Angie McCloskey makes a strong case in MediaPost’s Performance Insider on how “Affiliates Are Pilfering Your Brand” by grabbing branded search terms and then charging the merchant for the trouble. She points out that if your brand is what caused people to search, then by restricting your affiliates so that they can’t bid on those branded keywords you’d reap all the benefits of customers coming directly to you. Instead of paying affiliate fees for searchers using branded terms, you’d pay nothing to make the same sales. Although this sounds like common sense, I think it’s wrong.
Certainly Angie has a point. If you’ve spent years building your brand, why would you want to cut affiliate marketers in on the sale when your customers search for branded keywords?
Some merchants running affiliate programs have heeded Angie’s advice and changed their affiliate agreements so that their affiliates are not allowed to bid on certain branded terms. Unbranded category keywords are fine, and it makes sense to credit the affiliate with driving sales from those terms, but these merchants are making branded terms off-limits to affiliates. Studies by MarketingSherpa indicate that this practice is on the rise, with twice as many merchants blocking branded search terms since early 2005.
I think that’s short-sighted.
As I wrote a year ago in my column in Revenue Magazine, “Unfortunately, no matter what a merchant does to block its affiliates from buying branded keywords, competitors can’t always be blocked, because the merchant has no control over them. The merchant can buy just one ad per branded keyword, but the search engines always show several ads on each result screen. Although the merchant might have the top paid spot, who has the rest of the spots?
“Before that merchant began blocking its affiliates, the bulk of those other ads were likely from its affiliates. Searchers who clicked on those affiliate ads (and bought) were still buying from the merchant, even if the merchant had to shell out higher fees than if the searchers had purchased without coming through an affiliate.
“But Randy Antin, search marketing manager of Travelocity, notes that when his company restricted its affiliates from bidding on branded keywords, ‘the spaces in the bidding were soon replaced by our competitors’ affiliates.’ Searchers clicking anything other than Travelocity’s single ad might end up buying from a competitor. Yahoo has recently changed its policy to block competitors from using trademarks, but it remains to be seen if other search engines will follow suit.”
To me, it’s a shelf space issue. Every search has a set of results, and anything you can do to crowd out the competition is a good thing. I’d rather have higher cost of sales with a lot higher sales than lower my cost of sales while losing revenue to the competition. You can read my entire column, “The Search Tug of War,” but I warn you that the Web site has mangled the text a bit from the original print version.
