Affiliate PPC blackmail - that’s a nice howdy do

If you’re an affiliate marketer, I have to suggest monitoring this thread at SearchEngineWatch about a company essentially blackmailing its affiliates. I’ll try to nutshell it at the bottom of the post for anyone (like me) who is still learning affiliate marketing lingo.

RustyBrick does a nice job of summing up what’s happening:

(1) Your bid must be set to .50 cents (or less) this applies to both Google and Overture
(2) Cannot use parent domain
(3) You must stay out of the top 4 positions on Overture and with Google we’ll see how it goes due to CTR bidding

The affiliate also noted that the reason for guideline number three, is because the affiliate manager (the merchant) was controlling the top four PPC ads with their own domain names. That specifically is against the PPC company’s Terms of Service.

The original poster, BountyHunter, goes on to say:

I’m more curious how both Google and Overture feel about a top level affiliate parent colluding and conspiring to “set” affiliate bids (behind theirs of course) by implied force because ‘the click amounts are too high” not to mention getting totally greedy by having multiple domains they control bidding for the same keyword. This is a direct attack on their auction type business model. I’m sure Goog and Overture have encountered it before say when they see overnight advertiser #1 at 1.00 and everyone else behind that bidder conveniently at .50 cents after months of bidding being in the 3 to 4 dollar range. I’m sure there are some RICO violations here…..we’ll see how this plays out but the longer it goes on being handcuffed with respect to competitive bidding and our real dollar losses the more attractive litigation will become.

If I understand correctly, the company in question operates four domains with the intent of controlling the top four spots on the SE’s, so that you, the searcher, will end up with them one way or another, unless you go further down than the top 4. First of all, as far as I can tell, that’s spam all by itself, and violates the SE’s policies (though maybe they’re being sneaky about it - I have posted in the thread asking for clarification, so hopefully we’ll find out).

Secondly, by manipulating bid amounts, they’re participating in an unfair business practice (which is where the mention of RICO racketeering laws fits in) that bypasses the auction-style of PPC ad selling. It’s like letting independent contractors sell your product on eBay, but forcing them to sell it at $9.99 or less, which prevents eBay from collecting the higher fees that would be generated by a natural auction sale of, say, $12.97.

Whatever these guys are doing, it’s ugly, it’s against the rules, and they appear to think they’re going to get away with it.