Affiliate Program and Arbitrage: How to Protect Yourself?

With the growth of online sales, many brands use affiliate marketing as an effective strategy to boost their products.
At the same time, this approach offers opportunities for those who want to operate online without needing to create content or expose themselves as digital influencers.

However, it is important to stay alert: your affiliates may end up attracting your best customers and increasing your cost per click (CPC), which can negatively impact the performance of your branding campaigns.
To better understand how this happens and how to avoid these problems, keep reading.

What is an Affiliate Program?

An affiliate program is a marketing strategy that allows companies to expand their sales and online presence through partnerships with commissioned sellers.
Affiliates promote the brand’s products or services in exchange for commissions for each sale or action generated (such as sign-ups, downloads, or qualified clicks).
Companies have increasingly adopted this approach to increase visibility, reach new audiences, and boost sales. Currently, 81% of brands use affiliate programs to drive brand awareness and marketing.

Benefits of an Affiliate Program for Your Company

The success of this practice aligns with the numerous benefits it offers. If your brand operates in e-commerce and is looking to grow, this might be the right time to invest in an Affiliate Program.

Expansion of Reach and Visibility

One of the biggest benefits of affiliate programs is the ability to reach new audiences. Affiliates are generally influencers, bloggers, experts, or even companies with segmented audiences.
By promoting the brand’s products or services to their followers or clients, they extend the company’s reach without the need for direct advertising investments.

Cost-Effectiveness

Unlike traditional marketing campaigns, such as pay-per-click or impression ads, affiliate programs are performance-based.
This means companies only pay for successful actions, like actual sales. This model reduces financial risk and optimizes ROI (return on investment), as costs are directly linked to results.

Freedom to Choose Your Representatives

With affiliate marketing, you have full control over the program, setting all guidelines and permissions, as well as selecting affiliates that best fit your desired profile.
Selection criteria are under your control, allowing you to filter candidates and choose the ideal affiliates to represent your brand.
This way, you can evaluate candidates’ affinity with the product or service, the channels they operate in, and select those aligned with your market positioning.

How Can the Affiliate Program Affect My Brand?

Affiliate arbitrage can manifest in different ways, depending on your company’s guidelines regarding link usage and paid campaigns. Here are two scenarios to help understand this practice better.

Without the Use of Ads

Companies that digitalize reseller contracts often prohibit the use of affiliate links in sponsored ads, such as Google Ads.
In this context, if an affiliate runs campaigns using the brand’s institutional keywords, they are directly violating a contractual rule, harming the company’s marketing strategy.

With the Use of Ads

Some brands allow or even encourage affiliates to run paid campaigns to promote products and services.
However, these actions must follow specific parameters, avoiding the use of the brand’s institutional terms.
The idea is for affiliates to use alternative and creative approaches without competing directly with the company’s official presence in sponsored campaigns.

Affiliates Should Not Compete with Original Campaigns

If a customer, attracted by the company’s branding, makes a purchase through an affiliate’s link, the affiliate ends up receiving an undeserved commission since the customer was originally acquired through the brand’s advertising.

Additionally, when an affiliate aggressively buys institutional terms in ads, it can significantly increase the company’s cost per click (CPC).
This causes the brand to pay more for its own keywords, harming both the budget and the performance of official campaigns.

Branddi Can Help You!

Identifying affiliates who directly compete with your branding campaigns must be done strategically for several reasons.
Only by regulating affiliates and partners practicing brand bidding can you gain a clear understanding of how often these occurrences happen.

For this, Branddi offers continuous monitoring and analysis of sponsored campaign results. Our exclusive technology captures a wide range of data, which is carefully analyzed by our Brand Strategy team.

Based on this analysis, we provide personalized action plans for your team and, after alignment with your company, contact unfair competitors, partners, and affiliates with precise and targeted communications for each situation.

By providing separate evidence of affiliates involved in questionable practices, we help our clients more clearly identify when there is customer diversion.

Thus, we have already achieved impressive results for our clients, such as:

• A 70% reduction in CPC;
• An average 20% increase in organic clicks;
• Plus a 90% reduction in costs related to costly legal actions.

Protect your brand from losing valuable clicks and paying undue commissions to affiliates! Talk to our specialists and find out how we can effectively shield your brand.‍