Adam Jewell - Search & Affiliate Marketing

Mike Jacobs of iMarketing presented this track along with Mike Solomon, VP of CJ Search and what a doozy it was. For years, affiliate marketing like search has struggled to gain respect in the online marketing world. Search is so big now, that only the most backward and clueless companies still stick their heads in the sand and ignore it. Lots of companies still ignore affiliate marketing and those in affiliate marketing don’t often see how search can work harmoniously with their affiliate program and create an overall more powerful online marketing program.

No doubt, the speakers had lots of experience in online marketing and had been around search and affiliate marketing for a while. The presentation, however was very one sided. It was from the perspective of an agency that wanted to preserve its own interests rather than that of its clients. It was from the perspective of an advertiser that thinks it owns keywords and can dictate the practices and placements of those companies and media properties that take the risk and work on a performance basis to drive sales.

The presentation suggeted two key points.

1 - Do not let your affiliates link directly to your website from paid search programs like Google AdWords

2 - Impose restrictions on how much affiliates who have their own websites can bid on keywords you the merchant targets so that they don’t outrank you.

Unless a merchant is totally hands off in search, they’ll probably want to restrict an affiliate linking directly to their website from a PPC search program AND bidding on their brand keywords with that direct link. Most merchants prohibit this, as well they probably should but it’s up to them.

Sales from PPC campaigns on brand terms come easy for an agency, an affiliate or an in-house search team. In many cases, a lot of money could probably be saved but not bidding on these terms at all. At least that’s what Microsoft says (think that’s an effort to take a chunk out of Google’s revenue - nahh it’s got wholesome intentions written all over it) and there may be some merit to that.

Let’s step outside of an advertisers brand terms. An in-house team or an agency probably handles the campaign. These people get paid by the hour, a flat salary or on retainer and are not often compensated based on performance. This may result in fantastic campaigns because the parties running them have built or use great tools and have time to make the search programs connect with consumers or they may totally suck. Often they totally suck.

The creative and creative structure is designed to make setup easy for the employee or agency, the campaign is set on broad match and the advertiser doesn’t really know what is happening in the campaign. They look at the numbers but not the human interaction with the campaign, the ad text, the keywords and the landing pages. The campaign may simply not perform well. Even if it does perform well, when you factor out the costs and revenue from brand terms does it perform better than a 5%, 10%, 15% cost of marketing that the affiliate program pays? In most cases, probably not. The agency or in-house team probably lumps everything in together and says our PPC search campaign perform at a 10% cost of marketing or something like that. It all looks ok to the financial folks and the CEO so there is no reason to mess with it.

Now what happens if you open up the use of the display URL to affiliates so long as they don’t bid on your brand terms when they link directly to the website? What happens is you get affiliates, maybe 1, maybe 1000 looking for the most effective, efficient, targeted way to send traffic to your website to generate sales. Not only that, you don’t have to pay them unless they sell stuff for you. Would you let affiliates link directly to your website from PPC search ads? hmmmmmmm tough choice huh?

What if affiliates have their own websites and they use PPC search to drive traffic to their sites? Here again, it may make sense to prohibit them from bidding on your brand terms or to set some kind of bid or rank cap on how much they can bid or where they can rank.

It’s a whole different story on the generic terms like shoes, bedding, or whatever you happen to sell. Why does it not make sense to try to dictate “bid caps” for your affiliates when they bid on keywords to drive traffic to their own sites?

Despite what an advertiser or the CEO or traditional marketing manager turned interactive guru thinks, no company “owns” any keywords except for their brand terms and even there is can be a bit questionable with the way Google operates its TM policies.

“Bid caps” may have worked in the old GoTo.com and Overture models that dominated the search world years ago but now that ranking algorithms are based on (bid price * click-through rate), if an affiliate writes ad copy that pulls 5% the click-through rate of the merchant, a bid cap will be meaningless and no affiliate is going to spend hours and hours making sure that they artificially lower their bids enough to stay below a particular merchant. They’ll just drop the merchant work with a more forward thinking advertiser.

If an advertiser is going to try to have “bid cap” policies like this, it should be with advertising sites like shopping engines traffic from which is billed on a CPC or a CPM. As the advertiser you are paying to appear on the shopping engines regardless of whether or not you get any sales. Those CPC, fixed price and CPM ad sites are the ones you might have a gripe with but since there is no shortage of advertisers, they probably would not agree to those restrictions either.

Affiliates want to work with merchants who want to make money, who spend time working on the conversion rates of their sites, who are forward thinking. When an affiliate only gets paid on a rev share basis, why work with a merchant who wants to micromanage everything?
Obviously, I thought this presentation was awful, misguided and was frankly shocked that CJ would have a speaker like this giving a prime time presentation. Maybe if it was balanced. One person from the traditional agency mentality and another from the progressive ROI driven affiliate in a cage match would have been more entertaining, balanced and educational for the audience.

It will undoubtedly take a while for online marketing to sort itself out. The presentation on Search & Affiliates presented one view, this blog entry presents another on how to handle search. High-level relationships with traditional agencies still often dictate that the traditional agency will get the interactive business even if they have no idea what they are doing. As the traditional media perspective starts to retire and fresh thinkers who grew up on the net begin to take over, or companies wake up one day and find a savvier competitor eating their breakfast lunch and dinner, they’ll change or encounter some rough times.