that requires limitations - and you've got systems in place to deal with these issues and have special clauses for your affiliates saying they can't advertise those terms. This is the real "trademark bidding" that people were concerned about, before affiliates started whacking domain names with ppc.

    I honestly think we should start to talk about them separately - domain name bidding and trademark bidding.

    And concerning domain name bidding, it's simple - do it or don't. If you think your seo for your domain name is strong enough (it likely is very strong, you can see that yourself) -AND- you think you'll never lose sales to your competitors who show ads for searches for your domain name (you likely will lose a very small % of sales), then don't do it. You'll have your seo position there and that's your solution, all done.

    If you want to put an ad front and center for searches for your domain, it's very easy to do that via your own in-house ppc - it's cheap and the returns are very high (the customer is looking for you by name!). Your ppc person can set up an ad group for your domain name in less than 10 minutes and let it run forever - the clicks are very cheap because the relevancy is super high. If you don't do in-house ppc or have other reasons to not do it in-house, then you might consider letting your affiliates bid your domain name traffic. Doing so will make your program's EPC increase because the returns are so high. I'm not advocating that, but experienced affs know EPC is fallible and you do have competitors that will do this making your aff recruiting tougher - so I'm also not advocating against it.

    Now, here's the wrinkle, and also why this whole situation is considered a problem. Because the clicks are cheap and the return so high, there are now specialized (for lack of a better word) affiliates who do only this - bidding on domain name traffic. Since it takes a whopping 10 minutes or less to set it all up to run and since the returns are among the highest available to affiliates, there are some who will bend and break rules to do it. They will make their ads look just like the merchant's inhouse ads, so it goes without notice. They will run geo-targeted ads so their ads don't show in the state where the merchant lives (and does their policing). They will redirect their urls through phony sites / urls to make it look like it's some sort of tracking system the merchant has legitimately put in place, again making it look like their ad appears to be the merchant's own ppc. These affiliates are making tons and are adding very little value. So, you gotta ask yourself as a merchant or affiliate manager - if this is so very sweet and high returning, when I give it to the specialized domain bidding affiliates and it's all that they do for my program, am I getting all I can get for it. If we can do it easily in-house, outside of the affiliate program, why let the domain bidding affiliates do it? If you're a merchant and you let these folks do this for you and you require nothing else from them in return, then you're getting ripped off. That's why I often refer to the specialized only-bidding-on-domain-names affiliates as poachers. If you give away this high roi area to anyone, you're not maximizing your program's performance. If you decide to allow affiliates to do it, use it as a reward or incentive for hand-picked affiliates that do other promotions for you - you can get them to do even more for you in return!

    Every merchant is different and entitled to make their own decisions that fit them best. If they chose to allow domain name bidding and they allow the specialized domain name affiliates to "earn" those returns, they get 2 good things in return:
    1) improved program metrics - EPC and related numbers go up, helps recruiting
    2) save time - nothing to police if everything's wide open to everyone
    along with the good, they get these three negatives:
    a) their company roi goes down, they're paying out to affiliates for something that's easy to do. if their brand name is strong, it can be a lot of money.
    b) if they let affs who just bid their domain name and do nothing else have it, they're wasting an incentive opportunity that can be used with their more valued affiliates
    c) their other affiliates are negatively impacted on return days. if an affiliate with a site referred someone yesterday and today that shopper returns through an affiliate bidding on your domain name, the domain bidder is "last in" and your value-add affiliates suffer. the size of this problem is very small - smaller than other leaks like phone tracking, cookie issues, adware issues, work-versus-home buys and others.

    For many lesser brands, the positives outweigh the negatives and it makes perfect sense to allow domain name bidding. As brands grow bigger, it can make sense to go the other direction.

    Now, because your domain name and company name are often the same, and because everyone is (incorrectly) thinking "we must protect our trademark from dilution", merchants get carried away with what must be considered, done and enforced. You don't need to police the use of your domain name in combinations with other things, because it's a waste of time and it's use doesn't dilute anything - in fact, it does the opposite.

    Let's say someone considering buying from your store wants to get more information about you - so they search for things like checksunlimited history, bentgear review, or villagehatshop coupon. These visitors are looking for something else to close the sale - if you extend your "trademark" policing to these other issues, your affiliates won't be there to help you close the sale, but your compertitors will.

    For some merchants, I've bid on "merchantname coupon" - and at times, I've been accused of "trademark bidding" (even though their policies clearly didn't address "coupon" or cobinations. If you lump "domain" & "domain+otherwords" into "trademark bidding", you're again missing the entire point of things. In the case of +otherwords, the visitor is looking for something else before they buy - if you eliminate the +otherwords, your same affs will still be there for seo/organic traffic and all you've accomplished is preventing your affs from taking those ppc spots - your competitors will be there, so will some weird results, like ebates. If we want to debate the +otherwords part of a merchant's ppc domain-name bidding policy, I can give tons of funny examples where the intended consequences have gone horribly wrong.

    The issue is entirely people looking for you by name - I call it domain name bidding - if there's +otherwords in there -we are no longer talking about people looking for you by name - they're looking for something else about you. You also add completely unnecessary policing time to your job if you spend time looking for the +otherwords combos.

    All you need to do is have a policy that bans the domain-name bidding - an example:
    banned keywords:
    ~~~~~~~~~~~~
    bentgear
    bent gear
    bentgear.com
    ~~~~~~~~~~~~
    That's three words.

    +otherwords like these are counterproductive, let your affs fulfill those needs:
    bentgear review
    bentgear.com coupons

    Typos and misspellings are so small, you shouldn't add them as banned words either - let your affs chase them all down so you know they're all covered - they are not high returning like your domain only words.

    So if you decide to disallow domain name bidding by your affiliates, your policing efforts are checking three words at Google, Yahoo and MSN once a week. Keeping an eye on your high producing affiliates traffic is the other thing you should do, and you should do that no matter what your domian name policy is.

    If you decide to allow domain name bidding, I suggest you use it as a private incentive to get your existing affiliates to do more for you. Otherwise, you're letting the squirrels run free in the park - allowing them to have the nuts for free will not get them to bring in a single new additional sale for you - they don't do that - they just take the nuts. If you're giving out delicious nuts, make the people there clean up the park, build a new slide, mow the grass, bring a new friend to the park or something - be the park ranger. If you just give out your nuts to the squirrels and ask for nothing in return, you're the crazy old homeless broke dude always sitting there dumbfounded on the bench, holding an empty paper bag.

  10. #10
    Analytics Dude Kevin's Avatar
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    Thanks Donuts. Great post.

    How about Trademark bidding in regards to DTM? Should a merchant be more lax here, or is there no distinction?
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  11. #11
    Affiliate Manager PetsWarehouse.com's Avatar
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    Quote Originally Posted by Donuts
    All you need to do is have a policy that bans the domain-name bidding - an example:
    banned keywords:
    ~~~~~~~~~~~~
    bentgear
    bent gear
    bentgear.com
    ~~~~~~~~~~~~
    That's three words.

    +otherwords like these are counterproductive, let your affs fulfill those needs:
    bentgear review
    bentgear.com coupons
    I agree the banned words should be limited, to a short and sweet list.

    The plus words have been tested in Courts by Beanie Babies or TY.
    They had a dealer that was using their mark in conjuction with +words.
    They TY Corp brought suit against that dealer and lost.
    The court found that as an authorized dealer how else could they descibe the product they we're offering for sale.
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  12. #12
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by Noth
    How about Trademark bidding in regards to DTM? Should a merchant be more lax here, or is there no distinction?
    For clarity, I want to say that the folks that bid on your domain name only are Direct-To-Merchant PPC (DTM PPC) affiliates - they do nothing but the ppc ads - no site, no seo, no pages built, no product selling, no deep linking - nothing but bidding on your domain name. If the merchant has decided to allow domain name bidding, these types of affs don't deserve to get the sweet rewards of that really great traffic, they've done almost nothing to earn it.

    Other than harping on that point again, there's really no big distinction here between affiliates that are ppc'ing their own affiliate sites and those doing DTM PPC straight to the merchant.

  13. #13
    Affiliate Manager Howard Gottlieb's Avatar
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    I agree with lots of points made above. However it seems to me the bottom line is that competitors can bid on anything they want. Wouldn't merchants rather have affiliates take over ALL the top spots so all PPC ads lead to them?

  14. #14
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by PetsWarehouse.com
    The plus words have been tested in Courts by Beanie Babies or TY.
    They had a dealer that was using their mark in conjuction with +words.
    They TY Corp brought suit against that dealer and lost.
    The court found that as an authorized dealer how else could they descibe the product they we're offering for sale.
    In some distribution agreements, one party must make prepayments or guarantees of certain levels of inventory and such - I can see how that ends up in court. But in affiliate marketing, partnerships are essentially at-will. There's no upfront fees - just an agreement with terms, and they can be changed at any time by the merchant - and the affiliate can depart at any time as well. Too many changes will hurt their reputation and recruiting, but an affiliate couldn't take a merchant to court for disallowing domain name bidding.

    Again, don't focus on legal precedence and trademark law, it doesn't directly apply to a working merchant-affiliate relationship - the rules of the accepted affiliate terms govern things.

    A merchant can just say stop bidding on our domain name (or any other word the merchant wants to ban) and that's it - there's nothing to debate in courts about who has a right to do what. If the affiliate doesn't agree to the terms, the merchant can terminate them without fear of recourse. In fact, the merchant doesn't even need a reason - it's an at-will partnership. As long as it's not discriminatory (religion, sex, handicap and such), there's no defined term (length) to the agreement, the merchants says bye and that's it.
    Last edited by Donuts; July 16th, 2007 at 01:15 PM.

  15. #15
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by visitourmall
    I agree with lots of points made above. However it seems to me the bottom line is that competitors can bid on anything they want. Wouldn't merchants rather have affiliates take over ALL the top spots so all PPC ads lead to them?
    Sure, and I said deciding to allow that makes sense to some merchants.

    However, there can be only one ppc ad that goes straight to merchantname.com - and that ad is very lucrative, even when the brand / domain name isn't super strong, but is just medium strength. If you open it up to affiliates, giving it to some affiliate that does nothing but bid your domain is a waste of a reward / incentive opportunity.

  16. #16
    Affiliate Manager Howard Gottlieb's Avatar
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    Agreed. A better policy might be to restrict bidding on certain terms if the you are using the merchant site as your landing page. However if you have built a site with a good landing page you might lift the restrictions.

    Just a thought.

  17. #17
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    Quote Originally Posted by Donuts
    Sure, and I said deciding to allow that makes sense to some merchants.

    However, there can be only one ppc ad that goes straight to merchantname.com - and that ad is very lucrative, even when the brand / domain name isn't super strong, but is just medium strength. If you open it up to affiliates, giving it to some affiliate that does nothing but bid your domain is a waste of a reward / incentive opportunity.
    But there can be many ads going to the affiliates own site. Just like the example I have above with Golfsmith, I think it's better for them for their own affiliates to be there than their competition.

  18. #18
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    If I was running an affiliate program and saw my competitors bidding on my TM I'd definitely let my affiliates bid on it. Might as well open the field to competition that will drive sales to me, rather than away from me.

    I don't think "poaching" is an appropriate term for trademark bidding unless it's either a) not allowed, or b) done by a competitor.

  19. #19
    Analytics Dude Kevin's Avatar
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    So conceptually, a merchant that isn't strong with their own PPC might head in this direction:

    They themselves run PPC campaigns on their trademarks in order to strengthen and protect their brand. Doesn't take much PPC skill to do that. Also, they restrict or prohibit TM bidding from affiliates.

    Then, they let their affiliates handle the rest. Products, long tail, etc.

    Fair enough?
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  20. #20
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    "They themselves run PPC campaigns on their trademarks in order to strengthen and protect their brand. Doesn't take much PPC skill to do that. Also, they restrict or prohibit TM bidding from affiliates."

    What if their competition is bidding on their TM? Would you as a merchant rather have that or your own affiliates. Another example for Vitacost:

    http://www.google.com/search?hl=en&s...230&q=vitacost

    Affiliates can bump down Doctor's Trust and Vitamin Shoppe.

  21. #21
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Yep, your both right - there can be many going to your affiliates sites, but think it over...

    +people typing in bentgear.com are rarely going to click on an outdoorgearaffsite.com ad (so letting your aff run this ad is not a problem and squeezes out your competitors trying to show ads on this search).

    +ppc engines today regard relevancy and quality as very high, most ads for affiliate sites won't be able to rank higher than the ad that goes straight to the merchant (whether it's the merchant's internal ad or a DTM affiliate ad) for the search that is just for that merchant's domain name.

    So if you allow bidding on your domain name, the money issue still centers on the one person doing the DTM PPC at the top that goes straight to the merchant - that is the spot that is the reward opportunity - the one that shouldn't be given away.

    As for the others, if you let affs bid on your domain name, you don't need to handpick those in second and beyond, let them take up all the others spots. If you decided to disallow domain name bidding, you've already decided that your seo can withstand your competitors ppc ads or that you need not run it yourself, so right or wrong, you've also already decided you don't need a line of your affs there in the ppc spots.

    So from my view, it's really all about that spot that goes striaght to the merchant - which is what these people searched for and will be the vast majority of the traffic and issue we're discussing. All else is in a far distant second.

    There's just one more thing to concern yourself with - and it again doesn't expand your policing efforts, regardless of whether you've banned domain name bidding or have allowed it - cuz it's policing you already have to do either way. You need to watch you domain name ppc spots for affiliate sites that leverage your domain name excessively or negatively. These things will already be on your radar. Like an affiliate comparison site that trashes the merchant, yet bids on the merchants domain name - you'd already be stopping that kind of thing.

  22. #22
    Analytics Dude Kevin's Avatar
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    Well, yes and no (IMHO).

    You can outspend your competition on simple keyphrases like your trademark and domain names. If you can't, you probably shouldn't have an affiliate program...

    And Donuts is right. DTM PPC'rs hitting up trademarks are grabbing low hanging fruit.

    But for those doing PPC to value add affiliate sites... I guess that's ok... Unless they're price comparison sites, right?
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  23. #23
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    "So from my view, it's really all about that spot that goes striaght to the merchant - which is what these people searched for and will be the vast majority of the traffic and issue we're discussing. All else is in a far distant second."

    Have to disagree a little on that one. Especially if that merchant has any coupons or deals available. You can have that #1 direct to merchant spot, but the ones below that with Merchant coupons and deals will get the clicks.

  24. #24
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by Trust
    "They themselves run PPC campaigns on their trademarks in order to strengthen and protect their brand. Doesn't take much PPC skill to do that. Also, they restrict or prohibit TM bidding from affiliates."

    What if their competition is bidding on their TM? Would you as a merchant rather have that or your own affiliates. Another example for Vitacost:

    http://www.google.com/search?hl=en&s...230&q=vitacost

    Affiliates can bump down Doctor's Trust and Vitamin Shoppe.
    I would rather have my own affiliates there.

    But much more importantly, the value of the top ad that points to my site, would be my primary concern.

    People doing that search are looking for my site - they're so close to typing it into the url bar I can feel it. The other competitors being there is an issue, but it's not in the same league as that top ppc spot - which I'd definitely want to be mine (or one of my affiliates, but not an aff that just bid that spot and nothing else).

  25. #25
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by Noth
    But for those doing PPC to value add affiliate sites... I guess that's ok... Unless they're price comparison sites, right?
    If you mean bidding on the domain name to take them to an affiliate price comparison site, this is again the merchant's decision based on value.

    If they are nowhere near being price competitive, I'd think you'd not desire this affiliate to do ppc on your domain name, cuz it'd be a leak to your competitors. If you were a low price leader, perhaps you'd feel differently.

    But again, this concern wouldn't be as important as the decision you make about who is running the ad going straight to your domain for searches that are for your domain name.

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