There was an interesting debate about allowing affiliates to bid on branded keywords. Check out the linkedin discussion on branded affiliate terms. Most of the people there opted towards not allowing bidding on branded kewyords. I strongly disagree... and below is my reply:
"As someone with experience in the affiliate marketing field as an affiliate, I would offer two reasons why you would want to allow your affiliates to bid on your brand name, and one argument against the "affiliate branding decreases my companies ROI" logic.
Why you would want to allow your affiliates to bid on your brand name:
1) As of right now, your competitors are allowed to bid on your brand name terms... unless you have your name trademarked - which most companies don't. That being said, you'd rather have your affiliates bidding on your keywords rather than your competitors.
I can tell you that this is true, as some of the best terms I've targeted - both as an affiliate, and as a PPC manager have been brand keywords for competitors products. The searcher is obviously already ready to buy - thanks to your competitors teaching them, and now all you have to do is show them their alternatives.
2) Sometimes, the people that I've worked with have allowed their big affiliates to leach off of their brand simply to give them the stimulus to drive more traffic. This obviously only works if you are going to make an exception for your biggest affiliates.
As far as the thought that the affiliates are leaching away sales... they actually are not. They are paying for the traffic, and in exchange they are making getting the affiliate commission. The only thing you are "losing" is the difference between your affiliate payout and your in-house cost per lead on your branded key terms.
As far as losing brand equity, I (biased-ly) think if they ultimately come to your site, and close the sale, you are not losing much brand equity... affiliates can sometimes add value, for example, if they do reviews on your site / product.
I am lucky to have had the experience as an affiliate as I move towards creating my own affiliate programs. It really changes my perspective, and I will be giving my own affiliates alot of room on branded keywords."