I recently prepared a presentation for EcomXpo, and thought that Goyami readers might be interested in reading the script. The goal of the presentation was to give a PPC Super Affiliate perspective on what affiliate managers can do to drive us away from their program.

If you would like to see the slides you may Download the Presentation.

The Top 10 Ways to Repel Super Affiliates from your Program

Introduction:
Welcome to “The Top 10 Ways to Repel Super Affiliates from your Program”, my name is Adam Viener and I am the president of imwave and an editor of Goyami. My company, imwave, is focused on using search engine marketing to drive sales and leads to our partner’s websites, we do this for our partners and clients on both a pay-for-performance and consulting basis. Goyami is a search and affiliate marketing blog that I founded and is part of the target="_blank">Corante technology and business intelligence news network.

Super affiliates come in many flavors, so before we get into the Top 10 ways to repel super affiliates, I want to define the specific type of super affiliate I am talking about. More and more of company’s top affiliates are those that successfully leverage pay-per-click advertising to drive traffic to your company’s programs. These pay-per-click search affiliates, also known as search arbitragers, risk their own money every day to buy pay-per-click advertising betting that the companies they have partnered with can convert that traffic into commissionable events on their site which will earn them more than the cost of their ads. These super affiliates spend a lot of time building keyword lists and often send traffic from their search engine ads directly to the merchant’s site without ever landing on a site of their own. Some of these affiliates do this on a part-time basis and continue to keep their “day jobs”, and they often test a lot of company’s programs across many industries to see which ones will convert the best.

As I prepare this presentation, Google has just recently announced their new affiliate policy of only allowing one ad per url in their searches. Undoubtedly, these super affiliates, like myself, are working hard to adjust their efforts to work within these new rules. So without further a-doo, let’s get into the top 10 ways to repel these super affiliates from your program.

Number 10: Poor or Missed Communications

I hear affiliate managers struggling with this question all the time, how should the communicate with their top affiliates? Should they call their top affiliates on the phone or wait for them to call? Well, some affiliates have full-time jobs, and may not be able to talk on the phone. Before I started focusing on this full-time, I sat in a cube-farm with my boss in the next cube. Talking on the phone wasn’t an easy option for me during the day. What about email?

Since affiliates may join hundreds of programs, they get a lot of newsletters. I had to setup a separate email box just for the newsletters which I hardly ever read. Right now, I have over 2 thousand un-read messages in that mailbox for only 3 months worth of messages. I have filters setup to highlight messages that come into that box that I might not want to miss. The partners that I communicate with via email have learned that adam@imwave.com is my 2-way communication email box, and partners@imwave.com (the one I have registered with) is not. For me, AOL instant messenger is my preferred form of communications, it let’s me contact partners when I need them, and allows partners to contact me when they need me.

Finally, I get very few postal mail communications from merchants. This is probably the best way to reach potential affiliates who are either not in your program or who have joined and are not active yet. A quick welcome to the program postcard might go a long way. Ebay sent out a flyer about how one of their affiliates earned over 1 million in one month, and that sparked my interest in their program, now I am one of their top affiliates. Sad to say, I have not yet earned a million in 1 month. The bottom line here, is that there is no 1 best way to communicate with your top partners, you need to learn what their favored form of communication is and adapt.

Number 9: Dropping inactive affiliates

How often do you non-active affiliates from your list? Some affiliates will sign up for all the programs in a specific network so that when they are ready to run a test they will already be a member. Does purging affiliates really save that much time in reporting and communicating? An affiliate who took the time to sign-up for your program could have great potential, affiliates belong to far more programs than they market today, please don’t purge us. If you must purge your list, be sure not to do it before your busy season, I had one costume site purge me right before Halloween.

Number 8: Providing Lots of Coupon Codes

How often do you send out coupon codes to your affiliates? Are these codes ones that customers must enter during the checkout process? If a search arbitrager is linking to your site directly from a Google ad, there is very little chance the affiliate has room to communicate the code, and even less chance that if they did the customer would remember to type it in. Coupons may be a great way to drive sales on your site though, so how can they work for arbitragers?

A better option would be to provide a landing page that sells the customer and promotes the coupon code, the best option would be to embed the code in the link, so that the customer’s don’t have to do anything but click on the ad and the offer detailed on the landing page, and is automatically included when they check out. It is important to mention the offer on the landing page, Google requires that any offer referenced in the ad must be available within 1 click on the landing page, otherwise the ads will be disabled.

Number 7: Asking Affiliates to Change Links or Ad Copy

How often do affiliates have to change their Ads for your program? If you make a change that breaks old links, typical website affiliates might just have a broken link on their site, but pay-per-click affiliates may be paying to drive traffic to error pages which will cost them money with each click to an error page.

Google determines the ranking of an ad based on the amount the affiliate is willing to pay per click as well as the click through rate of the ad for that specific keyword term. As ads are run over time, they build up position for important keywords, and if the ads are modified in any way, Google considers these ads new, and affiliates may have to pay more to maintain their ranking or risk driving less traffic and generating less sales. Always do what you can to make asking affiliates to change their ads, the last resort.

Number 6: Not Understanding the Metrics

Understanding your affiliates financial model is critical to the success of any program. How do you determine how much you are going to pay affiliates? You need to know their metrics before you should answer this question.

Pay-Per-Click Search affiliate pay for every click and often lose money. That is important, so let me repeat it. THEY OFTEN LOSE MONEY. These affiliates will often test a lot of programs to see which ones will have the best return per click. There are typically 3 possible outcomes of a test:

1. The ads lose money, and the test and relationship is over (note, they don’t usually tell you it’s over, they just pause their ads and move on to the next test)


2. The ads generate a small return per click. These may remain as ongoing tests until they start losing money.


3. The ads generate a good return per click, these are the companies that the affiliates fully engage and do additional keyword research, build out sites, or otherwise grow their revenue stream.

There are really 3 key variables that determine the revenue per click, two of which are more controlled by the merchant and one in direct control of the affiliate. The merchant controls the amount of commission they are willing to pay and what the customer’s experience when they reach the merchant’s site, which results in a conversion rate of the traffic that the affiliate sends. Affiliates control how much they are willing to pay per click. The amount that the affiliate makes per click is equal to the commission rate times the conversion rate percentage, less the cost per click. Let’s look at an example

Let’s assume the merchant pays a hefty 25% of sales (I have seen this rate marketed in Revenue Magazine by companies looking for new affiliates). Also let’s say the merchant’s average order size is $100. This means that if the customer buys they affiliate can expect to make roughly $25 per transaction.

The merchant’s site isn’t great, and they are only converting about 1% of visitors to sales, but the category is fairly popular and the affiliate feels they need to bid 35 cents per click to generate traffic on their keywords. When you multiply the $25 by the 1% conversion rate, you can see that the affiliate is making only 25 cents per click, so they can expect to lose 10 cents on every click. Nice rate, but bad return.

This merchant either needs to drastically improve their conversion rates or pay a lot more in commissions to make the relationship work. Merchants must do the math, and understand these metrics to make sure affiliates have room to bid and be profitable.

Number 5: Running Pop-up Ads

Pop-up ads can be an effective way for merchants to drive more sales and promote new features to their customers, but can have a drastic affect on your pay-per-click search affiliates. If the landing pages you allow your affiliates to link to have pop-ups your affiliates paid ads are going to get disabled.

Pop-ups include any additional browser window that opens when the customer enters or exits the landing page. Pop-ups are often implemented to promote customer surveys and seasonal promotions. If you feel must use a pop-up to promote your business please consider landing pages without pop-ups for search affiliates. Make sure these are clearly labeled and that you communicate well that they are available, because a search affiliate might just check the first ad to see if there is a pop-up, and if there is they might move on and never return.

Consider providing a parameter that affiliates can pass in the affiliate link to your site that disables the pop-up ad. Finally, you might be able to accomplish the same result using DHTML overlays on your site instead of pop-ups, this would allow messages to appear on top of your page without triggering pop-up blockers or getting your affiliates ads disabled.

Number 4: Difficult Display url Policy

Some merchants allow affiliates to link directly to their site via affiliate links, but have a policy of not allowing affiliates to use their domain name in the display url of their ads. This can confuse customers because they see one URL in the ad, but end up somewhere else. This policy often is a pre-courser for not allowing affiliates to link directly to the merchant’s site and forcing them to build their own site to market the company or abandon the company’s program all together. Finally, Google has a policy that display urls must match the landing page url, so this policy often forces pay-per-click search affiliates to market for your competition.

Number 3: Trademark Bidding Policy

Some merchants do not allow affiliates to bid on the companies name. I have found that bidding on a companies name and variations of their name often provide me a good indication of how well the site can convert traffic. If the site can’t sell people who are typing their name into a search engine, than they won’t convert any of the other more generic keyword traffic I could send them.

As you saw in the metrics, promoting a site with a poor conversion rate can cost an affiliate a lot of money. Additionally, many merchants have used affiliates bidding on their trademarks as a way to block competitors ads on those marks from appearing on the first screen.

With the Geico decision and Google’s new single ad per url policy in place, it will be harder and harder for companies to keep competitors from bidding on their names. Working with top affiliates creatively here could be very important.

Finally, if you must have a no trademark bidding policy, be specific and give affiliates a specific list of terms that they are not allowed to bid on. Also, when you make this list be smart and don’t include generic terms, even if they are part of your name, because you can bet your competitor’s and their affiliates will be bidding on those generic terms.

Number 2: Indirect Trademark Bidding Policy

Some merchants have adopted a policy of not only preventing affiliates from bidding on their trademarks directly, but preventing them from accidentally showing up under these terms indirectly. An example of this would be if you were one of the top flower companies on the Internet, and your affiliates might not be able to bid on the term flowers because the search engines might match the term flowers with keyword searches for your brand name, pro flowers, 1-800-flowers, or flowers direct.

The only way an affiliate could bid on these terms would be to implement a specific list of negative terms that their ads are not allowed to show for. If you adopt this type of policy, and your competitors don’t, their affiliate’s ads will show up on your terms even though they are not bidding on them directly.

And the Number 1 Way to Repel Super Affiliates from your Program?

Number 1: Not Understanding the Technology

Remember your policies have to work with the current technology, and some policies can have un-foreseen consequences. For example:

I have recently seen more and more default trademark policy language on Commission Junction’s merchants preventing direct and indirect bidding on companies marks and misspelled variations. The technological consequence of this is that pay-per-click affiliates who decide to participate in the program can not bid on any term using broad or phrased match, because it is impossible for them to ad negative terms for every misspelled possibility, especially when Overture only allows 15 negative terms.

The technical result of not allowing affiliates to use the company domain in their display url is disabled ads or poor user experience.

The technical result of putting pop-up ads on your site, is disabling existing pay-per-click affiliates ads and new affiliates never running tests to see if they want to market your program.

The technical result of asking affiliates to change their ads is affiliates losing rankings in their ads, higher costs for your affiliates and reduced results in your program.

Finally, the result of not understanding the technology, is more affiliates marketing for your competition who do understand the technology.

Conclusion:
Thank you for listening to, I mean reading, my presentation. At the end of the day, affiliates and merchants are both looking for the same thing, to create win-win relationships where both the merchant and the affiliate can make money and enjoy working with each other. That’s the only way this works.

Please feel free to IM (AdamViener) me or email me if you have any questions, I look forward to hearing from you.