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Nov 24, 2009
Article

New Chart: How Merchants Manage the Affiliate Search Marketing Dilemma

SUMMARY: Competition between companies and their affiliates is natural. Affiliates can be very effective at creating revenue-generating traffic through search so there’s an inherent tension in the system. See the main attitudes/policies with which merchants attempt to deal with this issue.
Merchant Affiliate Search Engine Marketing Policies -- 2009 vs. 2007

View Chart Online
Click here to see larger, printable version of this chart

With the advent of search marketing came the problem of competition between companies and the affiliates with whom they have, hopefully, symbiotic relationships. It’s in an affiliate’s best interests to generate search traffic using the most alluring keyword terms, and these are often branded, including the company name itself. Merchants for their part generally want to take full advantage of those same terms and to avoid ‘paying twice’ for affiliate search-driven clicks that they feel would have come to them anyway based on the keyword.

At the same time, affiliates can be very effective at creating revenue-generating traffic through search (some merchants simply cede paid search to their affiliates) so there’s an inherent tension in the system.

Above we see the main attitudes/policies with which merchants attempt to deal with this issue. Interestingly, the number of them who completely reserves brand/trademarked terms has dropped in favor of more nuanced approaches:

Offering specific terms to affiliates. This solution carves off specific terms that aren’t obviously navigational (BestBuy, BestBuy.com, etc.) and allows some or all affiliates to use them in the search marketing.

Limiting terms to the elite. As we saw in figures 3.20 and 3.21, a small number of affiliates tend to produce the lion’s share of revenue, and these elites are given the right to use some or all trademarked/branded terms. Another advantage of this is that monitoring and oversight are somewhat easier.

Placing bid limits. This tactic attempts to reduce competition in the never ending auction for ad placement. This speaks to the efficiency of some affiliates, which have determined that they can make money at keyword prices higher than the merchant itself.

Free reign. For some, the decrease in ROI because of the affiliate ‘cut’ is balanced against affiliates overall success and the affiliates become the ersatz search marketing arm of the merchant.
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