Affiliate marketing is booming in India, but not all growth comes from ethical practices. A concerning trend has emerged where brand managers secretly allow (sometimes ignore) unauthorized ads and brand bidding by affiliates to hit short-term targets. This covert tactic might boost immediate sales numbers, but it carries serious risks for brands.
What is Brand Bidding?
Brand bidding refers to affiliates bidding on a company’s branded keywords (like the company’s name) in search ads. In a legitimate affiliate program, this is often prohibited, as brands want to control their keyword space. However, some brand managers allow certain publishers/affiliates to run ads on their brand keywords, ensuring quick traffic and sales.
It appears like normal search advertising – a user searches for Brand X, sees an ad, clicks, and buys the product. But if that ad was placed by an affiliate (with the brand manager’s approval), the sale gets attributed to the affiliate, who earns a commission. The brand essentially pays a commission for a customer who likely intended to come directly. This tactic misrepresents affiliate performance and cannibalizes organic traffic.
Why This Hurts Brands
Allowing affiliates to bid on brand keywords may deliver a short-term boost, but the negative impacts on the brand are significant:
- Increased Advertising Costs: Affiliate competition drives up the CPC for branded keywords, making marketing more expensive.
- Loss of Revenue: Affiliates intercept organic traffic, forcing brands to pay commissions unnecessarily.
- Brand Dilution & Customer Confusion: Unethical affiliates use misleading ad copy, damaging consumer trust.
- Distorted Performance Metrics: Inflated affiliate sales numbers make it harder to measure true marketing effectiveness.
The Growth of Affiliate Marketing in India
Affiliate marketing is a growing industry in India, with brands allocating 10-12% of their digital marketing budget to affiliate partnerships. The sector was valued at $331 million in 2023 and is expected to exceed $420 million by 2025.
However, unethical practices like brand bidding are becoming more common. A Statista report estimates that 30% of global affiliate marketing losses stem from fraud, including brand infringement, costing over $1.4 billion annually. The situation in India reflects this global trend, with increasing reports of affiliate-driven ad fraud.
Real-World Cases
- A Major Shoe Brand in India found that 22% of all brand searches displayed ads placed by affiliates and coupon sites. This meant the company was paying commissions for traffic that should have been organic.
- Foxtale, a skincare brand, saw a 25-30% increase in CPC on branded keywords due to third-party bidding. Once they shut down unauthorized ads, their CPC dropped by 21%, saving on ad spend.
- Brand hijacking in the e-commerce space is another growing concern. Reports indicate that competitors and affiliate marketers alike are bidding on popular brand keywords to divert traffic, creating misleading search results that often cause consumers to land on unofficial sites.
Expert Opinion: Rajat Singh, Founder of CouponZania
“Unethical brand bidding not only inflates marketing costs but also weakens a brand’s credibility. At CouponZania.com, we strictly adhere to ethical affiliate marketing practices. Brands must take a proactive stance against unauthorized ads and ensure their affiliate programs align with long-term brand goals. Rather, we advice brands to not allow ads to anyone other than their marketing team”
How to Prevent Unethical Brand Bidding
- Enforce Clear Policies: Define strict rules prohibiting brand bidding in affiliate agreements.
- Use Monitoring Tools: Platforms like BrandVerity and mFilterIt help detect unauthorized ads.
- Apply Google’s Trademark Protection: Prevent unauthorized use of brand names in ad copy.
- Enforce Penalties: Immediately remove non-compliant affiliates and deny commissions.
- Educate Affiliates: Ensure they understand brand guidelines and compliance rules.
- Audit Your Affiliate Program Regularly: Companies should periodically review the activities of their affiliates to identify any unethical practices.
- Negative Keyword Strategy: Add branded terms as negative keywords in affiliate campaigns to prevent them from appearing in search ads.
Legal Considerations in India
Recent legal rulings indicate that bidding on trademarked keywords is not automatically illegal unless the ad is misleading. The Delhi High Court’s ruling in MakeMyTrip vs. Booking.com (2023) clarified that bidding on a competitor’s keywords does not violate trademark law unless the advertisement confuses consumers.
However, misleading affiliate ads can fall under false advertising regulations set by the Advertising Standards Council of India (ASCI) and the Central Consumer Protection Authority (CCPA). Brands should actively report deceptive ads to these authorities when violations occur.
The Role of Business Owners and Leaders
Business leaders must take an active role in ensuring ethical affiliate marketing. Key actions include:
- Prioritizing Long-Term Brand Integrity over short-term performance numbers.
- Empowering Compliance Teams to monitor affiliate activities.
- Investing in Affiliate Fraud Detection Tools to prevent unethical practices.
- Setting Balanced KPIs that measure genuine marketing effectiveness.
- Creating Internal Whistleblower Channels to allow employees to report unethical practices anonymously.
- Collaborating with Legal Teams to ensure compliance with digital advertising and trademark laws.
Conclusion
India’s affiliate marketing sector has immense potential, but unethical practices like brand bidding threaten its sustainability. Brands that prioritize ethical partnerships and invest in monitoring tools will not only save costs but also build stronger consumer trust.
By taking a stand against these deceptive tactics, businesses can create a healthier, more transparent affiliate ecosystem – one where performance is based on genuine value creation, not backdoor tactics.
Sources:
- Kantar & IAMAI Report – Growth of Affiliate Marketing in India
- mFilterIt – Affiliate Fraud and Brand Bidding Concerns
- Statista – Affiliate Marketing Fraud Statistics
- Delhi High Court Judgment – MakeMyTrip vs Booking.com (2023)
- BrandVerity – Why Affiliate Brand Bidding Hurts Brands
