72 Kilowatts Affiliate Marketing

My overall impressions of the DMA Tax Call

Just my interpretations of opinions given by attorney George Isaacson on the call….

1.) Traditional affiliate marketing does not constitute a nexus, based on the wording of the May 8th memo. The memo, PERHAPS, is a direct response to the Amazon lawsuit in an effort to keeping the law “constitutional”.

2.) NY affiliates cannot specifically target NY customers in any form out side of web links and remain “unaffected” in the eyes of the merchant.

3.) The merchants, not the networks, are specifically charged with knowing the revenues of all performance based activity done by NY residents to NY customers.

4.) NY affiliates MAY (and this is still a sticky one) email market to NY residents providing they do not SPECIFICALLY mention a merchant by name in the email. Mentioning a merchant name would potentially qualify as “additional activity”, and therefore make them a party to the nexus definition.

All in all, I think the call was what I expected, and a good one. Here’s the downside.

Merchants still have to apply as a tax entity, then rebut that they have a nexus in NY based on having only traditional affiliates. Second, the burden of proof falls on them to prove that their affiliates are NOT engaging in “other activity”.  (UPDATED Note:  I’m still not sure exactly who has to register, and who doesn’t…  What step is between “registering” and “rebutting”, etc.)

Might still be too much responsibility for some merchants to hold on to NY affiliates at least, and perhaps their programs, at worst.

Tags: new york state internet and pay for performance tax

Merchant Responsibility and the New York Tax Law

Having just listened in to the DMA call on New York’s tax law, and how it relates to all forms of affiliate marketing, I gleaned the following:

1.)  Merchants, not the networks, are responsible for determining how much revenue their New York affiliates are generating.  While it certainly would be helpful for networks to provide that info, such as Shareasale has, the ultimate responsibility will fall on the merchant, especially since a nexus could be in fact established via other means, outside of traditional affiliate marketing as we know it.

2.)  Merchants are NOT automatically exempt or amnestied simply because their affiliates provide no other promotional means outside of traditional web links, which is now commonly believed to not present a nexus scenario.  They must register, and then rebut the fact that their affiliates have established a nexus.  This is important, in that while I believe traditional affiliate marketing falls outside of this scope, it requires merchant action to prove.  As well as having the burden of proof fall on the merchant.

3.)  Merchants should in fact specifically word their contracts to preclude New York affiliates from making overtures to New York residents in any way that falls outside of web linking.  I will have a deeper most on that in a few minutes.

Tags: merchant responsibility, new york state internet and pay for performance tax, opm responsibility

Kudos to Hips and Curves

NY Affiliates are OK

As a taxable merchant, based on their goods, Hips and Curves has chosen to read the Taxation Memo the same way I have, and indicate that virtual affiliates are not inclusive in the Nexus Syndrome.

Hats off to Hips and Curves for being progressive.

Tags: merchants we like, new york state internet and pay for performance tax

It’s not just Trademark Poaching

I’ve talked about this quite a bit over at Abestweb, but I wanted to note quickly here that we tend to use the term Trademark, especially in relation to poaching (i.e. bidding on the term when forbidden by the merchant) pretty loosely.

The real issue is bidding on merchant restricted keywords.

Since some merchants allow trademark bidding, and some don’t (in fact some allow it to select affiliates and not others), using the term Trademark Poaching is a misnomer in many cases.  I think if we’re going to discuss this topic openly, such as we have at ABW, it’s important to use the correct terms, so that everyone is on the same page.

So as we often use it, I’d suggest Trademark Poaching really means:  bidding on restricted key terms.

Tags: ethics, trademark poaching