72 Kilowatts Internet Marketing

How weak is the affiliate/merchant contract?

Mel at NYAffiliateVoice.com asked me to clarify why I say that the “tenuousness” of the affiliate merchant contract is one of the reasons I broadened my horizons, and stepped outside of affiliate marketing as being my main source of income… Here’s my thinking, for better or worse….

The way I view the affiliate contract is two fold. While on one hand it provides affiliates an easy out in dumping merchants they for whatever reason choose not to do business with, it also provides the merchant the same luxury. And fair is fair I suppose.

At the same time, if we look at the reasons merchants often dump affiliates, it’s for reasons outside of the affiliates control. Those can include:

Lack of sales. This isn’t horrible as it’s not immediately revenue impacting for the affiliate. Though they could have many hours of content and link building invested, so it stings nonetheless.

Too many repeat Customers. This one tends to get hidden a bit, and not necessarily listed as the termination reason. But we all know it happens. In this case, the affiliate is being punished for what arguably is a lack of proper customer retention on the merchant’s part. Some discussion has been given to paying lower commissions on repeat business, and that might not be a bad idea. It’s certainly better than terminating affiliates.

Out Ranking the Merchant in the Search Engine Results Pages. Horrifying. We’ve seen this mentioned at Abestweb before. This can be a big revenue impact for the affiliate, as they may well be getting more traffic than the merchant in some key searches. Why punish the affiliate for having some serious SEO skills, or at worst, some seriously good Google Luck?

Breaking Unwritten Terms of Service. If a merchant is unclear, or doesn’t indicate at all, what their trademark policy (or any other term of service, for that matter), you can’t blame the affiliate for breaking them. But many merchants do, and unjust terminations follow.

Not understanding the NY Amazon Tax. I’m not going to say too much about this one here. But as a merchant, if you’re not COMPLETELY familiar with this legislation, it’s implications, and its workarounds, read more on my blog. Please.

It should be noted that a small merchant could be hurt by losing a strong affiliate just as badly, but I would submit that a valuable merchant partner SHOULD already have a strong enough web presence that losing some key affiliates wouldn’t shatter their total revenue stream. (It certainly can impact market share though, if a major affiliate leaves you for a competitor).

So it can hurt both ways. There are more small affiliates that are affected daily by this, however, so I stand by my belief that it’s a worse situation for affiliates.

Also of note is the fact that an affiliate’s contract with a network is just as fragile. I think history, however, bears out that MOST network terminations of affiliates are well justified, so I don’t see this as being as big of an issue.

So what can be done about it? I’d like to start compiling a list of items affiliates would like added to their contracts with merchants. While I wouldn’t want to see a contract that makes affiliate marketing too much of a “job” in the reporting sense, I would like to see some certainty, especially between merchants and affiliates that have strong histories together.

Don’t forget, Affiliate managers and OPM’s come and go. What works for you today may well not work for you tommorow. It’s time to get more than a handshake.

PLEASE comment below.