Brand bidding (also called trademark bidding or brand-term PPC) is when an affiliate runs paid-search ads on a brand's name or trademarked keywords, such as "BrandName" or "BrandName promo code", and sends the clicks through an affiliate link. The affiliate then earns commission on customers who were already searching for the brand and would likely have bought anyway.
How it works
A user searches for the brand, sees the affiliate's ad above the brand's own listing, clicks and lands on the brand site carrying the affiliate's cookie. Under last-click attribution, the affiliate gets the sale. The brand pays twice: it competes against its own partner in the auction for its branded keywords, and it pays commission on a customer it already had.
Ad platforms do not necessarily prevent this. Google, for example, does not restrict trademarks used as keywords, although a trademark owner can file a complaint that restricts their use in ad text, under Google's trademark policy. That is why the rules are normally set in the affiliate agreement rather than left to the search engine.
Example
Example clause: "Affiliate may not bid on [Brand] or any misspelling or variation of it, alone or combined with other terms, on any search engine, and may not use [Brand] in ad text or display URLs. Commissions from such traffic will be reversed, and Brand may terminate this Agreement."
Some programs allow exceptions, for instance letting approved partners bid on brand terms in specific geos, or paying a reduced CPA for brand-term traffic.
Why it matters
For brands, uncontrolled brand bidding raises acquisition costs and pays affiliates for demand the brand created itself. For affiliates, a brand-bidding violation is a common reason for reversed commissions and closed accounts. Written rules, a list of protected terms shared with partners and regular checks of branded search results keep both sides on the same page. Sample wording is in the affiliate agreement template.
Related: affiliate agreement, last-click attribution, commission reversal.