Direct Linking The only time you should let affiliates direct link is when you have no search marketing campaign of your own.
Brand Terms If any other companies are buying your brand terms then allow affiliates to buy them…if not then don’t. It is okay to place bidding caps on brand terms but not too low or your competitors will take top spots. ***Work with a small trusted group of affiliates if you allow this.
Bidding Rules Do not place bid caps on affiliates for any terms other than your brand.
Competitors Bidding on competitors terms is okay for affiliates as long as they don’t mislead the customer. Your ads should not be confused with ads for the competitor.
Coupons Make sure you have your own special offers page then PPC and SEO the hell out of it. Borrow a page from the affiliates playbook and capture more customers directly.
Post The Rules Make sure you clearly write out how affiliates can and cannot use search marketing to promote you. Post guidelines everywhere.
Advertisers approach search arbitrage in different ways 2010 Affiliate Benchmarks Study
Monitor License a tool to monitor your critical keywords to gather intelligence and police affiliates. We use TheSearchMonitor.com but others exist. Test it out for free with code: PeterOms *not an affiliate link, I promise
Search + Vertical If you have an affiliate who can build out vertical websites around your category and is an expert in PPC and SEO then you have found the Holy Grail!