Should you allow Affiliates to bid on your Trademarks?

A common practice, or one that was actually seen as something that was good years ago was trademark bidding in Affiliate Programs. The Networks would encourage it and convince Merchants that it was a good thing and many Outsourced Affiliate Program Managers would convince their Clients of this as well.   But why would they do this?  What are the benefits of allowing Affiliates to bid on trademarks and what are the downsides to it?  This is a question that comes up over and over and over again so I wanted to do a post addressing the possible benefits as well as the negatives and why I recommend that you pretty much never allow it.

Why would Networks and Outsourced Affiliate Program Management Companies encourage trademark bidding?

The reason why these two groups of people, not to mention the Affiliates who were doing it themselves, would recommend doing this is that they have to do absolutely no work and they will make money by poaching off of your own efforts and customers.  You spend your life and all of your energy getting your company’s name out there.  You do your best to provide the best possible service for your customers to get them to come back to you.  You risk a lot of money advertising to build your brand and bring in new customers and when they search for your site and company by name, you have done your job by building awareness and new customers.

The point of an Affiliate program is to be able to reach a group of customers that you may not have been able to reach on your own.  When people are searching for your trademarks or your trademark + coupon code or yourdomain.com or yourdomain.com coupons, they already know about you or are in your shopping cart.  If they are searching for these terms then they know you exist and they are probably going to be your highest converting terms because you have already had them as a customer and they have come back or they have seen your ads and you have spent time and money to build their interest and bring them in to your site.  Because they normally convert high and the Affiliate had to do almost no work, not to mention trademark names and urls are dirt cheap to bid on so the Affiliate is out almost no money, the Affiliate will have to do no work and will add absolutely no value to you because they will be taking credit and making money off of the people you worked extremely hard at developing and bringing in as a customer.  The Trademark Bidding Affiliates love it because they have to do absolutely no work and they will profit off of your hard work.  Networks that get an override fee or network fees on each sale love it because you are handing them money without them having to add value to you or by them having to help you get content and blogging or coupon sites with newsletters and making them do work by helping you reach an audience you cannot reach on your own sales which they will bill you for.  Think about it, why should you have to pay out on sales from customers you already had when they were searching for your company by store name or website url or were in your shopping cart already and left to find a coupon off terms like yourdomain.com coupons?  (Now with that said, if the person was already a customer but may not have come back for 5 months or a year, then that previous customer reads a blog they follow and finds you again through an Affiliate link, you should definitely pay out because that Affiliate who was not poaching or trying to optimize organically for your trademark and brought you a customer back because that customer trusts their recommendations and reminded this customer that you exist.  There is a huge difference between that and someone who was already looking for your url or was already in your shopping cart.)  Outsourced Affiliate Program Management Companies love it because not only do their numbers look better but if they get a bonus or are working on a percentage of sales, they make more money or look better in your eyes because their numbers are good which also means they get to keep their contract because they were able to take credit for people who were already your customers.  So with that said, is there any actual good that can come from trademark bidding?

Is there any good that can come from allowing Affiliates to bid on your trademarks and trademark extensions?

The one argument which makes sense to allow trademark bidding is that you want as much coverage as possible in the search engines on your trademarks so that your competitors aren’t there on your trademarks.

Although this does make sense to a point, there are other ways to get around this and not have to spend a ton of money on your current customers.  The thing is you have already spent a ton of money bringing your customers in the first and second time and you shouldn’t have to keep spending on them over and over again, it eats to much out of your bottom line.  If your domain name and company name is extremely general like wedding store or blue widget, chances are that tons of people will be bidding on those terms.  By allowing Affiliates to bid on terms like wedding store, but not allowing them on your domain name like bluewidgets.com or bluewidgets.com coupons, you can help to make it so that you have more real estate for those general versions of your trademarks and those terms may not convert as well because they are general and can possibly be people who haven’t heard about your company.  If they add in coupon code or bid on the url then that is a different story and they are potentially poaching your traffic and customers.  You also want to make sure that you mention that they are not allowed to direct link to you as that will cause your own ads to not show up.  Make them build out a landing page and drive traffic there so you have the extra space in the search results.   It is called direct linking and you should include no direct linking in your terms and conditions.  With that said, this is technically against Google and many other Search Engine’s Terms and Conditions so I do not endorse it or support it or recommend that you do this.  I am just saying that many companies who allow this do this and in this way.

Now, because these people may be taking from your current customer base, you may also want to consider reducing their commissions in half or just hiring a local search firm or two to bid on your trademarks and keep the Affiliates off of them since they will only be bidding on trademarks and it is cheaper to do with a firm since you won’t have to pay network fees, overrides and commissions.

What about extensions like yourdomain.com coupons or your company name coupon codes?

This is the absolute worst type of trademark bid.  Not only do you have to pay for people who were already inside your shopping cart, not just ones who had seen an ad and were curious about your company but actually in the shopping process, but you will now have to pay a commission, a possible network fee and a bonus to your OPM or Affiliate Manager on someone who was already shopping with you in the first place.  This really eats into your margins and can also mean that an Affiliate who brought you a brand new customer may lose their commission to someone who is adding no value to you.  Again, you or one of your value adding Affiliates did all of the work to get these customers to your site and shopping in the first place, why should you have to pay out or pay out the full commissions for the people you brought in yourself or paid for yourself and the Trademark Bidding Affiliate did no work to send you?  You shouldn’t have to.  If you want a couple recommendations on possibly lowering the risk of people leaving your site for a coupon code and also possibly lowering the risk of having to pay for people who leave your site and search for yourdomain.com coupons and clicking an Affiliate link on one of the top results or from a trademark bid, please check out this post on what to do about your coupon code box and how to prevent people from leaving your shopping cart to find a coupon.

We need at least a week or two to work out the campaigns?

This is a bullsh*t excuse and more than likely a lie.  Sure, someone may be on vacation and they may not get your email for a week and that is somewhat understandable, but the reality is that you can shut off trademark bids within seconds from Google and within minutes across the top 3 engines.  It is not difficult and it is not hard to do if your campaigns are set up correctly.  Even if they aren’t set up correctly most of the major engines let you search keywords and extensions and pull the full list up making it only take a minute or two to find all trademarks and pause or delete them.  Giving a one day notice is more than enough time because it not only takes a couple seconds to pause properly built campaigns or delete them, but these people are just stealing your current customers anyways and not adding value to you.

These trademark bidders tend to only bid on your trademarks and add zero value to you.  This is also why I always recommend that you never put your Affiliate Program on Auto Approve because these types of Affiliate flock to programs on auto approve since they don’t think there will be anyone looking and can get away with ripping you off.  If they claim that they bid on general terms as well, ask them to do a conference call with screen share with you and to show you the campaigns during the call.  You should also make sure that they are showing you the entire time frame that your Affiliate program has been opened and you need to see the chart and graph above to see when they actually launched the general campaigns and how long they have actually been running.  You can also then see the amount of clicks from general campaigns vs. your trademarks, compare them to your own and see where the majority of their sales actually came from.  Anyone can show ads on general campaigns and build stats instantly, but  by seeing the active general terms over a 2 year period (or even just the last few months) you’ll know that they weren’t lying and actually did try to build and add value to your campaigns.  You’ll also want to check the individual keywords and not just adgroups on this in case they have them combined. If they won’t show you then don’t trust them.  Its that simple.  Affiliate Marketing is about trust and if you guys can’t trust each other then you shouldn’t be working with each other.  If they weren’t bidding on your trademarks in the first place than you wouldn’t be having this conversation anyways.

There are many more reasons why you should never allow Affiliates to bid on your trademarks, urls or trademarks plus coupon code terms but the most basic reason is that these people are already in your shopping cart or already know about you because you did the work.  Why should you have to pay out a second, third and every time they are looking for you again when those Affiliates do zero work to drive new customers and their real goal is to just poach as many customers from you as possible.  The goal of an Affiliate Program is to have sites like blogs or content sites that rank for general terms like beer making kits or Christmas party supplies because they not only have followers but they also have people finding their sites that you may not be able to reach on your own.   Trademark bidding and trademark extensions like yourdomain.com discount codes add no value to you.  You can more easily have a search company bid on those at cost or for little to no money (this is against many of the major search engine’s terms of service so again, I do not recommend you do this, I also do not endorse this method or promote it) and not have to pay out commissions, fees and bonuses on the people you already brought in on your own.  This will also better help value adding Affiliates keep their commissions since Trademark Bidders won’t be poaching them from the shopping cart.