Brand bidding is one of the most widely followed practices of affiliate marketing where the affiliate bids for the name of a brand or related terms in paid search campaigns. Brand bidding has the potential to divert traffic from official channels of the brand to affiliate links, leading to increased advertisement cost and brand dilution. While some companies permit brand bidding as part of their affiliate programs, some treat it as a threat to their brand strategy. It is crucial to understand how brand bidding functions, the pros and cons of brand bidding, and ways to avoid wasteful expenditure.

Here, we are going to explain the mechanisms of brand bidding, the manner in which it is employed for generating traffic by affiliates, and the impact it has on businesses. We are also going to discuss best practices for managing and regulating brand bidding.

What is Brand Bidding in Affiliate Marketing?

Brand Bidding

Brand bidding in affiliate marketing is the method of bidding for terms that have the brand name within them in search engine ads. It is where the affiliate’s paid listing shows up in search when the user has searched for the brand name and even outranks the brand’s website.

How Affiliates Use Brand Bidding for Traffic Diversion

Affiliates use brand bidding for the following reasons:

• Capturing high-intent traffic – Those searching for a brand are likely to be ready to buy and are thus valuable leads.
• Getting Ahead of the Competition – By being listed at the top of search engines, affiliates are capable of diverting clicks away from competitors or the brand website.
• Higher Commissions Earned – Since brand-specific searches have higher rates of conversion, more sales and commissions can be earned for affiliates.
• Outbidding Competitors in Ad Auctions – Competitors may bid on a brand name, and affiliates may try to outbid them to take over the search listings.

Whereas brand bidding can be a useful tactic for the affiliate, it can have severe consequences for the brand.

The Impact of Brand Bidding on Your Marketing Budget

Higher Advertising Costs

When brands bid for brand terms, their competitors are usually their partners in such bids, and this generates:

• Higher Cost-Per-Click (CPC) – More competition for the same terms causes bids to rise.
• Advertising Spend – Companies can spend more on commercials to maintain their position.
• Ineffective Spend on Ads – Money that can be better invested in other campaigns is spent fighting affiliate bids.

Loss of Direct Traffic

Brand bidding can reduce the direct traffic to a brand website. This happens when users click on an advertiser’s ad instead of the brand’s organic listing, which results in:

• Loss of Customer Data – There can be no full access to customer data for the brand.
• Limited Control of Messaging – Affiliates can potentially leverage different messaging, promotions, or offers that may not be part of the brand strategy.
• Potential Brand Dilution – When multiple affiliates bid on the same brand name, inconsistent messages confuse customers.

Payment of Commission on Unnecessary Sales

One of the largest downsides of brand bidding is that brands are being forced to pay commissions for sales that would have been obtained organically. A customer who is already searching for the brand and is making the purchase directly through the website means that any affiliate who is intercepting that purchase is being paid an undeserved commission.

Is Brand Bidding Ever Necessarily Negative?

Not all brand bidding practices are detrimental to businesses. Some businesses allow controlled brand bidding through their affiliates so that:

• Increase Exposure – More ads increase exposure for the brand in search results.
• Prevent Competitors from Bidding – Competitors can bid on the brand name; affiliate marketers can stop them from doing so.
• Generate More Conversions – In some cases, affiliate bids managed carefully can boost overall sales.

Yet unmanaged brand bidding can cause wastage of ad spend as well as revenue loss.

How to Control and Manage Brand Bidding

To reduce the adverse effect of brand bidding on their businesses, companies can adopt the following practices:

• Set Clear Affiliate Program Rules
  • Clearly indicate whether brand bidding is allowed.
  • Specify what terms affiliates can bid on.
  • Restrict the use of direct brand name bidding in PPC campaigns.
• Monitor Brand Bidding Activity
  • Review search engine ads periodically to identify unauthorized brand bidding.
  • Use tools like:
    • Google Ads Auction Insights
    • SpyFu, SEMrush, or a Brand Monitoring Software
      These can help detect brand bidding activity.
• Use Negative Keywords
  • Adding your brand name as a negative keyword to your PPC campaigns can prevent affiliate marketers from competing with you.
• Enforce Affiliate Compliance
  • Enact rigorous rules in affiliate agreements.
  • Remove and issue warnings to violating affiliates for violating brand bidding rules.
  • Use affiliate tracking tools to monitor compliance.
• Consider Running Your Own Brand Bid Campaigns
  • If brand bidding is unavoidable, managing your campaigns for yourself means your official ads show up at the top and lessen the influence of affiliate ads.

Comparison: Controlled vs. Uncontrolled Brand Bidding

Factor	Controlled Brand Bidding	Uncontrolled Brand Bidding
Spending Efforts	Optimized	Excessive budget waste
Customer Experience	Consistency of message	Potential brand confusion
Brand Protection	Protected from competitors	Exposed to exploitation
Commission Payouts	Justified	Unnecessary expenses

FAQs

What is brand bidding in affiliate marketing?

Brand bidding within affiliate marketing occurs when affiliates bid on a brand’s name within paid search ads to intercept traffic that would have been directed directly to the brand’s website. Affiliates use brand bidding for various reasons, such as appearing for high-intent search terms, getting more clicks, and earning commissions for sales made through their referral links.

How does brand bidding affect a company’s advertising budget?

Brand bidding drives the price of advertisement for a company up because it increases competition for brand terms, hence increasing cost-per-click (CPC) and potentially losing direct traffic.

Can brand bidding be beneficial for companies?

Yes, brand bidding can shield a brand from competitors as well as enhance search engine exposure if it is well-managed. However, unmanaged brand bidding can lead to wasteful ad spending and brand dilution.

How can businesses avoid unauthorized brand bidding?

Companies can prevent unauthorized brand bidding using rigorous affiliate program rules, search ad monitoring, the use of negative keywords, and imposing compliance mechanisms.

Should companies run their own brand bidding campaigns?

Yes, companies should operate their own brand bidding campaigns. In-house brand bidding campaigns can give you more control of search results, protect against competitor bids, and optimize ad spend.

Conclusion

Brand bidding in affiliate marketing is a double-edged sword. It can provide greater exposure and counter competitor tactics but also poses risks such as increased ad expense, wasteful commission disbursements, and brand dilution. Through strict rule execution, monitoring of bidding activity, and strategic management of affiliate relationships, businesses can prevent the negative effects and make informed decisions regarding their marketing budget.