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When Affiliate Marketing Goes Bad: Potential SEM Effects

Published: May 23, 2016

Author: Kevin Hamill

Affiliate marketing is alive and well – and, done right, it’s potentially a good, legitimate source of marketing income. But there’s a reason there’s a bit of a stigma to it: lots of low-value, loosely affiliate ads are out there, junking up the SERPs and inflating CPCs.
We experienced this recently with one of our clients, which suddenly found itself fighting for position with an aggressive affiliate. This affiliate was sitting in the top two ad positions on high volume/high value traffic by serving ads from multiple accounts on the same search query – against Google Ad Policy.
Screen Shot 2016-05-02 at 7.56.19 PM
Obviously it’s infuriating for advertisers to see their real estate colonized by invaders that don’t offer the customer a great experience (and violate Google’s paid search policies in a number of ways, e.g. gaming the auction with multiple entries per ownership, low-value arbitrage).
But what’s the actual cost to the advertiser?
In this instance, it’s pretty dramatic. You can see above non-brand CPCs increase by about 50% as these affiliates enter the auctions. In the two charts below, see the impact on the client’s average position and on click volume/CTR, before and after the affiliate stopped bidding:

1) Affiliate impression share vs Client Av. Pos.
– As affiliate impression share dies off, the client avg. position improves 1 position at the same CPC


2) Clicks vs. CTR
– Volume of clicks significantly increased along with CTR because of improved ad position

The charts show that there’s good news here: the affiliates left the auction just as we were poised to submit a deck to Google arguing for the ads to be taken down. But you and your clients can’t always count on that happening. Be vigilant, check the SERPs periodically, and be on the lookout for:

  • Ads that misrepresent a brand, product, or service
  • Companies with multiple ads on one term (gaming the auction)
  • Companies with landing pages that send users elsewhere (elsewhere: sending users away from their own domain)

Good luck!

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