The Search Tug of War

The balance of power between merchants and affiliates is shifting.

Welcome to my first column – Mary O’Brien set a high standard that I hope to live up to. I’ve been working in search technology since the 1980s, so I can help you understand what lies behind some of the search advice you receive. I initiated IBM’s search marketing program back in 2001, and I also understand a merchant’s perspective on affiliate marketing. Search engines are complicated beasts, but a little knowledge can give you a leg up on your competition.

Let’s dive into the topic at hand: the issue of branded keywords in paid search marketing campaigns. In the earliest days of affiliate marketing, most merchants didn’t understand the importance of search marketing or, if they did, they didn’t know how to succeed at it. In those bygone days, merchants were happy to – in effect – outsource their search marketing.

How times have changed. Search marketing is big business now – the prime way that affiliates attract visitors to their websites. But it’s also one of the biggest ways that merchants drive traffic to their sites. And those merchants are no longer asleep at the switch. They are keenly aware of the competition their affiliates pose for searchers’ clicks, and they are starting to take action.

The Organic Search Front

Merchants are beefing up their organic (also known as natural) search marketing efforts. Some were embarrassed to find that their affiliates ranked ahead of them even for searches containing their own brand names. Merchants have many organic search improvement techniques at their disposal, but one is symptomatic of the tug of war between merchants and affiliates: the search-friendly affiliate tracking system.

Affiliate tracking systems are at the heart of the relationship between affiliates and merchants. Each affiliate codes a link on its site to the merchant’s site that transmits the affiliate’s identifier. When a visitor clicks the link, that identifier is transmitted and the merchant’s affiliate tracking system credits any purchases made by that visitor to the affiliate, so that the proper commission can be paid. So far, so good.

What makes this more interesting is that search engines have their own agenda for links. Google and other search engines raise a page’s authority based on its incoming links. Search engines calculate authority by analyzing the number and quality of links to the site from other well-respected (high-authority) sites. Pages higher in authority tend to rank higher than other pages in an organic search. For search queries that match many pages on the Web, a page’s authority is often the most important determinant of where it ranks, so search marketers care deeply about acquiring those precious inbound links to their pages.

It would seem that merchants would benefit greatly from all those inbound affiliate links. But, mostly, they don’t. That’s because traditionally (if any business this young can have a tradition), affiliate tracking has been performed using links that search engines don’t assign any credit for. Some affiliate tracking systems use JavaScript links that can’t be seen by the search spiders that constantly scour

have increasingly sought to control their affiliates’ paid search campaigns by adding new restrictions to their affiliate agreements, banning the use of the merchant’s trademarks and other brand names in any paid search marketing campaigns by their affiliates.

Studies by MarketingSherpa indicate that this practice is on the rise. Just 21 percent of merchants restricted their affiliates’ paid search campaigns in January of 2005, but that figure had zoomed to 39 percent by August of the same year.

Just 21 percent of merchants restricted their affiliates’ paid search campaigns in January of 2005, but that figure had zoomed to 39 percent by August of the same year.

pages on the Internet. Other tracking systems use temporary redirects (also known as 302 redirects), which are designed to shift a page’s URL for a short time – and search engines don’t credit any authority to a page that may soon disappear. Only permanent redirects (also known as 301 redirects) transmit their value to the linked-to merchant pages, because the search engine expects each permanent page to have a long life – making it a strong candidate for a search result.

As you can imagine, savvy merchants are beginning to migrate to these “search-friendly” 301-based tracking systems. So far, this trend is just a trickle, but you should expect to see more and more merchants wake up and “think links.” As they do, those merchants’ organic search rankings will get a boost, making it that much harder for affiliates to outrank them.

The Paid Search Front

This is a two-front war, with organic search in many ways the less hard-fought of the pair. Over the past year, merchants

These merchants argue that searchers using trademark names have already made a brand decision, and should be brought directly to the merchant’s site. They see no reason to pay an affiliate a fee for bringing them a customer who was trying to come to the merchant in the first place. These merchants are happy for affiliates to conduct paid search campaigns using generic keywords devoid of brand and trademark names – those keywords are bringing the merchants customers that might have gone to competitors.

You can see the trend here. Merchants began with a laissez-faire attitude about paid search, allowing affiliates free reign to use any keywords in their campaigns, happy to make the extra sales. Now, merchants are increasingly clamping down because they want those sales for themselves. Not only do they save the fees they’d have to pay to the affiliates, but they may be able to bid lower for their branded keywords because they’ve reduced the number of companies that can bid against them.

Unfortunately, no matter what a merchant does to block its affiliates from buying branded keywords, competitors can’t always be blocked, because the merchant has no control over them. The merchant can buy just one ad per branded keyword, but the search engines always show several ads on each result screen. Although the merchant might have the top paid spot, who has the rest of the spots?

Before that merchant began blocking its affiliates, the bulk of those other ads were likely from its affiliates. Searchers who clicked on those affiliate ads (and bought) were still buying from the merchant, even if the merchant had to shell out higher fees than if the searchers had purchased without coming through an affiliate.

But Randy Antin, search marketing manager of Travelocity, notes that when his company restricted its affiliates from bidding on branded keywords, “the spaces in the bidding were soon replaced by our competitors’ affiliates.” Searchers clicking anything other than Travelocity’s single ad might end up buying from a competitor. Yahoo has recently changed its policy to block competitors from using trademarks, but it remains to be seen if other search engines will follow suit.

Some merchants believe they should treat search results the same way they would treat shelf space in a grocery store – by filling it with their product. Those merchants might decide not to block affiliates from bidding on branded keywords because they want every paid search result to sell their product, whether it is direct from the merchant or through an affiliate. Although merchants and affiliates must work together to be successful, it’s inevitable that they’ll have channel conflicts – especially in search marketing practices.

MIKE MORAN is an IBM Distinguished Engineer and the manager of IBM.com Web Experience. Mike is also co-author of the book Search Engine Marketing, Inc. His website is www.mikemoran.com.