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March 25, 2009

Dealing With Affiliates: A Roadmap to Success

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This Fundamentals track session is moderated by Jeffrey Rohrs, VP of marketing at ExactTarget. Our lovely speakers are Kristopher Jones, president and CEO of Pepperjam; Jeff Ferguson, SES Advisory Board member; Lori Weiman, CEO of The Search Monitor; and Peter Figueredo, CEO of NETexponent.

Dealing With Affiliates panel at SES NY

Kris Jones is going to start it off. He says he has a unique perspective as he was once an affiliate marketer. He now helps runs an affiliate network. He’ll be talking about how an advertiser can minimize conflicts with affiliates.

Your affiliate network should stand as a resource to help you. He’s going to cover ways to identify potential channel conflicts. He’s going to help you understand who your affiliates are (transparency) and what promotional methods they use to drive sales. Then you can minimize the conflict and optimize the affiliate channel.

There are four primary potential channel conflicts:

  1. Direct linking
  2. Trademark bidding
  3. Bidding on the same keywords as you
  4. Promotion of conflicting (outdated) marketing messages

Direct Linking

Direct linking occurs when an affiliate uses an affiliate tracking URL as the destination URL for PPC marketing purposes, instead of sending the traffic through their own unique landing page and URL. Since Google only delivers one advertisement per unique display URL, Google may show your affiliate’s sponsored search instead of yours. To identify if this is occurring, go to Google, right click on your ad and take a look at the link extension that you see. There’s another way to do this and that will be explained by Lori. This is an easy way but you don’t really want to be right-clicking on your ad all the time.

Unfortunately for you, Google does not provide protection from direct linkers. Therefore, you must learn the rules.

Trademark Bidding

Trademark bidding is a serious concern for many advertisers and therefore it can be prohibited as part of the terms and conditions of the advertiser. Other advertisers allow trademark bidding and see it as a way to push out the competition.

Competing for the Same Keywords

  • Many advertisers complain that SEM affiliates run up the pricing for the same keywords the advertiser is trying to bid on.
  • This is only true if the advertiser doesn’t have rules in place and the affiliate isn’t following the rules.
  • Before you put a NO PPC policy in place, realize that the SERPs represent available real estate for you and your competitors.
  • One of the best ways to cover more real estate is through your SEM affiliates.

Conflicting Marketing Messages

Conflicting marketing messages can occur when your affiliates use inaccurate product info, non-authorized banners/text links, and/or through misrepresented or outdated ad copy on search engines. This conflict can be minimized through increased communication to a smaller key group of affiliates.

Tips on Making the Affiliate Channel Work for You

  • Send a request to Google to disallow advertisers from using your trademark within the ad copy. However, you can’t get Google to stop bidding on your trademark.
  • Amend your affiliate contract with a no direct linking or no trademark bidding policy.

Through increased affiliate transparency, you can grow your affiliate relationship and bring it to the next level. Get to know your affiliate.

  • Set min/max bidding rules.
  • Restrict or include certain keywords.
  • Allow select affiliates to bid on trademarks.
  • Provide your key search affiliates with private offers and incentives.

Jeffrey: Is there any abuse happening in the marketplace right now?

Kris: Advertisers are getting smarter but they need to develop a knowledge base in Facebook ads. There are a number of techniques that affiliates are using that may not best represent your brands. Take the time to familiarize yourself with Facebook ads. It’s not a different problem; it’s just shifting to other channels.

Jeff Ferguson is going to talk about zen and the art of paid search and affiliate marketing. There has been a lot of fiery debate over the topic, but he feels it’s all about finding the balance. Zen is difficult to obtain but people, by default, exist close to a balanced state. Outside influences push them towards extremes.

Common Issues

In the ideal world your ad is at the top and there are no competitors, but that’s not always the case. Affiliates can be your alternative to having competitors show up next to you in the ad space. But when you see your affiliates up there there’s an immediate concern that they’re somehow stealing from you.

Issue 1: Cannibals

Should I allow it?

Yes:

  • When you’re using a highly competitive keyword
  • When you’re the most relevant ad on the search item
  • When there is a high chance of loss of opportunity

No:

  • When you’re usually all alone on a term

Issue 2: Rising bids

When you need to worry is if your ad is so bad that it ends up on the bottom. It’s a knee-jerk reaction to blame your affiliates for ranking above you but the real problem is your own program. You need to step up and figure out what’s wrong that your affiliates can rank for your brand.

Should I allow it?

Yes:

  • When you can make it work with your ROI

No:

  • When someone on the term is a little crazy… maybe. The affiliate is probably losing money. At this point you may want to point out to him that he’s losing money.
  • When you want to be more cost efficient

Issue 3: Brand damage

What if my affiliates will hurt my brand’s good name in their paid search ads. Jeff says it’s usually a non-issue but sometimes it happens when the affiliate is lying or promising something they can’t deliver or insulting a competitor.

Should I allow it?

No:

  • When they’re truly damaging the brand or breaking rules

Yes:

  • When they may have discovered something that you should have been saying all along.
  • When you don’t have any brand equity anyway.

Some of the best breakthroughs with brands are done through affiliates saying something that’s never been said about your brand before. FedEx is a good example because they shortened their name from Federal Express after everyone was calling it FedEx anyway.

Issue 4: Over dependence

Paid search affiliates are a great way to expand your program. Once you let them in the mix, don’t lose focus on other areas. Don’t let paid search take over your program. When Google changes policies, like when they stopped allowing direct linking, they lost everything because they were relying too heavily on paid search affiliates.

Should I allow it?

No.

  • The end.

One way to look at this mess is to ask if the combined volume of the two programs increased.

If yes, then take a look at your ROI. If your ROI went negative, then adjust accordingly in either program. If no, then you may need to rethink the program a bit. But don’t blame them immediately. It could be you.

Jeffrey: What are things you’ve done to positively incentivize the right types of behavior from affiliates.

Jeff: He’ll do the math and give them more or come to an arrangement that the affiliate will take less risk. Determine if the ROI is positive and don’t just do it in the name of building relationships.

Lori Weiman will present next and she’s focusing on monitoring your affiliates’ efforts. She’s going to help us quantify things to figure out if you do or don’t have a problem.

Her system is a competitive intelligence tool that looks at ads across different mediums, including search. They identify affiliates who direct link, affiliates who operate their own Web pages, watch for brand terms, head terms and long-tail terms.

She’s often asked if affiliates are a problem or a solution. They look at it as a solution:

  • Increase leads and sales
  • Corner the marketing — push out the competition
  • Protect your brand

The problems are:

  • Direct linkers which compete for visibility and drive up CPC
  • Drive down your rank if their quality score is better than you

Measuring if you have a direct linking problem:

  • Measure frequency of ads served — you vs. the affiliate: The percent of the time that your ads are served.
  • Measure impression share: Look at your impression or market share. If it’s lower for no good reason, turn to your affiliates.

Impression share:

Your impression share is reported by AdWords. Create a campaign performance report with daily selected for unit of time. Graph the resuls in Excel. Determine your mean/average impression share. Look for anomalous dips. In this case you may have a direct linking problem. Once you’ve identified the problem you can dive into that date and time and figure out wha’ts going on.

If the affiliate is driving down your rank this can happen in the affiliate has a better quality score than you. You need to either accept it or put rules in place.

Decide if the ROI is there to have the ad in place. If yes then let them stay up there because at least it’s an affiliate and not a competitor.

Is the affiliate a solution?

  • Affiliates should be in your marketing arsenal. Focus on your goal of making money.
  • Increase leads and sales
  • Less you corner the market
  • You can protect the brand

There are facts you can’t avoid. You will never get all the clicks and you can’t prevent competition. Let the affiliate take over the other spots for you and occupy more than one position on the page. They may have better landing pages and quality scores and you may not be able to challenge them for that position.

Protect your brand

Don’t worry about it. Think about it this way:

  • Google does not police your brand.
  • Engines let advertisers bid on your brand.
  • Legal action is expensive.
  • The best solution is getting more affiliates show up. Empower your affiliates to sponsor your brand and then put rules in place to prevent things that concern you. You can even give affiliates the exact copy to use.

One problem could be that each ad on the page has a different offer. That can be confusing and conflicting.

Something to watch out for: Switching the landing page. The rule is that the display URL must match the landing page URL.

Getting around the rule: The affiliate initially sets-up its ad to point to the affiliates own landing page. After it sees the Google bot do its editorial check, the affiliate changes the landing page to the merchant’s Web site.

Closing out the session is Peter Figueredo who’s going to talk about the good, the bad and the ugly. When he advises clients about affiliate marketing, clients are usually worried that affiliate marketing is the Wild West. They either let them do anything or nothing because they’re scared.

The Good

These are the heroes of the search affiliate category. Seven characteristics embody the heroes.

  1. The Exclusive Ranger: An affiliate that agree to be exclusive with an advertiser. If you have a strong enough relationship and value proposition, you may get an exclusive deal.
  2. Testy McGee: An affiliate that tests different offers for you. You can know that your tested and proven offer gets to stay with you but someone else is out there trying new things.
  3. The Enricher: Some affiliates will invest in content, write it themselves, hire editors and writers and enrich the affiliate experience.
  4. Doc Development: This one will build out sites for categories and brands. This benefits you by enriching the consumer experience and shows you what a conversion rate might look like if your site looked different.
  5. Long Tail of the Law: If you’re not doing a good job with long tail search, affiliates can help you get exposure.
  6. Marshall McShare: A trust level where your affiliate is sharing info with you. Sharing can be a two-way street. They will tell you what they’re bidding, where they are and so on.
  7. Sheriff SEO: A lot of affiliates are doing SEO, not just paid search. They’re getting natural rankings through their SEO talents.

Affiliates doing search can generate 30-50 percent of sales in a program. This will happen in a well controlled environment.

ChilledToPerfection.com is an example of a good affiliate. He clearly states it’s an affiliation. He pulls in the client’s product feed but is also adding his own quality content. This site uses almost all of the seven characteristics.

The Bad

These shouldn’t be acceptable in any case.

  • Hijack domain misspellings and confuse natural listings. Citizen Hawk is a service that will identify this bad practice and reclaim the domain.
  • Hide ads by geo/daypart targeting around the advertiser or agency.
  • Steals your display/linking URL and kills your ad.
  • Steals your ad copy and causes consumer confusion.

The Ugly

Just because it doesn’t look good to you doesn’t necessarily mean that it’s bad. You have to figure out what they’re doing and see if the problem is you don’t have terms that address that and you can reach out and correct the situation.

  • Using ad copy that falls into the grey area. Reach out and find out what they’re doing.
  • Promote your competitors’ offers alongside your own.
  • Register domains that are similar to yours, but not misspellings.
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3 responses to “Dealing With Affiliates: A Roadmap to Success”

  1. Margie Butler writes:

    Thanks Virginia. You have done an excellent job of live blogging these sessions. Bruce should be very proud of you.

  2. Peter Figueredo writes:

    Thanks Virginia, I appreciate you posting this up for all those who could not make the session. Hope you enjoyed our talk.

  3. falilou writes:

    Great post! This will be so helpful. You basically answer to ALL the issues I am facing currenntly.
    Thanks again



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