It has been many a time by search marketers that you shouldn’t run affiliate programs because your brand will be damaged by affiliates. That’s a cop-out. Yes, you should be very concerned about protecting your brand. To do otherwise would be irresponsible. But to suggest that you will lose control of your brand by having other marketers drive sales for you is insulting to those of us who understand the business. To be sure, don’t let these guys run willy-nilly with their SEM campaigns. Be smart about it and keep them in check. You control the creative, you control the messaging, you control the offers, and for paid search you control the keyword portfolio and the linking strategy.

Synergy, not cannibalization

In our “orders” businesses for example, where we’re bringing people in to subscribe to various paid Yahoo! services, affiliate marketing helps us increase our order volume in a profitable way. In these businesses, we do need to monitor affiliates’ SEM behavior quite closely. We maintain and update our policies on a regular basis. In some programs we allow affiliates to bid on our brand terms, and in others we prohibit it. Our decisions are driven by whichever route we think will drive the most profit to the company without sacrificing our brand value.

Increase CTR, not CPC

As stated above, direct linking is another tactic that should be managed carefully. As we know, for a given advertiser domain, most search engines will only allow one advertiser to show on a given search result page. So why not maintain a policy that prohibits affiliates from direct linking at all?
Because doing so can significantly reduce affiliates’ conversion rates, in turn cutting the order volume they can drive to your business. Exceptions to this rule are the “comparison sites” many affiliates maintain that promote various competitive services. In cases like this, no direct linking is required. Instead, you’ll want to negotiate terms with your affiliate that will favor placement of your offer over those of your competitors. The beauty of this scenario is that when the “comparison site” affiliate is not direct linking to your site, you can essentially get multiple listings on the same search result page, thereby increasing your effective CTR across multiple sites.
But what about when affiliates are direct linking? Aren’t you then bidding for the same real estate? In effect, yes. But remember that affiliate marketers are crazy about efficiency, so if they’re out bidding you for a keyword, chances are it’s worth more to them and should perform better for your company.
Policy, policy, policy
So what are the best practices for affiliate/SEM policies? As usual, it depends on your business. Try starting with some simple easy-to-manage policies and go from there. Don’t overthink it. Disallow brand terms and direct linking, for example, but be as aggressive as you can on your rate card to attract quality affiliates. Then, if you’re not getting the traction you need with the larger affiliates, selectively tweak your affiliates’ SEM policies as needed. Keywords and direct links can act as currency in negotiations with affiliates. A word of caution: don’t publicly change your policies or rate card too frequently. Affiliates are human beings (as opposed to keywords), and if you jerk them around by changing policies and rate cards too often they’ll simply go away. You don’t want that.
Outside of policies and rate cards, there are also some situations where affiliate marketing can naturally complement SEM in a synergistic way. In one of our programs, for example, we have an affiliate partner that specializes in buying and optimizing traffic content networks. By contrast, our in-house SEM campaigns are mostly focused on keyword-driven search, so in this case there is no discussion of overlap, cannibalism or other scary-sounding marketing buzzwords.

A note on SEO
Many affiliates engage heavily in SEO to drive traffic to the offers they represent. In most cases this is fine. Where you need to be careful is where an affiliate might set up a microsite specifically to drive traffic exclusively to your offer. This can still work, because in many cases it’s going to be better to have an extra algorithmic result on the search result page, but if you’re going to allow this keep in mind a couple of guiding principles.
First, you should be doing a better job of SEO than your affiliates, at least on your brand terms. If not, there is some reputation risk here—it doesn’t look good for affiliates to be outranking you in algorithmic results. As well, you should enforce the same brand guidelines you would for paid search. It’s your brand, and it’s your job to protect it. A logical policy in this regard is to insist that all copy (and meta tags) related to your offers are subject to your approval.
So the next time you hear a marketer yammering on about how affiliates are ruining their campaigns, go ahead and set them straight. Tell them Dave from Yahoo! says you should be able to get along just fine with your affiliate brethren, and if you can’t, then you’re not doing a very good job.
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