Direct Linking Affiliates: Nuisance Or Serious Problem?
Most affiliate managers and brand owners agree that they are not fond of the practice where affiliate marketers direct link from a search campaign to the advertiser’s web site. While frowned upon, the practice may be simply a nuisance because you just don’t like it or could become a more serious problem that is costing money either directly or indirectly due to skewed decisions. The only way to know for sure is to measure the impact with real quantifiable numbers.
What is direct linking?
Direct linking occurs when an affiliate uses your web site address as its display URL in search ads. The structure of the search ad consists of the following:
- Display URN is your domain
- The destination URL is an affiliate redirect link
- The final landing page is part of your domain
Many times the affiliate will also re-use your ad copy in their ads—which makes the ad appear to be you.
How does direct linking impact your bottom line?
Consumers do not see a negative effect from this practice because the consumer ultimately lands on your site—where they ultimately wanted to go in the first place.
However, you will see a negative impact on your bottom line. Here is why: Google and Yahoo only allow one advertiser at a time to show the same display URL. That means when your affiliate’s ad is being served, then your ad is not—and vice versa. Your losses from this activity likely consist of:
Increased CPC. You and your affiliate are essentially competing to be served within the SERPs. For you to beat your affiliate, you need a better quality score and/or a higher CPC. Since the affiliate is using your ad copy text and pointing traffic to your landing page, your quality scores should be the same. Therefore, you are left competing only on cost per click. You will go back and forth driving up the cost per each keyword against your affiliates.
Fewer clicks. When your affiliate’s ads are being served, and yours are not, you are losing clicks to the affiliate. This means that when you run your ROI or CPA models against your keyword list, you will find a lower volume of clicks on keywords where you are competing against your affiliate.
Lower impression volume. When your affiliates’ ads are being served, and yours are not, your affiliate is generating impressions which you will not receive.
Cookie confusion. It is common for consumers to search the same keyword multiple times, and revisit ads when researching and shopping. If the consumer first clicks on the affiliate’s version of your ad and receives a cookie, then later shops and clicks on your version of the ad and buys, your affiliate will receive cookie credit for the sale. In that scenario, you wind up paying twice for the same buyer—you pay for the click, and you pay for the commission to the affiliate.
Data interpretation confusion. The affiliate’s ads appearing when yours are not can cause a great deal of havoc for you when analyzing keywords for important decisions such as pruning or bidding. You may find that effected keywords have higher CPC’s, lower volumes and undesirable ROI for you.
So is affiliate competition a mere nuisance or a real problem?
First let me explain what I mean:
- Nuisance: I mean an undesirable byproduct of your otherwise effective affiliate program – for which you are afraid to rock the boat for fear of losing your affiliate revenues.
- Problem: I mean a measurable impact that damages your bottom line in terms of lost clicks, increased cost, or interference with keyword analysis.
The only way to know if you have a nuisance or a problem is to measure and quantify the situation. To do that, I suggest two ideas on how you could get your arms around this problem.
Solution A: Measure the percent of time your ads are served vs. your affiliate’s ads
To do this, you will need to crawl the search results pages along with destination URLs several times daily, from the vantage point of different geo-locations. You will need to record who the advertiser was that appeared in the results – you or was it your affiliate. I suggest watching this activity over the course of at least one week. After you have gathered the data, you will make a table in Excel with fields like this: Date | Keyword | Advertiser is Me (y/n) | Advertiser is Affiliate (y/n). Next create a pivot table, and chart the results in a stacked bar chart. This will show you the percentage of the time your ads are served versus your affiliates’ ads being served by keyword.
You can take the ad serving percentages and extrapolate these on-top of your keyword data to run scenarios as to what your ROI might have been had your ads been displayed and not those of your affiliates.
Solution B: Impression share analysis
Another way to determine if you are being impacted is to monitor for impression share anomalies within your own campaign. Google Adwords provides impression share information by campaign. You can run a daily “campaign performance” report in your Adwords account, and download it into Excel. Then create a line chart of the impression share field by date. Determine your mean or average impression share, and then look for dips in the line chart where it dips below your average. You will need to also review your account history and other market changes. If everything else appears normal, then you probably have a problem with an affiliate marketer who is ‘stealing’ your impressions by direct linking.
Solution C: Measure sales
If you can get your hands on your sales data for each affiliate and marry it to the traffic source—in this case keywords and search engines—then you can quantify the impact on sales due to cookie confusion. You will need to be able to access the following information: (1) traffic sources by affiliate with the ability to identify the search engine and keyword; (2) traffic path by affiliate to determine if in-bound traffic is coming to you direct from redirect links or if it is arriving from an affiliate owned and operated web site; and (3) your own campaign data to compare the affiliate’s keyword source against your own campaign list. Next, you will calculate the clicks and sales generated by direct linking affiliates. Then, you will compare those clicks and sales to the clicks and sales you received from the same sources. Finally, you will need to run simulations to determine had you received those clicks and sales, what would your ROI have been taking into account the cost for the click and the value of each sale.
While the most accurate method from a final decision making standpoint is direct measurement, it is probably the hardest to accomplish because the data may be difficult to tie together in the proper fashion – which I imagine requires participation from your engineering, analytics, and bid management vendor teams. I suggest that if you can get your hands on the data for Solution A – measuring ad serving percentages – you will have enough knowledge to make decisions without involving your entire engineering, analytics, and bid management vendor teams.
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