Ross Barnes, Response One You Asked Our affiliates have begun bidding on our brand words; does this mean that we will end up paying them for searches that should have led to our website to begin with?

The relationship with affiliates is one of the most difficult for a business to handle: on the one hand they are providing leads and sales for your company, but on the other they are independent entities which require retribution for their services and have their own interests, as well as your own, at heart. This is, however, the case with any provider of service or materials and it is important to establish a relationship of trust and confidence on both parts.

One of the most common sticking points for businesses comes when a decision has to be made as to whether to allow affiliates – providers of voucher and coupon services or cash back sites – to bid on your trademark terms. If they are allowed to do so, consumers entering “M&S” in the search engine, for example, will not only find the link to www.marksandspencer.com on the search page displayed but links to websites offering discounts and vouchers for the purchase of Marks and Spencer’s products.
If they are more popular than the company’s own ecommerce site, these results may even feature higher in the page rankings than the company’s own ecommerce site. As a result, customers searching specifically for your brand may end up purchasing the product via a website other than your own. This lead will then have to be paid for by your company even though the consumer would have clicked on your site and not the affiliate’s had the rankings been more favourable.

In this case the question is- are the high ranking affiliates cannibalising sales or is your ecommerce site simply not optimised properly? Improving your paid for search results as well as your natural results should be the pressing issue for a business whose affiliates are attracting more traffic than the main site. If the consumer typed in a specific brand term, they almost certainly have been influenced to some extent by the brand’s own marketing and advertising; failing to optimise search lets these efforts down in the last lap. Understandably, however, businesses feel that affiliates should not charge for leads generated on the back of promotional activity that is not their own.

Marketers tend to see the acquisitions made through affiliates as bringers of ballooning costs. Firstly there is a cost per acquisition (CPA) charge for affiliates, then the brand’s own marketing effort is to be added as it drives the search, and finally the extra bidding cost of trying to keep the brand at the top of the search results page, which is regarded as the last straw.

There is, however, another important aspect to consider before letting fears of cannibalisation and plummeting return on investment (ROI) sever the relationship with affiliates. In May 2008, Google relaxed its UK regulations against bidding on competitor trademark names meaning that, for example, when M&S bid on the term Interflora, M&S appeared on the same search page as the brand. As Google currently has no regulations against competitor trademark term bidding, allowing affiliates to bid on key brand terms helps keep competitors out of that all important first search page. While affiliate bidding may add a fractional cost to the process of acquisitions, competitors really are driving business away with their aggressive bidding.

If relationships with affiliates are managed more openly, concerns over the cannibalisation of traffic can be quelled. Last-minute solutions such as lowering commission budgets and suspending programmes are simply unacceptable and feed into the climate of “every man for himself” on which mistrust is based. Some businesses have even gone as far as making up excuses so as to legitimise suspension of affiliate programmes over Christmas, a time of the year that affiliates have been gearing up to as much as your own business.

One solution that avoids stigmatising affiliate programmes is to suggest different rates of commission depending on the different type of lead or customer acquired. This way, for example, if the consumer provided by the affiliate turns out to be a returning customer who has previously bought through the ecommerce site, the payment can be set at a lower rate than if the consumer is an entirely new lead or a person whose custom is only available through affiliates.