72 Kilowatts Affiliate Marketing

Findings on Affiliate Status and the Amazon Tax

Excellent meeting this week with Mark Klein from Hodgson Russ as well as some New York affiliates, 4Checks, Growthspurt Media, and Andy Rodriguez Consulting.  Thanks to all who came.

I posted a full version, with discussion, of our findings at Abestweb.

Here’s my text from that thread:

To sum up briefly, with much more detail to follow:

1.) The June 30th TSB is the “law of the land” at the moment: NY Affiliates engaging in “safe practices: (including: email campaigns, PPC, et al NOT directly selling merchants, but rather their own sites)” are A-OK, and as such, allow merchants to SUCCESSFULLY REBUT the presumption of nexus providing the merchant takes the steps outlined in that memo, including getting the signed “promise” from affiliates, and terminating those that don’t sign it, or in good faith, follow it.

2.) We will be reaching out to Mark again to compose a companion piece for merchants, outlining their responsibilities should they decide to work with NY affiliates (which, as above, is above board.) We need to work with Hodgson Russ on the price for their time to do so.

3.) Second tier commissions are also OK, supposing that any NY affiliates in any NY Affiliates second tier also adhere to the package we are putting forth (moreso, the June 30th TSB)

4.) At greatest risk, per this reading of the law, are loyalty sites that employ (via commission, cash back, etc) NY residents to encourage other NY residents to shop through their sites. (i.e. A NY Church asking NY parishoners to buy through it’s affiliate links because of the commission that will be gained, etc)

5.) DTM PPC is not rebuttable… PPC to an affiliate site without mentioning the name of the merchant: rebuttable. Ditto for newsletters, email campaigns, etc.

6.) Incorporating in another state, or claiming dual residency, etc, is NOT rebuttable. Merchants pushing that as a solution are doing so at their own peril. Residency, as far as defining that in the case of affiliates, means that you have a place to hang a shingle here, or sleep here, or own any property here. Period. In other words, clever means of disguising your residency is a bad practice.

In the end, this is still an awful piece of legislation, that at it’s core, affects not for profits more than it affects traditional affiliates. Merchants dumping traditional affiliates failed to fully understand the spirit of the law (granted, that spirit was far better spelled out on June 30th… about 45 days too late).

Next steps for your tax fighting dollars is building that companion piece to be sent to merchants that properly defines the law and the TSB’s, as well as organizing an effort to have matching legislation to the June 24th Senate repeal drafted AND sponsored in the NY Assembly.

So I would hope the Affiliate Voice (who was directly involved), The Performance Marketing Association, and ALL interested parties would assist in getting this word out.

We’re developing a package to be hand delivered to every merchant we can find at Affiliate Summit.

Tags: affiliate summit, amazon tax, new york state internet and pay for performance tax

Getting Ready for the New York Affiliate Meeting

Just a few hours now before sitting down to dinner with a handful of New York affiliates for dinner, preparing how to approach the new wrinkles in the Amazon tax.

I’m interested to hear everyone’s views in person.

On one hand, we have the news that the NY Senate has voted to repeal the Amazon tax.  On the other, we know that it will be a long and tough road to hoe in order to get the NY Assembly to even put forth a similar bill (in order to actually repeal the tax).

I think one thing is for sure.  We can’t make an argument against NY collecting these taxes.  We know where the State is financially, and we know the detrimental effect online shopping (meaning tax free shopping for New Yorkers) has on local business.

Affiliates have been put in a lose/lose/lose position.

Our role in the buying process is of little consequence to most citizens.  Yes, they like to read candid opinions of products before they make purchases.  But many affiliate sites don’t provide that kind of value.  Secondly, we can be viewed as the primary reason New Yorker’s might have to pay tax on out of state online purchases.  Third, no one really knows who we are, what we do, or why we matter.

So no one is on our side except for a few merchants, and of course, other affiliates who are concerned by this legislation which in essence leverages a state’s local businesses to force tax collection from out of state retailers.

So I hope to come to the conclusion with the group here that our recourse is to state that the tax is poorly written, in that it hurts New York small business (the affiliates).

We’ll find out tomorrow which direction everyone wants to head.

Tags: new york state internet and pay for performance tax

The Affiliate Contract

So if the New York tax debacle (whether it’s repealed or not) has taught me anything, it’s this very important lesson:  As an affiliate, the tenuousness of the contract you sign puts you in a horrible position.

It was so easy for merchants to remove NY affiliates from their programs, especially for independent merchants that have access to address data, and later on for networked merchants who got support in determining who was who.

It’s “at will” employment at it’s finest.  A merchant you make $2000 a month with today can drop you this afternoon, at their discretion.  Sure, it might not be the wisest choice on the part of the merchant to walk away from that revenue, but let’s say for arguments sake that the merchant felt all your sales were repeat customers, and you were only providing coupon tags while the shopper was on the merchant’s check out page.

You have no perceived value to them, so out you go.  And what can you do about it?  Promote their competition?  Sure, but if you were getting traffic on a trademark search as opposed to a general product search, it might take you some time.

So the point of me even pointing this out is simple.  I’m playing around now in the merchant realm, as a form of diversification.  I can’t rely on crappy contracts to pay the mortgage anymore.  So I’ll be selling kitchen ware and foods (like Romertopf clay bakers, etc).  I’ve had a URL I’ve wanted to use for something like that for a few years now, so i decided to move on it.

I think it might be the beginning of the end for me as an affiliate.  The industry has been good to me, but not good enough.  And the current in fighting and what have you are only making it worse.

Tags: affiliate marketing

A Meaningless Repeal of the Amazon Tax?

This news sort of bled out as opposed to being screamed out, but the NY Senate did in fact appeal a goodly portion of the Amazon Tax in a bill introduced June 19th, 2008 (my birthday) and subsequently passed in a conservative controlled State Senate, 44-18.

Why wasn’t this sung from the roof tops by NY affiliates?

A few reasons.

It was snuck through the last day of the NY session, and was introduced by the rules committee, without a sponsor.  So no one except a committee was championing the idea, therefore noone was mugging for the cameras about it.

Second, there is no coupling legislation in the NY assembly, so it’s unlikely that we’ll see any movement on this thing until 2009.

I have additional info coming from Assemblywoman Susan John’s office this week, and I’ll pass it along.

 

Tags: new york state internet and pay for performance tax

Ad Disclosure for Blogging Affiliates

Looking to keep your blog above board, but still be able to promote products with sales driven content?  Easier said than done, and a real sticking point for me when I consider the ethics of blogging products simply to pass consumers through affiliate links.  And while it’s not the answer overall, I’ve found disclosurepolicy.org to be a helpful step.

Here’s their statement on why it’s important:

By disclosing the purpose of a blog, bloggers are letting readers know more about the information they’ll be reviewing. Bloggers retain the freedom to write original content, as well as select which advertisers they will represent in exchange for gifts or money. Any ethical concerns will remain where they’ve always been - on the individual level. Because it is a blogger’s freedom to select which topics will bring them payment, he/she remains responsible for his/her own reputation.

So in generating a disclosure statement, which is quick, easy, and free to do at their site, following it, and by making it easily findable on your blog, you are adding credibility to your words.  You’re letting your readers know what’s an ad, what your opinion is, and what is to the best of your knowledge, truthful.

It might seem unimportant to some affiliates, but I think it’s very important.  It’s what puts one publisher ahead of another in my book.  At the end of the day, your reputation to your advertising partners matters, and with luck and hard work, it will get you into the best programs, and hopefully make you feel better about what you do as well.

 

 

 

Tags: disclosure, ethics

New York Internet tax takes a step back?

… or a smart step ahead?

As reported initially at 5 Star, with discussion following at Abestweb, New York seemingly took a step back, and confirmed that they look at traditional affiliate marketing as possibly being the seed to rebut having a tax nexus in New York.

However, it might be just the step back they needed in order to ensure Amazon and Overstock won’t have the entire law sued into unconstitutional oblivion. Let’s look at some statements on the new Technical Services Bulletin.

TSB-M-08(3)S, New Presumption Applicable to Definition of Sales Tax Vendor, states
that the Tax Department will deem the presumption rebutted where the seller is able to establish that the only activity of its resident representatives in New York State on behalf of the seller is placing a link on the resident representatives’ Web sites to the seller’s Web site. In addition, none of the resident representatives may engage in any solicitation activity in the state targeted at potential New York State customers on behalf of the seller.

Seemingly, this backs up the statements made in the Direct Marketing Association conference call back in late May stating that traditional affiliates, in the most sparse of circumstances, did nothing to further the presumption of nexus in New York.

Now, what exceptions are listed?

Contract condition - The contract or agreement between the seller and the resident
representative provides that the resident representative is prohibited from engaging in any
solicitation activities in New York State that refer potential customers to the seller including, but not limited to: distributing flyers, coupons, newsletters and other printed promotional materials, or electronic equivalents; verbal solicitation (e.g., in-person referrals); initiating telephone calls; and sending e-mails. In addition, if the resident representative is an organization such as a club or a non-profit group, the contract or agreement must provide that the organization will maintain on its Web site information alerting its members to the prohibition against each of the solicitation activities described above

This part gets a bit tricky again. It appears to state that a merchant must contractually bind its New York affiliates to do NOTHING aside from simple web linking. No phone calls to New Yorkers, handing out flyers and coupons, etc. Specifically as well, no email marketing.

But then they throw that “or electronic equivalent” in there. I see now we should figure out what constitutes the electronic distribution of a coupon. My hopes would be that they mean by email, but that would then be double stated in the document. Can we not have RSS feeds of our deals available? In some cases, can we even control whether an RSS feed could be made available, through the methods used by scrapers?

Further, New York goes on to request:

Proof of compliance condition - Each resident representative must submit to the seller, on an
annual basis, a signed certification stating that the resident representative has not engaged in any prohibited solicitation activities in New York State, as described above, at any time during the previous year. In addition, if the resident representative is an organization, the annual
certification must also include a statement from the resident organization certifying that its Web site includes information directed at its members alerting them to the prohibition against the solicitation activities described above. Furthermore, the certification must contain a statement alerting the representative that the certification and any information submitted with it is subject to verification and audit by the Tax Department.

This may be done electronically, it goes on to say, so it might even be able to be done at the network level, if your concern is privacy.

Another hoop for merchants to jump through to hang on to their valuable New York affiliates, if in fact, we can remain as viable with the restrictions being placed on us. And, if in fact, some of the merchants that dropped us go on to re-instate NY affiliates.

Thoughts?

Tags: new york state internet and pay for performance tax