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What You Should Know About Retail Affiliates and Paid Search

With roughly 90% of advertisers taking part in them, retail affiliate programs are an undeniably popular marketing strategy. On paper, it makes perfect sense as to why: More places selling an advertiser’s products means consumers have more opportunities to purchase them – What could possibly go wrong?

As it turns out, quite a lot.. Specifically, when it comes to paid search, the increase in competition – even from affiliates ostensibly on the same side as you – can drive up CPCs and lead to a decline in traffic. Consumers tend to (often justifiably) believe that affiliates offer lower prices on products than retailers do, leading them to click on affiliate ads rather than your own.

It’s unlikely that we at iProspect will deter retailers from participating in affiliate marketing programs, nor are we intending to do so. We do, however, hope to offer more clear and comprehensive information about the obstacles these programs will likely present to paid search campaigns, as well as guidance about how advertisers can take them on proactively. 

You can’t invite everyone to the party.

As stated, it’s easy to assume that offering more avenues for consumers to buy your products, but experience shows us that this excessive competition offers no benefit to you or any of your quality retail affiliates.

“One affiliate may lead to incremental volume. A second affiliate can add a small degree of [increased visibility]. Ten additional affiliates provide no added value, clutter the space, drive up SEM costs, lead to decision paralysis, and dilute the brand,” says iProspect’s Director of Paid Search Mark Magnani.

In fact, decreasing the number of affiliates has been one iProspect’s most impactful strategies. When one of our telecom clients faced this same dilemma, we worked directly with those on the client-side managing retail affiliates to determine which partners drove performance and which could they stand to lose. Though reducing the number of retail affiliates can be a heavy decision, we’ve seen that this strategy is truly in the retailer’s best interest, typically resulting in increased traffic and a decrease in CPCs in doing so.

But it’s not enough to simply cut affiliates.

In addition to focusing solely on the most effective retail affiliates, you have to provide these remaining retail affiliates with a set of guidelines to prevent them from outperforming or outspending your brand. With that same telecom client, we put together a tiered paid search strategy:

  • Tier 1: Top performing affiliates that could bid on whatever keyword they wanted.

  • Tier 2: Mid-performing affiliates that could bid on branded terms if they set top performing keywords as negative keywords.

  • Tier 3: Lowest performing affiliates that could only bid on non-branded terms with top performing terms negated.

Additionally, these affiliates were assigned a max position and bid they could strive for, and if they noticed they were falling behind in either of these categories, they were to report this to us. From there, we instructed the affiliates in the higher priority tiers to decrease bids rather than having the lower performing tiers increase bids to catch up. This essentially allowed our client to do two things: First, it prevented CPCs from reaching unnecessarily high levels, and second, it allowed them to keep their ads to remain in top positions.

Don’t forget about your Shopping campaigns.

For consumers, one of the benefits of Shopping ads is the ability to get a more detailed look at a product (even before they click on an ad) to decide if it’s what they truly want. For retailers, however, one of the potential downfalls of Shopping ads is losing out on valuable clicks to competitors with lower prices listed.

While you may not always be able to win out on price, you can win consistently on visibility by optimizing your datafeeds to provide the most complete product information. Including all variations of a product in your feed – including colors or sizes or dimensions – benefits advertisers in a variety of ways. Not only does it increase the probability that the most relevant product will show for even the most specific search queries, but it can also allow multiple ads to earn top positions.

Another way to maximize your visibility is by opting to use more features than Google requires. One of the easiest (and perhaps most obvious) ways to do so is through automated extensions. Being able to show consumers a positive review or an upcoming promotion could make a consumer more inclined to click on your ad, even if you can’t offer the most competitive price. Although more complicated, leveraging all available ad units is also an incredibly effective strategy. Local Inventory Ads (LIAs), Showcase Shopping Ads, and Purchase On Google are all attention-grabbing ad formats that highlight features consumers might find as important as price (including proximity or an easy buying experience) and gives advertisers further SERP dominance.

So, even if your brand can’t offer a competitive price, you can still attain positive paid search performance by being selective in choosing retail affiliates, mandating guidelines based on your affiliates’ performance, and thinking outside of the text ad format.