• by joe.h , Bob Heyman , March 2, 2007

I had the opportunity to attend the Affiliate Summit is Las Vegas recently and was reminded once again that some of the savviest search marketers are that group of affiliate marketers generally known as "search affiliates."

While "content affiliates" attract audiences by offering a deep level of subject information before directing buyers to merchant pages, "search affiliates" buy keywords and live on the arbitrage between the click cost and the affiliate sale payment on conversions.

In this group can be found some of the most knowledgeable search marketers on the Web. They live search 24/7. They depend on their SEM prowess to pay the mortgage or their kid's school tuition.

There is a current controversy in the affiliate world as to the proper relationship between the search affiliates and the merchants for whom they are a channel. The trend is for merchants to increasingly limit the affiliates on what brand- and product-related keywords they can bid on or how high they can bid. This is to minimize potential bid competition between merchant and affiliate.

Some search affiliates maintain that this is a short-sighted policy and point out that, in the search affiliate model, it is the affiliates who are, in effect, financing the merchants' search marketing budget. Many merchants counter that the search affiliates "cannibalize" sales that should go directly to them. Advocates for the search affiliates maintain that they can be responsible for 10% to 30% of merchants' affiliate program sales, and that they provide the opportunity for merchants to gain traffic from multiple ads appearing on a search results page.

Some "search affiliates" may not even have a Web site, only a referring URL. While the search engines have rules about display URLs being the same as destination URLs, these are not always being followed. The number of rogue affiliates is probably low, but the issue is worrisome for merchants.

Of course, with Yahoo having implemented Panama, all the leading search engines are now opaque when it comes to discerning the bid landscape. As a result, merchants can't see what their affiliates are bidding. This makes enforcement of merchant bidding restrictions somewhat problematical and increases the pressure for merchants to totally ban affiliate competitive keyword bidding, especially on brand words.

However this controversy plays out, it's always worth paying attention to what the search affiliates are doing. You're probably bidding against them.