Barring affiliates from bidding on brand names can be a double-edged sword
What seems to make intuitive sense in online marketing isn’t always borne out by the numbers, as recent tests by online affiliate services provider LinkShare Corp. demonstrate. In an effort to protect brands and save on what were deemed unnecessary commission payments, a number of marketers have asked affiliates not to bid on their trademarked name on search engines—or face exclusion from the marketer’s affiliate program. The idea was that shoppers who weren’t redirected through an affiliate upon typing in a retailer`s trademark would go directly to the marketer’s site, saving the marketer the cost of that click-through.
For some marketers, such restrictions proved to be a double-edged sword. Some who dropped affiliates for engaging in the practice have seen their sales volume suffer, according to LinkShare CEO Stephen Messer, who says the findings also surprised him. “Over the last three months we’ve done 10 tests with retailers. When they kicked these affiliates out, all they saw was a drop in sales,” Messer says. “They thought that if they eliminate these affiliates, more business would come directly to them that they would not have to pay commissions on those sales. But the opposite happened.”
Messer traces this to the fact that some of the affiliates buying keyword positions on trademarked names added different marketing messages that were eliminated from the retailer`s programs when those affiliates were eliminated. “If you typed in a retailer’s name, you’d see listings from these affiliates saying here’s where to go for the discount, here’s where to go to get the day’s special. It turns out people weren’t just looking directly for the retailer. They wanted be directed to something more,” he says.
This reflects a larger trend in the e-commerce marketplace, which is that as major retailers start to reach the same high standards on selection, the customer experience, and fulfillment, the distinction between one online retailer and another becomes less. Category-leading retailers over the past three years have pulled their standards up to that of Amazon, Messer says. “They’re gotten consumers used to unlimited selection, great prices, and the ability to get what they want any time. So now people are looking for some other value-add that they don’t get by going directly to the retailer,” Messer says. “They are going to intermediaries.”
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