Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
Bike and parts e-retailer Jenson USA was losing serious money to dishonest operators.
Bike and parts e-retailer JensonUSA.com long suspected that not everyone in its affiliate program was playing by the rules. Jenson staffers would occasionally see ads on search engine result pages that were identical to Jenson’s own, but at times when Jenson wasn’t running paid search ads for those products. The e-retailer, No. 387 in the Internet Retailer Top 500 Guide, also saw increases for the bidding prices on its trademarked keywords, like “Jenson USA” or “JensonUSA,” which meant that the real Jenson USA sometimes had to pay more for those phrases.
The trouble, says Jenson USA affiliate program manager Jared Saunders, was fixing the cause of the problem. One e-commerce site may have thousands of web sites as affiliates.“It’s really a fraction of one percent that are doing this,” he says. “But that fraction of a percent is stealing thousands out of my marketing budget over time.”
E-commerce affiliates earn a percentage of each sale that occurs after a consumer clicks from a listing or ad on the affiliate-run site to the advertised e-commerce site. Jenson USA might want a web site that posts content about mountain biking, for example, to serve as an affiliate because consumers who visit the informational site are interested in biking and would be more likely than other shoppers to buy such replacement parts from an e-retailer such as JensonUSA.com. That affiliate may also legitimately run its own paid search keyword campaigns to drive traffic to its site, bidding on terms like “bike chain” and “suspension forks.” What it’s not allowed to do, under terms it agreed to when it became part of Jenson USA’s affiliate program, is bid on Jenson USA’s trademarked name, misspellings or variations of the e-commerce site name.
But that’s what some affiliates are doing, and it is costing Jenson USA, and other e-retailers. “If I’m bidding against my affiliates, instead of having a $1 bid, I might have to bid $3 or $4 to get my own keywords,” Saunders says. He says Jenson has “thousands” of affiliates, but declines to be more specific.
More sophisticated affiliates take it further, getting Jenson USA to pay them affiliate fees for sales that result from intentional trademark infringement. Some will copy Jenson’s own paid search ad copy verbatim to make it look to consumers as if they are clicking on an ad Jenson placed that will take them directly to JensonUSA.com. In reality, those ads will redirect consumers through what might be a series of 10 or more web pages in an instant. To the consumer not staring at his URL bar, the ad does appear to take him right to JensonUSA.com. However, one of those 10 pages is actually an affiliate page that will get credit from Jenson USA if that consumer makes a purchase. “They’re hijacking my ads and are effectively printing money for themselves,” Saunders says.
David Naffziger, CEO of BrandVerity, which monitors paid search ads, says affiliates create those fast-moving mock pages to mask what they are doing. Offenders also will run these ads at certain times and in certain locations to hide the activity from affiliate managers. For example, Saunders says, the hijacked ads rarely appear in search engine results pages to consumers in Southern California where Jenson USA is based. BrandVerity’s technology captures the site addresses that cycle through the hijacked ads, and uncovers the six-digit user ID number associated with the affiliate page in that mix. BrandVerity then sends clients an alert with the information so affiliate managers can kick out the offenders.
Saunders says Jenson USA went from more than 50 trademark hijacks in March to zero today. “Some had been hiding in the affiliate program since 2007,” Saunders says. BrandVerity monitors the paid search activity for 15 variations on Jenson USA’s brand name twice a day. The monthly fee is about $250. Saunders says he knows he’s been able to plug enough leaks in the affiliate program already to pay that fee for at least five years.
Saunders says he sends an e-mail to the offenders after he matches the user IDs to ones in his program to make them aware that he’s knows about their transgressions. Occasionally, he says, affiliates aren’t aware that they aren’t permitted to buy Jenson USA’s trademarks as keywords and they stop doing it. For other affiliates, Saunders says he first resets the affiliates’ commission rate to 0%. “Then I send them an e-mail that says I know what they are doing and that they’ve been caught in my surveillance. I tell them I know they’re redirecting,” he says. “Typically, the ones going in for trademark bidding know what they are doing and have been doing it for awhile.” Once the affiliate realizes he won’t be making any money on sales from those ads, he usually removes himself from the program voluntarily and stops buying the ads.
Saunders also has access to a blacklist that BrandVerity maintains of the worst trademark offenders. He says he now checks any new applicants to his affiliate program against that list.