Vinny Lingham posted the following article on Revenuews in August of 2006, I was looking for it on Revenews but it was missing. I found it on Archive.org and am reposting it here, because I think it is just as relevant today as it was in 2006 (if not more)

The question is : Do either agencies or search affiliates you cover every possible keyword relating to an online business? Probably not! So in that case, shouldn't you use both?! This post deals primarily with Paid Search Affiliates that direct link to the site, and use display URL's, something that all the larger advertisers allow, but smaller, more insecure ones, don't.

For any large business selling more than a few hundred products, it’s virtually impossible for anyone to cover all variations and misspellings of keywords that you could be bidding on in the search engines. Most (not all!) Search Marketing Agencies focus on spending a lot of money on branded keywords and 1,2 & 3 keyword combinations, as their systems cannot cope with volumes lower down in the tail (4,5,6 keyword combination). Companies like eBay, Expedia & Amazon have some of the most advanced search platforms, and even they realize that they cannot cover everything and utilize paid search affiliates to assist them in growing their business – one of the reasons why they are so ubiquitous in search.

I’m often asked whether or not utilizing paid search affiliates (Performance Marketers) will conflict with existing campaigns run by search agencies and the resounding answer from the data we have is NO!

The key differences between PPC Performance Marketers & typical (not all!) Search Agencies are:

You have to ask yourself at some point – what are you paying for?

Many argue that it’s more cost effective to use an Agency, as you cut out the middle man (the affiliate), but this is simply not true. The reason that performance marketers can make money is that they are able to scale their systems, sift out and analyze keywords better, and get the same clicks cheaper through the search engines, like Google, by obtaining high yields and better conversion rates. There is no additional charge to use performance marketers.

Gone are the days of 1-man affiliates sitting at home trying to manage campaigns using spreadsheets, Clicks2Customers, as an example, consists of about 40 full time employees – half engineers, half campaign managers. These are professionals in the marketing space who can manage brands, build traffic volumes and deploy world class search marketing campaigns. Clicks2Customers manages their multi-million keyword campaigns through over a dozen high end servers and generates over $100m/annum for their clients in sales and over $10m in annual revenues – all on a performance marketing basis, in the belief that this model is more linked to success, and not % of spend!

If you’re paying an effective $20 CPA to Google, and you offer an affiliate the same $20 CPA to acquire customers through Google, how is this a conflict, even if they use the same display URL – Google ranks the BEST ad, not the worse! If the affiliate is able to acquire customers cheaper than what your or your agency can, then realistically, they are entitled to the difference in margin for having a better campaign. I would obviously advise not to approach any old affiliate off the street, but as long as you work with reputable companies, you cannot lose.

Don’t get me wrong, there are some very forward thinking agencies, (NetExponent comes to mind), that understand that Search is the channel and if the client benefits by having more traffic and sales overall at the right target CPA, then it doesn’t matter whether you pay the search engine directly, use an intermediary or a combination of both (which is what I advise).

Affiliate and Agencies can work side by side, share data and grow their campaigns independently – the issue really comes in when Agencies, who right now tend to have a lot more leverage, given that many of the companies that outsource to agencies do not understand this space, place their trust in the agency who, as a defensive reaction – prevent affiliates from competing with them, due to fears that they will “look bad” in front of the clients. In that case, Agencies should not take business that cannot deliver on.

In my mind it’s just a question of ethics – Agencies need to advise their clients on what’s best for the client in terms of sales and exposure, not trying to protect their profits from search – a very well known agency in the UK actually admitted that their reason for advising their clients not to use affiliates, was fear of looking bad and losing revenue! On the other side of the coin, Affiliates need to focus on building real value, not just brand bidding, in order to demonstrate that they can provide large amounts of supplemental and quality traffic from the very long tail of search.