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Affiliates and Brand Arbitrage Go Hand in Hand

How much do you know about your affiliates?  Do you know who they are and what they are up to? Convertro has dozens of clients using all the major affiliate networks, giving us extensive experience with affiliate taxonomy and the relative reputations of affiliates.

Most online publishers join affiliate programs and manage them in aggregate.  Publishers evaluate their affiliate programs’ overall conversion rates but are often not concerned with how individual affiliates perform. From their perspective, they mitigate risk by paying out on a CPA or revenue share basis; however, this opens up the door for affiliates to use suspect methods that take advantage of publishers that have well known brands!

Having looked closely at traffic data from specific affiliates within many different affiliate networks, we’ve uncovered numerous suspect methods of driving traffic. One egregious example: Do you think Zappos.com would approve of an affiliate that is renting ISP 404 error pages such as Cox.com to redirect users who were clearly looking for Zappos.com but mistyped the URL or brand?

Click here to see the actual live search result

Here you can see the same thing happening with Overstock.com:

 

Click here to see the actual live search result

The following statement from the Commission Junction Terms of Service for Zappos.com & Overstock.com clearly prohibits trademark search arbitrage:

 

Zappos.com Search Policy: We accept PPC Search publishers, but please do NOT conduct search bidding on our trademarked terms (like Zappos, Zappos Shoes, Zappos.com) or variants thereof (Zapppos, zapos, etc).

In addition, publishers are NOT allowed to have Zappos (or any variation of Zappos) anywhere in their main display URL. Please review Zappos’ Terms and Conditions and program terms for an in-depth list of protected and non-complete SEM keywords.

Violators risk losing all unpaid commissions and termination of their Zappos Development relationship. This is strictly enforced 24 hrs a day

 

Overstock.com Search Policy: Publisher shall not bid on any word, keyword or term in Pay-Per-Click Search Engines (PPCSEs) that only contains Company’s registered or unregistered trademarks or any word, keyword or term that is likely to cause confusion regarding Publisher’s affiliation with Company (“Overstock Keywords”). Publisher shall not bid on any word, keyword or term that only contains ANY VARIATION of the Company’s registered or unregistered trademarks. Examples of Overstock Keywords include, but are not limited to the following: overstock.com; overstock; overstocks, overstocking, over stock, www.overstockwww.overstock.com, and overstocked.

The publisher above is clearly in violation of these rules. They include their affiliate link in the banner as well as in the link redirecting the customer to Zappos (“Did you mean Zappos?”).  When the user clicks on the link or banner, the affiliate cookies the user and then gets paid on the conversion that ultimately occurs.  This method of hijacking the brand is very effective in driving affiliate revenues with sites that have high brand recognition.  (Of course, if you don’t have a prominent brand with heavy search volume, this type of fraud method is less effective.)

This is easy to miss.  One reason that managers don’t “get this deep” is that they think these kinds of affiliates are true contributors, since in reports they show high conversion rates and large numbers of successful orders.  In reality, if you’re seeing affiliates like this, with these kinds of conversion rates, it’s likely because your customers are trying to navigate to your site to buy directly from you, but are getting intercepted by these “brand squatting” pages. The fact is that these brand squatters are just getting in the way, and the only reason they’re getting so much credit is that the links they provide to your site are the shortest path your customer can take to your site. Many of these visits end up converting, and this makes the affiliate in question look productive.*  But in reality, you would get these sales anyway – the customers’ intent in these cases is clear. With the affiliate in the way, however, you end up with 10% less gross revenue and anywhere between 20-80% less margin!

If you considered the conversion rate of the above affiliate in a vacuum, the affiliate would appear to be an excellent partner; but, as we’ve just shown, the reality is that conversion rate doesn’t tell the whole truth.  By implementing Convertro’s advanced tracking, you can eliminate this risk of brand arbitrage by affiliates.

Take a moment to ask yourself the following questions about your affiliates.

Do you know:

–Which affiliates are bidding on your branded terms?

–Which affiliates are accretive and which are cannibalistic?

–Which affiliates are violating your terms of service?

–Which affiliates are hijacking 404 error pages for your brand?

–Which affiliates are using Adware?

–Which affiliates are using Toolbars?

If you have an affiliate program and you can’t answer “yes” to all the questions above, you need Convertro’s affiliate monitoring solution.

*The fact is that conversion rate just isn’t the right way to measure affiliates — rather, when it comes to affiliates, you should be looking at incremental contribution.

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