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Should Merchants Allow Affiliates to Bid On Their Keywords?
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Should Merchants Allow Affiliates to Bid On Their Keywords?

Many merchants in the affiliate channel are beginning to adopt a more open minded approach to their policies on PPC with affiliates. And many are allowing their affiliates to bid on related keywords on their behalf. I think this is a great shift and here are several reasons why you, as a merchant, should consider allowing your affiliates to bid on your keywords.

Firstly, some affiliates specialize in SEM and PPC and they do it all day long, day in and day out for hundreds of sites. It is their bread and butter. If they don't get quality traffic to a retailer’s website that ultimately converts to a sale, they don't make a cent. This simple math equation requires that they be good at SEM and PPC. Otherwise they'd never be a successful affiliate in the first place.

Secondly, for a merchant, allowing affiliates to bid on keywords is akin to free advertising, not to mention more real estate of search engine results pages thereby squeezing out the competition. Allowing this front loads sales and back loads costs because affiliates front the bill on their own for SEM and PPC and a merchant opens its wallet only when a sale is made and properly attributed to that affiliate. And, of course, a merchant will never pay a commission if a product or an order is cancelled or a product is returned but they will still reap the SEM benefits of the PPC work the affiliate did.

Much like moving media buys to a performance model, when you move the PPC line item of your budget to a performance model, it will open up budget to be spent on other marketing functions. And allowing affiliates the privilege of doing PPC on behalf of your brand opens up a world of negotiations for additional placements in other areas including premium banner or text link placement, social media inclusions, newsletter spotlights, etc.

So what's a merchant to do with all this freed up cash because they aren't fronting money for PPC marketing? Why bid on keywords themselves! But, wait! Didn't I just say merchants should allow affiliates to bid on keywords? Yes, I did but not on all keywords. And this is the caveat. Merchants are beginning to understand -- through better analytics -- that non-branded keywords can help drive new consumer traffic. They also know that high converting, branded or brand-related keywords can positively contribute to return on ad spend and are worth protecting.

With proper compliance, a merchant has the ability to retain higher converting, more profitable keywords while allowing affiliates to work their magic on other words that have not yet been profitable for the retailer. And when a merchant works with affiliates on SEO, it not only allows for another layer of keyword testing but also provides the merchant even more control over the representation of their brand online.

In other words, merchants can allow affiliates to bid on keywords that aren't yet clear winners without spending any money to do so. In the end, of course, a properly managed keyword program can have stipulations in place that allow the merchant to take over any keywords that turn out to be high converting winners. It's all in how the program is managed.

And another thing. Merchants can glean valuable insight from affiliates bidding on keywords. Affiliate conversion rates and keywords used to make those conversions can offer insight into which products are selling best, why they are selling, where they are selling, who's buying and which consumer purchase path appears to work the best. All of this can be used to tweak not only a merchant's marketing plan but also how they organize their product catalog, how they approach omni-channel selling and how your cross-network affiliate channel efforts are stacking up.

Allowing affiliates to bid on keywords puts the experts in the PPC driver's seat, provides free advertising to the merchant, reserves money for other marketing efforts and offers deep insight into what's working and what isn't inside the affiliate channel. What's not to love about that?

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Greg Shepard

Greg Shepard

Greg Shepard founded the global affiliate marketing agency, AffiliateTraction, in 1999, which was acquired by eBay Enterprise Marketing Solutions in January of 2016, and named Pepperjam the following April. Greg now serves as Pepperjam’s Chief Strategy Officer, charting the company’s trajectory for future product and service offerings. Greg also founded the brand compliance agency AdAssured, and has been a prominent speaker, author, and contributor at international industry events and media publications for over a decade. 

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