When it comes to strategy development, one of the decisions that every affiliate program must make is whether or not to allow affiliates to engage in trademark plus (TM+) bidding. Despite being a high-value tactic for improving the affiliate channel’s performance, TM+ bidding also has many potential risks associated with it. This article explores the various advantages and disadvantages of allowing a brand’s affiliate partners to bid on TM+ search terms, then makes recommendations on how brands should approach this issue.
What is TM+ Bidding?
TM+ bidding refers to the commonly used marketing practice in which sites bid on a brand name in conjunction with another keyword. This includes search terms such as “[brand name] coupon,” “[brand name] discount code,” and “[brand name] promo.” The more a site bids on these terms, the higher they are ranked by Google Ads, and consequently, the more likely a user is to see that site’s ad when searching for the term on Google.
For instance, say a user considering a purchase from a brand called Hamster Co looks up “Hamster Co sale” on Google. The user might see that the first search result is an ad for the Hamster Co homepage, the second is an ad for a competitor called Gerbil Co, and the third is an ad for a coupon site. The order in which the potential customer sees these results reflects the extent to which their respective sites have engaged in ™+ bidding on the search term.
Why Do Sites Bid on TM+ Terms?
Brands
Brands bid on their own TM+ terms in order to ensure that as much relevant search engine traffic as possible is directed toward their site. If a user Googles “Hamster Co coupons”, then Hamster Co wants to make sure that their potential customer ends up on their site. Brands understand that by not engaging in TM+ bidding, they risk having traffic redirected to competitors’ sites.
Competitors
By bidding on their competitors’ TM+ terms, brands can draw search traffic to their own sites. Suppose a user searches “Hamster Co promotion” but sees a result promoting Gerbil Co’s sale. In that case, they may be influenced to purchase from Gerbil Co instead, even though they were initially planning on ordering from Hamster Co.
Affiliates
The third main category of sites that bid on a brand’s TM+ terms are sites that have affiliate partnerships with the brand. In particular, it is typically coupon sites bidding on these terms, as their promotional methods are the most aligned with the search terms. Since affiliate marketing is a performance-based channel, brand partners are incentivized to provide as much exposure for the brand as possible in order to increase their chances of earning higher commissions. As a result, affiliates want to draw additional traffic to the site pages on which they are promoting the brand, and TM+bidding provides a particularly efficient solution.
It is fairly common for coupon affiliates to bid on brands’ TM+ search terms, with TM+bidding even being the primary promotional method by which many such partners operate. However, despite its prevalence, the use of TM+ bidding by affiliates is a highly controversial one within the industry.
Pros of Allowing ™+ Bidding
Preventing The Loss Of Web Traffic
There are many potential advantages to allowing affiliates to engage in TM+ bidding. First and foremost, as previously discussed, a brand can lose web traffic through competitors bidding on their TM+ search terms. Thus, it is in brands’ best interest to have users directed to partnered coupon sites rather than to direct competitors. Although the brand should still engage in TM+ bidding to take up the top one or two slots in the Google Ads search results, they may not be able to fill up all of the ads that a user would see due to factors such as high cost or inconvenience. As a result, there will usually be ad slots that are not being directly filled by the brand itself. In this case, it is much more advantageous that the remaining top slots be filled by partners, who have a vested interest in promoting the brand, than by competitors, who directly threaten the brand’s business.
Building Trust With Affiliates
It is important to note that when brands allow affiliates to engage in TM+ bidding, they do not have to extend these permissions to all of their partners. In some cases, brands will offer TM+ bidding permissions to only a select few affiliates. This exclusivity can also facilitate the success of an affiliate program by helping a brand strengthen its relationships with its top publishers. Being offered special permissions is a sign to the partner that they are a highly valued affiliate, which provides additional incentive to promote the brand. Additionally, the publisher may be more open to different methods of working with the brand, since they understand that there is strong trust from the brand’s side.
Strengthening Performance
When a brand selects which specific publishers to offer TM+ bidding permissions to, they might examine past data for key performance indicators. A brand might allow top performers that have demonstrated particularly high conversion rates or that have driven orders with notably high average order values to engage in TM+ bidding. As these specific sites are performing particularly well, it can be in the brand’s interest to allow these sites to promote them more. If a user searching for Hamster Co coupons is directed to a site with an 80% conversion rate, it might be expected that the potential customer would be more likely to make a purchase than if they were directed to a site with a 50% conversion rate. It is important to note that higher conversion rates cannot be guaranteed here, since performance indicators may be a result of the sites’ audiences and not how well they are promoting the brand. However, there is still a strong chance that the affiliate program’s key performance indicators can be strengthened by allowing top-performing affiliates to bid on TM+ search terms. It is important to note, though, that brands may want to shy away from offering these permissions to their highest revenue drivers, as this would decrease program diversity.
Diversifying the Affiliate Program
It is important for a program to be diverse in terms of the partners it works with. For instance, an affiliate program’s monthly revenue should be generated by a healthy balance of different affiliate categories, such as coupon, loyalty, and content. Furthermore, it is critical that the revenue comes from a number of different publishers each making valuable contributions. In some cases, a program will have the vast majority of its sales driven by one specific partner. Although this may be fine in the short term in terms of just meeting performance goals, it is not a sign of strong affiliate program health in the long run. A program can combat this by offering TM+ bidding permissions to other partners.
Suppose Hamster Co has a popular coupon site, Partner A, that is driving 80% of the revenue. The program is also partnered with another coupon site, Partner B, that is similar to Partner A but has a different user base. It would be in the program’s best interest to direct potential customers searching for coupons toward Partner B rather than Partner A. This way, some of the people who would have purchased from Hamster Co using Partner A’s affiliate links might buy through Partner B’s links instead. As a result, the total percentage of revenue contributed by Partner A towards the affiliate program would decrease, making the program less dependent on this one partner. Reducing partner-specific reliance is critical in order for the affiliate program to have more of a safety net. If Partner A were to continue contributing 80% of the program revenue, the brand would incur the risk that if something were to happen with Partner A, such as their site receiving less traffic, the brand might lose a high volume of sales. In the worst-case scenario, if Partner A were to shut down completely, the brand would lose up to 80% of its affiliate revenue. It is important to prevent situations like these by making sure that the affiliate revenue is coming from balanced contributions by different partners, and TM+ bidding permissions to select partners can help achieve this.
Cons Of Allowing TM+ Bidding
Diverting Traffic Away From The Brand
Although there are various benefits to allowing affiliates to engage in TM+ bidding, it is also important to consider that doing so can also come with many disadvantages. In particular, TM+ bidding by external parties can be particularly harmful to brands that are less well-known. For these smaller brands, it is especially important to get as much visibility in front of their potential audience as possible, meaning that they may want to dominate all of the ad spots that come up when someone Googles a TM+ search term. That way, the potential consumer will only see ads for the brand and not be distracted by ads from other websites, such as affiliate partners. Having any sites other than the brand’s being represented in the Google Ads results would interfere with the brand’s visibility to their target audience, so it can be important for branding purposes for a business to occupy all of the top ad slots. As a result, brands wanting to use this marketing tactic should place a ban on TM+ bidding for all affiliates.
Losing Money Through “Stolen” Revenue
The potential diversion of web traffic to a partner site rather than to the brand’s site can also hurt the brand through unnecessarily higher commissions. For instance, a user may Google “Hamster Co sale” searching for the sale section of Hamster Co’s website. However, they may end up seeing a paid search ad for Hamster Co coupons on an affiliate’s site. In this case, the user had originally meant to purchase directly from Hamster Co’s site but ended up being diverted to the affiliate’s site. Since the user was already ready to make a purchase off Hamster Co’s site, the affiliate is now being paid a commission for a purchase they did not necessarily generate. Thus, Hamster Co is making less money off the sale than they would have if the affiliate had not bid on the TM+ search term. Although it is important for the affiliate channel to drive a high number of sales, it should be a goal for affiliate programs to drive significant amounts of revenue that has not been “stolen” from other marketing channels.
Increasing Costs Of Bidding
Furthermore, affiliates bidding on TM+ search terms can harm brands by driving up the prices for brands bidding on their own trademarked keywords. Since there are now more parties bidding on the same terms, there is greater competition, meaning that the brand may have to bid more money in order to receive the same ad spot than they would have without affiliates bidding. Typically, when brands offer TM+ bidding permissions to their partners, they set guidelines as to how much the affiliates are allowed to bid on their terms. Ideally, these rules would create a situation where the brand’s TM+ bidding costs are not inflated. However, a brand cannot guarantee that its partners will follow these program terms, as they could go rogue and violate the requirements. If brands want to have as much control as possible when it comes to bidding costs, it would be in their best interest to not allow any affiliates to engage in TM+ bidding via Google Ads. Additionally, in some cases, the potential benefits of having partners bid on search terms may not be strong enough for a brand to justify risking the loss of profits through having to spend more money to bid on its own TM+ terms.
Risking Lack of Editorial Control
Another disadvantage of allowing affiliates to engage in TM+ bidding is that brands do not have complete control over what affiliates say about them. It is typically the case that publishers portray the brands they partner with in a positive light, as this is in their best interest. Additionally, affiliate programs can establish brand guidelines in order to mitigate the risk of being depicted unfavorably. Even so, brands cannot fully control how they are represented on external sites. As a result, they may not want their partners to show up on search ads for their TM+ terms. It would not benefit a brand for someone to Google it and see a website that does not showcase it in its best light as one of the first search results. Of course, even without TM+ bidding, it could still be the case that sites portraying the brand in an unideal light still show up in Google searches. However, these sites would not be as visible as they would be in a TM+ ad. This is particularly harmful when combined with the affiliate sites likely diverting traffic away from the brand’s website. Thus, allowing affiliates to engage in TM+ bidding comes with image-based risks for a brand. It is important that brands fully consider these types of potential harms and are careful when deciding whether or not to offer TM+ bidding permissions to their affiliates.
Setting Program Terms
Regardless of how a brand chooses to move forward in terms of extending TM+ bidding permissions to its partner, it is important that it sets clear guidelines in its program terms. Without explicitly delineated rules, it is possible that there may be room for misinterpretation on the affiliates’ end, resulting in more violations. Additionally, it is important that brands lay out these specifications in their program terms so that if affiliates intentionally violate them, they can use the terms to hold the publishers accountable.
In terms of program guidelines, it is important to very clearly emphasize whether or not affiliate bidding is allowed. Additionally, if allowed, the brand should note whether all affiliates have these permissions or if only a select few do, as well as what the bidding cap is. Any other guidelines the brand wants publishers to follow should also be specified.
Although affiliates will try their best to meet these program expectations, there may be cases in which violations occur. This may be accidental due to the publisher not understanding the program terms or intentional, but whatever the reason, it is important that the affiliate team email them to let them know that they have violated the terms and to ask them to stop. Generally, affiliates will take the ads down as requested. However, if any further complications arise here, letting partners know that they will be removed from the program if they continue to not comply with the program terms is generally effective in convincing them to comply with the program terms.
Should Brands Allow Affiliates to Engage In TM+ Bidding?
Whether or not a brand would benefit from allowing its affiliates to engage in TM+ bidding often depends on circumstances that are specific to each brand. However, as a general rule of thumb, we would recommend that brands that cannot necessarily afford to take risks play it safe by denying TM+ bidding permissions. Although extending TM+ bidding permissions can be highly beneficial, this practice also has many potential downsides associated with it, such as affiliates going rogue and brands losing money. Thus, a brand should not authorize its partners to bid on TM+ search terms unless it is confident that it can afford to take risks. However, if a brand is at a point of development where it is better suited to take risks, allowing TM+ bidding permissions to affiliates can be an incredibly strategic move. In particular, we would recommend this course of action for brands whose specific needs align well with the advantages that affiliates bidding on TM+ terms would offer. For instance, if a brand suffers from a particularly high number of competitors engaging in ™+ bidding, or its affiliate revenue is primarily being driven by just one affiliate partner, it may benefit significantly from allowing its publishers to bid on its TM+ search terms.
We will caveat this recommendation by emphasizing that if a brand does choose to move forward with offering TM+ bidding permissions, it needs to be very careful about how it does so. It is always important to ensure that brand guidelines for program terms are as specific and strict as possible. Additionally, we would not recommend that brands allow just any partner to engage in TM+ bidding. Brands should only offer bidding permissions to a maximum of three of their top partners. In particular, it is important to make sure that these sites are respected publishers within the affiliate industry with a strong history of brand collaboration, meaning that they are not likely to violate program terms. When working with an affiliate team, a brand will be able to receive recommendations for who they should consider for special TM+ bidding permissions, as the team will have worked with certain partners across multiple accounts and know them to be trustworthy affiliates.
In conclusion, we would suggest that newer or smaller brands avoid offering TM+ bidding permissions to affiliates and that larger, more well-known brands do extend these permissions. However, brands should always keep in mind the best practices for affiliate TM+ bidding as well as their own unique circumstances.
