I think the majority of the time everyone would agree with a big fat no on allowing affiliates to bid against their brand. Why pay an affiliate a commission for something you will get 99% of the time anyway?
However, there are times where clients of mine have agreed to a select few affiliates to bid against their brand and it is something I have been asked about a number of times since.
If you are unsure of the reasoning behind the closed brand bidding group, the logic is that by allowing a small number of top performing affiliates to gain extra commissions from the merchants brand it allows these affiliates to bid broader on more generic keywords or pay a higher CPC to send increased traffic and sales the merchants way.
Due to the change in trademark policy on keywords in Google, this might in some cases make more sense in terms of supporting brand protection, especially in higher CPC markets with more competition. But separate from this issue, I find the affiliate brand bidding argument extremely weak on the whole. What irritates me more than anything about this concept is often the lack of real thought gone into it like most marketing or business decisions should have.
In using a closed group of brand bidders the merchants aim is ultimately to increase their traffic, conversions or revenue (or whatever else the goal might be) by effectively paying the affiliate additional commissions, which does make sense. That’s fine.
But like any marketing decision for this to be measured accurately in terms of return and performance the merchant needs to know –
- The increase in extra traffic, conversions, revenue (the end goal)
- The amount of extra cost/commission paid to the brand bidders
- Any other extra cost involved (time, tracking, management whatever)
So Why Is This So Often Flawed?
- Ignorance – Very often, none of the above are even properly considered let alone set up to be tracked and measured accurately to be able to determine the performance
- Trust In Tracking & Affiliates – Tracking and measuring increases from the data can be inherently difficult to gauge anyway due to the number of factors involved. But even more so with a closed group the merchant needs to be completely sure that tracking is accurate because quite feasibly an affiliate can set it up however they wish. How can you be sure that every branded advert is being tracked separately? You can’t.
- Brand Ownership – Merchants are allowing affiliates to be the face of their brand. They will need to dedicate some time to monitor and police the ads and make sure they are representing their brand accurately. Also, if there are many adverts against the said brand, this can equally confuse searchers.
- Lack of Control – For large scale brands there are huge variances in brand related traffic that cannot always be predicted or controlled – meaning on occasions affiliates could all of a sudden receive a huge amount of commissions direct from the brand without providing extra in return.
- Higher CPC – If the merchant is also running a branded PPC advert, what extra cost are will they now be paying due to the increased competition from their own affiliates?
So Why Do We Still See The Closed Group Brand Bidding Model?
There are numerous reasons from bad advice from affiliate managers to pressure to hit targets. However in some cases I have found that marketeers actually embrace the lack of transparency that affiliate brand bidding provides. That may sound strange, but there is a sweeping under the carpet mentality sometimes.
It means they can reach their targets without seeming to pay a higher cost to do it. It’s easier to hide marketing expense in what can be viewed as just improved affiliate sales by allowing affiliates to syphon from their own brand than actually just paying out a higher CPA/commission. There can be a blissful ignorance in gaining more sales using this method (at least more perceived sales) and far from enough thought or consideration which is scary.
A much more transparent method is to simply agree to pay a higher CPA or commission to the select top performing affiliates because this is effectively what the affiliate brand bidding concept is attempting to do. In a roundabout kind of way. However, this is much easier to budget, track and measure and offers the same basic premise of more money for more of whatever the said business goal is. Working closely with the affiliate and providing extra offers or discounts is also a great option.
Marketeers will still have the same overriding issue of measuring performance of what extra they are receiving against the extra outlay of cost – but it comes with much greater transparency and control. My advice would be, if you want to push affiliates and really get the most out of them and your campaign, don’t hide your true cost in a closed brand bidding group.
Do you have any arguments for a brand bidding group? I would be interested in hearing any. :)