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Why affiliates may be skimming your Pay Per Click profitsAffiliate programs can be very effective in driving your customer acquisition efforts. But are they often competing directly with you, taking your clicks, and charging you for it? It is common that a company offers the affiliate channel $’s per conversion through an affiliate program where traffic is driven to your company's website and tracked by an affiliate tracking program. The savvy affiliates will the do the following first:

  1. Set up an AdWords account
  2. Create a PPC campaign using your company's brand and trademarked terms as keywords
  3. Create ad copy that makes it look like your company's ads

The affiliate then gets paid for each conversion that takes place.

The problem with this, of course, is that the affiliate is benefiting from the brand and trademarks that you have worked hard to build up.

The conversion rate and cost per conversion are dramatically lower for the branded/trademarked terms, and, if allowed, the affiliate will have an easy way to make the spread. Essentially you’re now paying the affiliate to compete with you, driving up the price of the auction on your branded keyword terms, and stealing clicks that you most likely would have gotten yourself.

Let’s say that you are paying out $50 per lead to your affiliate partners. If they use your branded and trademarked terms as keywords and in their ad copy, generating conversions at their cost of let’s say, $10; then they are skimming your profits in broad daylight!

You should NEVER allow an affiliate to bid on your branded or trademarked terms; you need to own this traffic and use it to maximize the revenues/profits from your internal SEO/PPC programs. These are the cheapest clicks and conversions/revenues from PPC, and you want to make sure that you capture them as they have significant impact on your PPC ROI and your bottom line.

I cannot tell you how many times we have taken on accounts for larger clients and found that affiliates are taking the client’s low cost clicks and conversions, making the clicks more costly for the client while diverting a substantial part of the branded/trademark traffic through the affiliate partners.

How do you find out? Do a search for your branded terms and trademarks, and see what shows up. It may take looking at the tracking (often in the URL line) to map out who owns the ad.