Inspired by a post on the A4U Forum there’s a thread about Easyspace a merchant on the DGM network offering up the right to bid on their brand name through PPC engines as a prize for whoever can deliver the highest volume of sales without using brand name bidding.
Currently the Easyspace term on Google only returns one ad, and that’s their own, so we can presume its protected by a trademark. So we can guess their cost on this ad is in the region of 2p per click. Now I don’t know how well their brand converts, but generally brand terms convert fairly well as the customer by searching for that term is looking for the company and either looking to buy or researching to buy. But for arguments sake well say conversion is 1% which gives Easyspace a cost of sale of £2.
Looking at the programme on DGM there are a lot of products all with different commission, the basic one being the starter web hosting with gets the affiliate £10 commission. If Easyspace are on a 20% network override that’s £12 cost of sale to Easyspace.
So we have a keyword that converts very well and is potentially very profitable for the affiliate and affiliate network. So by running a competition to ‘win’ the brand is a clever way of giving it away, im not saying that it wont increase sales as it will. Any PPC affiliate who has had a taste of a brand before would be happy to loose money making sales off generic ‘web hosting’ type terms for a month if they knew they were going to get the ability to bid on the brand for a month after as they would recoup their losses. So its win win right?
Depends. If Easyspace have been involved from step one and suggested this yes its win win and the company are achieving what they set out to achieve. If however the network has told them this is a good idea and talked them into it – possibly not. It creates a very unstable PPC environment for the affiliate programme and can potentially push the affiliate channel cost of sale through the roof. From the figures above Easyspace could go from paying £2 per sale to £12+.
Why am I bothering with this? Not because im jealous and want a go on the brand, or because I don’t like PPC affiliates (id happily bid on any brand and love PPC affiliates!) but if the merchant hasn’t been fully involved their opinion of affiliate marketing could quickly change from “ah yes this is working well in conjunction with our other advertising and converting at a cost of sale that we’re happy with” to “this channel is eating up our marketing budget and is reliant on just 2/3 people”.
This isn’t a dig at DGM either, I’ve seen a TradeDoubler presentation fighting the side of brand bidding for closed groups. Their power point showed a pile of money (yes that’s how networks see the brand bidding rights) and show how affiliates allowed to bid on the brand term will then re-invest that in generic terms which they take a loss on, and they can only do this because of the brand term. Now im sure they do, but if someone makes £10k profit off a brand term, are they going to invest £10k back into generic terms? Maybe not, £5k maybe but lets face it everyone has to make a profit.
