QUOTE(SuperAffiliate @ Nov 19 2008, 12:10 PM)
You need to look at the bigger picture. What do you think your affiliates will do when you tell them not to bid on products you sell? Do you think they will just give up all the hard work they did in trying to drive traffic to your site? Not likely. Speaking from experience, when this happened to us, we just directed all our traffic to a competitor selling the exact same products. That's right, the narrow minded first company not only lost all their sales from us but they were still paying the same PPC. As my mother always said, don't bit the hand that feeds you.
And people wonder why merchants grow weary of and learn to dislike or distrust affiliates. This statement, apparently presented to defend the affiliate's position, is the exact attitude that causes the distrust many merchants feel towards affiliates. What you are basically saying is "You need me, and if you don't believe it, just see how much I can screw you."
Don't bit(e) the hand that feeds you? It's a 2-way street, without the merchant the affiliate has nothing to promote. Without the affiliate, the merchant stands a chance of losing PART of their business. On the surface, and I'm sure under the right circumstances, affiliate programs should be a positive arrangement for both affiliate and merchant ... a partnership with mutually shared goals.
I've spent some time on a couple of affiliate forums trying to understand what they want from a quality affiliate program. What I've read in large part was a bunch of highly inflammatory, highly disrespectful talk about the merchants these affiliates are supposedly 'partners' with. A slam fest. I walk away from reading this realizing the affiliate's (those posting anyway) place no value at all on the arrangement, or the merchant .... OR the customer. It's all about me and how much money can I make. Certainly not what one would hope from a quality sales force.
I've personally not had hugely negative experiences other than poor performance. Actually, "most" affiliates (at least the bulk of those who've signed up w/ my program) appear to be rookie webmasters trying to learn how to earn money without a huge financial investment, which is totally legit and power to them. Unfortunately, these green affiliates don't offer a lot to the merchant, and it does take a lot of effort to support them at the level they expect.
Affiliate programs, at least the one I use, are largely weighted in the Affiliate's favor. There is very little means for me to confirm whether my site is being promoted in a manner inline with the agreement or in a fashion I feel appropriate for my audience. These vocal affiliate forumites tend to think it's none of the merchant's business, as apparently do the affiliate programs. But IT IS my business. My site, my reputation, my customer base, my future is on the line here. I think Randy is probably right that you need to be careful who you accept and who you don't. I may need to reconsider my tendency to give everyone the benefit of the doubt, unless it's obvious that their site is simply inappropriate for my customers.
I've found it very difficult to craft a program that attracts quality affiliates. Affiliates expect a good payout to make the effort to promote your site ... totally understandable. Many also expect a pretty deep discount for the customers they send your way, makes sense. But considering the average retail merchant makes only a modest return on each sale, have to invest in and warehouse the inventory and shipping supplies, invest the labor to process and ship the orders, invest the time to support the affiliates, etc .... if youre not careful the affiliate can 'earn' the largest chunk of your profit while you've increased your workload and costs to see only a very tiny return. I just can't make the numbers work w/ a high payout, and right now I'm far better off marketing in areas that do bring a good ROI. I maintain my program, but put real limits on what I'll do and how much time I'll spend to make it work ... at least for now.
I do think affiliate programs and affiliates are a good component in an overall marketing strategy. But you have to keep it in perspective. It can pay, but it's seems like a pretty fickle community to hang your hat on, and can dry up overnight for reasons completely out of your control.
<edit>Back to answer the original question. Honestly, I don't think you'll ever be able to control affiliates competing with you in PPC. Restricting their ability to go after the most competitive search phrases and capturing the sale will just keep quality affiliates away. Their overhead is likely less than yours, and they can afford the higher cpc if the return is good enough. From their perspective, you shouldn't be competing with them.</edit>
Edited by arlen, 20 November 2008 - 06:00 PM.