Affiliate marketing is a four billion-dollar industry. From an online retailer’s perspective, working with affiliates can be a way to drive incremental revenue at a guaranteed ROI. The flexibility of the contracts allows affiliates to go out and get traffic almost any way they like. This results in more creativity and faster innovation than we tend to see in other marketing channels. Because of this, affiliates are certainly responsible for driving some amount of incremental site traffic.
However, that flexibility has drawbacks. There are two big problems with the standard affiliate marketing model:
- Almost all affiliate contracts are based on last-click attribution
- The advertiser has virtually no visibility into the source of the traffic, making it difficult to understand whether it is truly incremental
So, just as the flexibility of affiliate networks encourages innovation, it also presents an incentive for affiliates to engage in deceptive practices.
Brand Traffic Poaching
One method by which affiliates can exploit the system is by bidding on PPC brand terms. This practice seems like an ancient story to some, but let’s quickly review it for anyone new to the Affiliate world. Affiliates sign a contract wherein they get paid for driving buyers to a retailer’s site. Unbeknownst to the advertiser, they may set up an AdWords (or Bing Ads, etc.) account and create keywords for the retailer’s brand term. They either pose as the retailer, or advertise using the retailer’s brand name. When someone clicks, they send the user through a redirect, plant a cookie on the browser, and then drop the user off at the retailer’s site. By doing this, they appear in the shopper’s attribution platform as the source of the traffic, and get paid when the shopper purchases the product. As long as the cut of the revenue they get from the retailer more than offsets the cost of the clicks, it’s a lucrative arbitrage.
This is nothing new. It has been happening for many years. Some advertisers even deliberately allow it. But there are some serious implications. First and foremost, more competition on your brand terms means higher CPCs. Many retailers insist on showing their ad in the top position for their brand term. Maybe you even have a $15 max CPC bid for your exact match brand keyword. You could easily go from paying, say, a $0.50 average CPC to $1.00 as a result of one other advertiser entering the auction. Additionally, it impacts the user experience for people trying to reach your site. If an affiliate shows users an old, web 1.0-looking webpage, it can harm your brand image. Finally, it clouds your attribution. Most of those users would have reached your site from another source if that ad weren’t there.
What can I do about this?
The first step is to watch your brand SERPs with undying vigilance. It’s not as simple as searching your brand name once a month on Google, though. If that’s all you’re doing, they will quickly find a way to evade your spotlight. Thanks to all the different controls made available by the search engines, there are multitudes of ways sneaky affiliates can dodge you. Here is a non-exhaustive, cross-multiplying list of checks to perform:
- Different times of day (especially nights and weekends. They know when you are at work!)
- Different locations (states other than where you/your SEM agency are located. Use Google Ad Preview to modify your location)
- Different keywords beyond just your trademark (most brands have WAY more affiliate activity on “[brand name] reviews” and “[brand name] coupons” than just “[brand name]”)
You should also check your brand impressions, CPC and average position daily (separate by search engine and device). A blip in any of these could be a hint that an affiliate is encroaching.
Ways to protect your brand
First, find out who it is and tell them to stop. Whoever manages your affiliate program should reach out to them. If you don’t get a prompt response, send a cease and desist letter. Finally, if they are using your trademark term in their ad copy on Google, you can fill out this form, which will block them from doing so.
Unfortunately, in some cases the affiliate will stop bidding on your brand terms with the domain you caught, and then resume doing so with an entirely new domain. Be persistent but if you don’t want to go through all of this effort, there are ways you can get help. If you have an agency managing your PPC efforts, lean on them to police your brand SERPs. This is part of the service we provide at Adlucent. If you are managing PPC in-house, there are several software-as-a-service options out there – BrandVerity, The Search Monitor, and AdGooroo’s Trademark Insight tool are all geared toward policing your trademark.
Couponing Attribution Theft
Aside from violating your contract terms outright, affiliates will often find ways to step into a conversion funnel without actually driving incremental revenue. Coupon sites are a prime example of this behavior. Shoppers frequently stop midway through the checkout process to search the web for coupon codes. Retailers sometimes have a text input box where users can enter a promotional code towards the end of the checkout process. Many users see this as a prompt to go hunting for discounts. I was doing this myself long before I learned that the coupon sites were affiliated with the online store where I was shopping.
What can I do about this?
It’s not necessarily true that all coupon site clicks are orders that would happen anyway – some people might actually start their shopping process by going to a coupon site and browsing for deals. For this reason, it’s important to determine whether the orders you are getting from these coupon codes represent incremental revenue. There are a few ways this can be accomplished. One way is to use a multi-channel order pixel, like the Adlucent super pixel, which allows visibility into cross-channel interactions. This way, you can see the full click funnel and use that data to guide your assessment of the incremental value of coupon sites.
We also recommend changing your attribution model. A growing number of retailers, including Amazon and Wayfair, now give credit to the last click that precedes the user adding an item to their shopping cart. Therefore, once an item is added to the cart, the attribution could not be changed. This way, the last-second coupon code search will not impact your attribution.
Finally, try removing the coupon code entry box from its prominent position in the checkout process. Place it somewhere so that users who are determined to use a coupon code can find it, but don’t stick it in the middle of the checkout process where it prompts coupon searching. Test some coupon code field placement options to see if they have a positive impact on your site. For instance, consider placing it on the cart only before the checkout process begins. Some retailers have found that removing the coupon code box entirely and displaying any promotions or coupon codes right on the site, in an easy to find location, has been effective. Others have considered only displaying the coupon code field if a user came in from one of the couponing sites. Test and analyze some options to see which may work out best for your particular site.
Benefits of a well-managed affiliate program
Now that we addressed a couple of the downsides to working with affiliates, let’s look at what a well-managed affiliate program can offer. We spoke to Schaaf-PartnerCentric, a trusted and premium affiliate management firm, to find out what they suggest to retailers in terms of recommendations and services provided by an affiliate agency:
- An optimal tracking configuration
- Competitive commissioning rates
- Advanced commission segmentation based on incremental sales
- Affiliate strategy, which is aligned with company goals
- Fraud monitoring and protection
- Program compliance monitoring and enforcement
- Ongoing recruitment and optimization of affiliate relationships
When implemented correctly, an affiliate program can offer ROI-positive sales that contribute to the company's top-line revenue goals, a platform for engaging with brand influencers, and a sustainable channel for new customer acquisition.
Do your due diligence
Every marketing channel should be monitored and evaluated. Affiliate networks are no different. Don’t just put your affiliate program on autopilot. Putting in 20 minutes/week of due diligence will save you money and improve your user experience. It’s extremely important to find the right affiliates for your business, which drive quality (not just quantity) traffic to your site.