He was kind enough to share with us a recent blog post, which ran on September 17, 2009 – so that networks, affiliates, and merchants can gain more understanding of trademark bidding from the perspective of a successful affiliate.

If you’d like to read more of Joe’s insightful postings, check out his blog http://www.whatdoesjoethink.com.

Merchant Restrictions on their Affiliates

By Joe Sousa

Throughout my years as an affiliate marketer I have seen all sorts of different terms of service, marketing restrictions, prohibited keywords, etc. from the merchants I work with. Some of these restrictions are good for both the affiliate and the merchant and some are just outright stupid for one or both parties.  Let me break down a few different restrictions and see how the affect both the merchant and the affiliate.  I will mainly be focused on PPC restrictions, trademark bidding, and stuff like that.

Level 1:  No restrictions. When an affiliate sees this, it is like they just found an ATM, especially if it is a large, well established, well known merchant. With no restrictions the affiliates can bid on any keywords they want and many times the most profitable keywords are the brand names and trademarks of the merchant. Also the affiliate can link directly to the merchant’s site off their PPC ads.  In many cases this is a gold mine for the affiliates.

Let me give you a couple examples:

Back in the early days of the CPA networks most campaigns didn’t have any restrictions.  There were two in particular I remember making me a lot of money: NutriSystem and eBay. If I remember correctly NutriSystem paid out $60 for a sign up and the conversion rate on keywords like “NutriSystem” and “NutriSystem diet” and other trademark terms like that was somewhere around 10-20 percent.  That would be an EPC of $6-12 and when I could get the traffic for around well under $1?  That campaign alone made me and a friend of mine many, many thousands of dollars a month.  It was a similar situation with eBay.  The payout was around $35 for a new signup and I could get traffic for keywords like “eBay” and “eBay auctions” for around a quarter.  The EPC on that one was $4-5 or so.  It was like printing money.

Why would a merchant allow this?  Two reasons.  First, they don’t know.  There are a lot of clueless merchants out there.  They just see the bottom line numbers and don’t care how they get there and in many cases don’t want to know. They just see “wow, this affiliate sent me a ton of sales this month.  That is awesome”.  They don’t run their own PPC stuff so they have no idea the affiliate is bidding their keywords.  Second, they don’t care.  The smart merchants know what the lifetime value of a customer is. If they make $200 for every customer and pay out $50 in commissions they are making $150 for every new customer.  Yeah, maybe they could have got that customer for $5 if they did their own PPC and kept affiliates from bidding on their trademarks but it isn’t worth the hassle for them.  They are still making money so they aren’t too concerned.

The affiliate is making money and a good merchant is making money but still leaving a lot of money on the table (and other affiliates are potentially getting screwed. More on this later)

Level 2: No trademark bidding. This is one of the more common restrictions placed forth by merchants. A smart merchant that has good name recognition will realize that people who are searching for their store name are most likely buyers.  Maybe they visited the store in the past and want to find it again; maybe a friend told them to shop at a certain website, or whatever.  When someone searches for your stores name they are ready to buy.

A smart merchant will realize that they can make more money if they restrict affiliates from bidding on their keywords. Why pay out 10 percent to an affiliate when the customer acquisition cost can be 5 percent or something like that?

Also, this keeps affiliates from creating ads like “Amazon sucks!  Don’t shop at Amazon until you read this” and having them show up when someone searches for Amazon.

There is a downside to this though. If you let affiliates bid on your trademark you can knock your competition who is bidding on your trademark off of the first page of ads.

Level 3: No direct linking. Most smart merchants who realize the value of PPC will not allow direct linking because they are probably doing PPC themselves.  A few years ago it didn’t really matter because you could have 5 or 6 different ads out there from your affiliates all using your domain as the landing page URL but Google stopped letting that happen and there can only be one ad for any particular domain. So if a merchant is doing their own PPC and they have affiliates bidding on the same words there is a good chance that the affiliate will take that ad spot from the merchant.

But if a merchant doesn’t know what they are doing with PPC they should just let their affiliates direct link because the 10 percent commission (or whatever they are paying out) is probably less than the merchant would spend on PPC. It is also less risk for the merchant because they know they only pay on sales if they let their affiliates handle the PPC stuff and don’t have to risk sending a ton of clicks with no sales.

Level 4: No PPC at all. There are quite a few merchants I work with that don’t allow their affiliates to promote their products via PPC at all. To me this is just kind of stupid.

If I want to spend my money for ads that are directing traffic to my site that is something I should be able to do.

One merchant in particular has a team of people doing their own PPC which is very smart, but part of their job is also to check ads to see if they are for their affiliates. I can understand no trademark bidding, no direct linking, and stuff like that but restricting affiliates from sending traffic to their own sites?  That is a bit over the top. But it gets worse.

Level 5: ”You can’t use our trademark names in your meta tags”. Ok, now we are to the point of idiocy. I recently got an updated terms of service from a certain merchant (who will remain nameless). This was a merchant I used to promote a few years ago and I did very well with them. The conversion rate was good, the profits were good, and I really liked the product. Then the company got sold and I can’t remember if they dropped their affiliate program for a while or just restricted what I was doing with PPC but I stopped promoting them. A couple months later I realized that I was missing a check from LinkShare. They were the only merchant I was promoting on LinkShare at the time so I started to try to figure out why they didn’t pay me. They said that those payments were the liability of the previous owner and not them — which is ridiculous.  So basically the fat headed new owners screwed me out of a couple grand. I quickly put them on my blacklist and decided never to promote them again.

But the problem is they are a very popular merchant with a totally unique product that fits perfectly on many of my sites.  So when they reopened their affiliate program at CJ I signed up. I still haven’t done anything in the way of driving traffic to them but I wanted to keep the option open if I changed my mind in the future.

One thing unique about this merchant that you don’t always see with others is for the most part the only keywords people would search for when looking for their products are their trademarks. So this new terms of service comes out and says “you can’t use our trademarks in your meta tags on your websites or searchable keywords“.  First of all this shows me that this merchant is fairly clueless about SEO. Second, it shows me that they aren’t confident in their own SEO efforts. If they need to restrict affiliates from using their keywords in meta tags that shows me they really aren’t confident in their ability to rank for their own name.

So what should a merchant do?

Well, there isn’t a cut and dry answer for every merchant. Each merchant’s situation is different and if I were to advise a merchant I would have to look at things like how strong their brand is, how good their own PPC efforts are, and other stuff like that.

Here is where I would start as a general rule of thumb:

Don’t allow affiliates to bid on your trademark and don’t allow affiliates to direct link.

Now if every merchant adopted these policies that would suck for me since I have made a decent amount of money bidding on trademarks and direct linking (assuming it was allowed by the terms of service). But I know how those things can be profitable and I would suggest a merchant do their own PPC and take care of their own trademark bidding and direct linking.

Another good option is to find a handful of affiliates who really know their PPC stuff and allow them to bid on trademarks and direct links and stuff like that — but restrict everyone else.

If a merchant can get 2 or 3 good PPC affiliates doing “their thing” they will most likely be able to do better than if they tried it on their own.

But like I said, it can be different for each merchant. So, I would also suggest hiring a qualified affiliate manager to take care of stuff like this.

A good affiliate manager will be able to advise a merchant on what would be best in their particular situation and properly explain the benefits and downsides to different policies.

If it is a big company they can probably hire someone or a team of people full time but for most merchants their best bet will be to hire an OPM (Outsourced Program Manager).

Here are a few OPMs I would highly recommend:

ARC Consulting:  Andy, Emelio, Steph, and the rest of the crew really know their stuff and manage successful affiliate programs for many merchants.

JEB Commerce:  Jamie Birch and his crew manage many large programs and can help you with all facets of online marketing.

GTO Management: Wade, Joel, and Karen work with a wide variety of merchants and won’t steer you wrong.

Suluta: Mike Nunez and his team have many years experience in affiliate program management and can help tailor a program to a specific merchant’s needs.

Schaafco: Brook and Forrest Schaaf and their crew manage programs for a wide variety of merchants

There are many more OPMs out there and this is just a partial list. If you are a merchant check them out and see what they can do for your program.

Obviously, there are many more restrictions a merchant can employ and this is by no means an all inclusive list but it is some of the more popular restrictions I have seen. Am I missing something as far as the terms of service? Any other restrictions you commonly see? Any reasons why a merchant should restrict their affiliates?

We asked some industry leaders that know and understand the networks to give us their take on the differences. We started with outsourced program managers (OPMs) because they work with a variety of networks and a range of client programs.

First up, Heather Paulson president of the Paulson Management Group, Inc. PMG offers Affiliate Program Management, Search Management, and Social Media Management services. PaulsonManagementGroup.com is the only OPM currently producing and integrating affiliate videos into the affiliate networks as well as worked with an eco friendly client to introduce a patent pending affiliate widget to the affiliate community. Advancements in affiliate media technology are dependent on the networks technological capabilities and Paulson is in a position to know the networks intimately since over the last 10 years she has launched and managed programs on all of the major networks – Commission Junction, Google Affiliate Network (formerly Performics), ShareASale, PepperJamNetwork and more. Ms Paulson is on the Advisory Board for Affiliate Summit and Affiliate Classroom.

We asked her a few questions to get her take on the networks.

AffPlan: What are the major network differentiators?

Paulson: Cost, vertical strengths and technology are primary differentiating factors. There are tier one networks such as Commission Junction, Buy.at, Linkshare, Zanox, Google Affiliate Network, which offer unique technology differences surrounding affiliate communications, reporting, media integration, and regional as well as vertical strengths. There are also many CPA networks such as Bridaluxe, Market Health, XY7.com, MediaTrust, ROI Rocket, AzoogleADS, which ride off either proprietary tracking solutions or are on DirectTrack or LinkTrust tracking and reporting platform which all offer unique differences and opportunities.

A great example of a prime difference in the system architecture within a network is the AzoogleAds network this is an open network system where affiliates can apply to the network and once accepted can run any of the offers within the network rather than having to have their individual applications be vetted (Manually approved) for each program that they apply for within that network, such as would happen in many of the other 350 US networks that exist today.  In an open network environment the affiliate partner once approved and active is quickly able to start marketing all of the programs that reside within that network where in a closed network system the affiliate would have to apply to each program within the network separately and wait for their application to be manually approved for each program (Vetted by the program manger) unless of course the program was an an auto-approve system.

Another example of network technology differences that a merchant might want to be informed of before choosing the right affiliate network partner would be sub id level tracking data. PPC affiliates are attracted to networks such as AzoogleAds and Commission Junction as well as other affiliate networks that offer SUB ID tracking so search affiliates can track their performance at a keyword level. SUB ID tracking is also helpful to remnant ad buying affiliates who purchase remnant ad space across mass network ad distribution platforms and need to have each campaign monitored per page or site across the distribution points within that ad network.

There are many different “types” off affiliates within all affiliate networks that can be categorized by their marketing style or performance. Some networks offer you the ability to group these affiliates so you can easily send each affiliate group specific updates and announcements via intra network emails by either textual content or HTML newsletters concerning their marketing media needs, or other brand or product related news. The ability to group and manage affiliates within a network also allows the merchant to reward and incentivize specific performance groups with custom media, coupons, or campaigns. There are affiliate networks that do not offer the opportunity for you to perform “intra network” communications or grouping and this can impede the merchants’ ability to communicate with affiliate partners if it is imperative that the merchant strategies depend on direct communications with the affiliates.

Consulting with a professional affiliate management agency concerning which network and network launch plan is right for their brand and their program goals and terms of conditions is a “significant” factor in the success of the program and the overall dependencies of the success of their other online channels as well. Affiliate management agencies or OPM’s (outsourced program managers) are experienced with working with many networks and have experience to help merchants ascertain which direction should be taken concerning choosing the right affiliate network. Often times as well an OPM will have a relationship with that network and can offer discounts and savings to the merchant concerning launch fees and other network fees by negotiating on behalf of the merchant.

One important new development in the affiliate space is that many merchants who find success with one network are now inclined to launch their product or service within multiple networks to increase their online presence as well as sales through the affiliate channel.  Multi-network launches and management take an extreme amount of organization, collaboration, as well as vast knowledge concerning each networks strengths, opportunities, threats, and trends. Tools such as AffiliateReporting.com is something that Paulson Management Group, Inc will be using to ensure multi-network reporting is streamlined and well attuned to the goals for each of our clients. Affiliate Reporting.com is the first and only multi-network reporting aggregation service in existence and will lend itself as a vital tool in streamlining a merchants multi-network reporting efforts.

AffPlan: What’s not so obvious?

Paulson: Program strategies. There will be many technical differences that merchants will not be aware of unless they have firsthand knowledge of each network’s core technological strengths. An affiliate programs brand management and overall media strategies will be determined based on the networks technology and how that technology is wielded to ensure success of the program.

As an example in Commission Junction merchants are able to locate affiliates within the network via a recruiting tool that can assist merchants in pushing offers for their program to new affiliates, this is an intra network recruiting strategy that we at PMG use for our Commission Junction affiliate program accounts and many of the other networks do not offer this type of technology. Another example would be if the merchant wants to allow social media affiliates to market their brand; WebGains is the only network currently that has incorporated a shortened URL function within their network allowing for social media traffic monitoring of affiliates in Twitter as well as other social media venues. The merchants affiliate program strategies have to be able to be realized with the technology the network provides so careful scruitinization of each networks technological capabilities is an important factor in choosing the right network for the merchants needs.

An important consideration as well for merchants concerning what might not be realized is the relationships that the affiliate network might hold within the affiliate community. Relationships that affiliates hold with these affiliate networks are the primary factor that propels success of the program within that network and the transparency level in this channel is high especially on affiliate forums such as AbestWeb.com and AffSpot.com. So merchants should research and learn how affiliates regard each network as it can vastly affect the success of an affiliate programs sustainability within that network. Merchants need to understand that affiliate partners are the marketing force behind their programs and any affiliate networks success, it is important to hear affiliates as a community to ensure their needs are being met and respected by the networks.

AffPlan: You seem to like CJ, do you have a special relationship with them?

Paulson:  Over time we have developed relationships with many affiliate networks, we have a running affiliate network list and are now offering single and multi-network launch strategies so building affiliate network  relationships has always been a  focus for PMG. I have years of experience working with the Commission Junction affiliate network either as an affiliate or affiliate manager so their technology is well known to me. Most of the clients we work with are larger eCommerce brands that need dedicated pro active affiliate management and support. Commission Junction is able to offer a high level of reporting as well as technology factors to those larger brands that assist PMG team members in launching new media initiatives such as affiliate videos which are easily integrated into Commission Junction. ShareaSale, PepperJamNetwork, Google Affiliate Network, LinkShare, Buy.at, Zanox, there are so many fantastic affiliate networks in our space all offering varied opportunities to each merchant so a thorough check of the channels landscape is important when choosing to work with any affiliate network.

AffPlan: What else makes you want to work with a specific network?

Paulson: We choose the network based on our clients goals, strategies, vertical, as well as many other factors. As an example some merchants might need to batch their sales or leads after carefully scrutinizing them to ensure they are valid and commissionable, the merchant can then batch or send sales or leads to the network to ensure affiliates are commissioned. Other merchants might prefer a pixel tracking system. Not every network offers batch processing so it is extremely important for merchants to speak with a professional management company concerning this choice and options and  if they are not having their programs professionally launched and managed by an affiliate management agency with experience then at least to have a consultation would help save them undue time and cost.

http://PaulsonManagementGroup.com

Lisa Picarille is an online content strategist and consultant. She blogs at www.lisapicarille.com.

Welcome to the premiere episode of the AffPlan Strategies Session, a podcast where industry leaders share their expert advice to help you with all aspects of creating and refining your online Affiliate Marketing Plan.

For the debut of the AffPlan Strategies Session we tackled a fundamental component of your Affiliate Marketing Plan:  Research.

Research is important to so may areas of online marketing. And having the right tools is vital. The areas we cover in this podcast are research tools for recruiting new affiliates, tools for conducting research on rival’s campaigns and tools for keyword research.

To help us uncover the secrets and tools of this very important topic, we brought on two amazing guest panelists:

Heather Paulson is the President of (PMG) Paulson Management Group,
which specializes in providing affiliate program management, paid
search management, SEO, Web development and e-commerce consulting
services.
http://www.PaulsonManagementGroup.com

Ginette Degner is an independent consultant with many years of
expertise in SEO, marketing and affiliate marketing.
http://AffiliateIdeaFactory.com

Special thanks goes to Lisa Picarille of LisaPicarille.com for hosting this podcast!

Heather Paulson and Ginette Degner both gave us serious insight as to how their businesses, their clients, and their experiences have successfully used the tools we link to below.  You’ll want to have a pen and paper ready for this — it’s jam-packed with ideas and examples.

Thank you again, to Ginette Degner and Heather Paulson for their time, and sharing their expertise with us.

We hope you find this podcast useful in preparing the “Research Section”, of your Affiliate Marketing Plan.

Some of the tools that each of our panelists found useful in doing research are:

Keyword Research

• Google’s Wonder Wheel http://www.googlewonderwheel.com/
• IBP keyword tools http://www.axandra.com/
• eBay Pulse http://pulse.ebay.com/
• Google Trends http://www.google.com/trends
• Raven SEO http://raven-seo-tools.com/
• SEO ToolBook http://wareseeker.com/free-seo-toolbook/

Research for Recruiting

• IBP-the link building tools http://www.axandra.com/
• Quantcast http://www.axandra.com/
• Compete http://www.compete.com/
• Syntryx http://www.syntryx.com/
• PPC Bully https://sales.ppcbully.com/

Researching Rivals and Affiliates

• Spyfu http://www.spyfu.com/lp/us/
• Quirk http://www.quirk.biz/searchstatus/
• Ispionage.com http://www.ispionage.com
• Radian 6 http://www.radian6.com/cms/home
• Word Tracker http://freekeywords.wordtracker.com/
• PPC Bully https://sales.ppcbully.com/
• Twitter http://www.twitter.com
• Facebook http://www.facebook.com