The Amazing Success of Trademarks

Conversion rates for trademark terms are high ‚ extremely high. In the direct response television (DRTV) advertising industry, for example, an estimated 20% of consumers who watch the commercial for an "As Seen on TV" product and type the product name into a search engine click the web site listing that appears. Then, an estimated 20% of those web site visitors buy the product. That's impressive! REVShare Corporation, a cost-per-acquisition TV media broker, achieved these conversion rates for their top DRTV product clients whose web sites REVShare managed. These conversion rates held true until the DRTV advertisers' wholesalers or affiliates jumped into the search engine space.

Almost instantly, per-click fees spiked and conversion rates plummeted for As Seen on TV product advertisers, once their affiliates or wholesalers bought the trademark terms. DRTV product manufacturers who sold products to only a handful of wholesalers suddenly found themselves competing with dozens of each wholesaler's affiliates who then promoted a lower retail price. Sales and valuable customer contact data were redirected to wholesalers instead of the parent company (see Figure 23.1 as an example of competition from wholesalers and affiliates).

Figure 23.1. In a search for their product line "aerobed" on Google, the Aero Products International web site (www.thinkaero.com) doesn't appear as a top sponsored link or organic ranking for their own brand. The positions instead are occupied by third-party companies that are promoting the products at discounted prices.

In an effort to educate the direct response industry, REVShare has created an information site on search engine marketing channel conflict at http://www.DRTVReport.com, and offers a free Cannibalization Calculator so DRTV product advertisers can see how much money they could be making on the search engines (Figure 23.2).

Figure 23.2. On REVShare's DRTVReport site, TV product advertisers can type in their product name and retail price to see their estimated gross sales from search engines.

The conversion rates for each industry and every company vary. Nevertheless, REVShare's research reveals that same-channel competition by companies' own marketing partners caused significant profit loss. And the heat is getting turned up. More online and offline partners are discovering the lucrative results of trademark advertising. Marketing partners aren't just affiliates; they include:

• Wholesalers

• Retail stores

• Catalog companies

• Marketing agencies

• Comparison shopping engines

• Online auction sites

Unfortunately, once you sell a product, you can't control how it's marketed. This means wholesalers or retail stores can buy your trademarks and then redirect sales to their sites by promoting discounted prices. You have greater control over your marketing partners such as affiliates or shopping engines because these companies market your product but refer the sales to you. Normally, this group uses tracking URLs that you control and can subsequently deactivate.

You can ask your marketing partners to sign a trademark protection agreement, which restricts them from marketing your trademarks on the search engines. Be prepared for kicking, screaming, and whining. Your current partners who are already generating huge amounts of cash will be most unhappy . Unfortunately, if wholesalers or retail outlets won't stop this practice, then your only option is to discontinue selling products to them. But this distribution channel could represent too much revenue for you to pull their accounts over this issue.

Most affiliate or other marketing partnerships, on the other hand, can be terminated immediately for noncompliance with your search engine marketing policies. This assumes you want to enforce one. Do you? As I mentioned, affiliates are an incredibly powerful sales force. They certainly fueled the growth of Amazon.com, whose network consists of more than 900,000 affiliates, and is growing.

Regardless of where your search engine marketing or affiliate programs are currently, it's time to design a strategy that best supports your business.