72 Kilowatts Internet Marketing

Who does the new New York Tax Law really effect?

We represent a serious representation for Amazon and other online merchants, and as such, Amazon et al are obliged to collect taxes on all purchases made by NYS residents, regardless if an affiliate was involved in the transaction.  That’s what our friends in Albany, NY, are telling us.

Let’s set this up.

Yes, New York needs to collect taxes in some format in order to make up for internet purchases. At the same time, New York needs to do it in a way that will not rob from Peter to pay Paul. Especially since recent evidence suggests that Peter isn’t going to have any money left to rob.

Here’s the set up:

Amazon says it is advertising when it compensates New York-based websites for posting links that refer customers to Amazon.com. New York says it’s soliciting business. The distinction means all the difference in the world for sales taxes, for Amazon, and possibly even print media, television and radio.

Amazon.com sued New York State earlier this month, challenging a newly enacted law that has serious implications for online advertisements. In April, the New York legislature passed a law designed to increase sales tax revenue from Internet sales. The law is known as the “Amazon tax” because of the way it broadens the sales tax law to apply to Amazon’s Associates Program, thereby achieving the necessary legal nexus for New York to force Amazon (and other Internet retailers) to collect and remit taxes on all sales to NY residents.

You can read the full article here: New York’s Ambitious Sales Tax law

So that’s the current state of affairs.

Let’s examine in detail what Braden Cox did an excellent job of explaining in the article, from an affiliate standpoint.

While I might think pretty highly of myself, it’s unlikely that I, or the other New York based affiliates are what are exclusively allowing Amazon to do commerce here. They are simply too big, and in fact, a household name. That would seem to put this issue well outside of the Quill decision. For Amazon.

But is that true only in certain cases?

What about smaller programs, such as those for merchants you might not have ever heard of unless they had an affiliate program? An argument could be made that New Yorkers could find them and purchase from them through PPC initiatives directly presented by the merchant, or social networks, or natural SERPs. At the same time, it’s also safe to say that affiliate sales will make up a larger percentage of their sales. Potentially, given the right affiliates are involved. (In many cases, this still isn’t true, as power affiliates don’t often get involved with very small merchants for a myriad of reasons.)

That’s where I question the magical $10,000 that New York has deemed as the indicator of Nexus. Given the criteria that the TechLiberation article points out for determining when Nexus occurs, it would seem that a flat figure is an unfair way of determining what merchants have a Nexus here, and which don’t.

However, if you start to look at what might be a good indicator of Nexus, i.e. what percentage of your annual revenues come from affiliates, it starts to get even scarier. There’s enough merchants that manipulate these totals already for other purposes; we don’t need to add fuel to the fire.

I’ll be writing about this much more, as it so directly impacts me. In the meantime, here’s some other folks that have touched on it today:

Shawn Collins, Overstock Drops NY Affiliates

Brad Linder

TechCrunch

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

Overstock.com Drops New York Affiliates

Just received word that Overstock.com is dropping all New York affiliates. my opinion on that in a few minutes…

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

The Big 3 Issues with Affiliate Marketing

I started out in affiliate marketing in May of 2003.  I had a website, hosted by Yahoo (!!!), and the Yahoo SiteBuilder. (!!!!!!)

Since that time, I’ve learned some code, discovered Wordpress and Joomla, and can get my way around a SQL database, at least in the PhpMyAdmin environment.  Also in that time, I’ve identified the 3 biggest issues that are affecting affiliate marketing, as I see it.

1.)  The “What I do is my own business and no one elses” attitude from affiliates.

What’s great about being an affiliate is the freedom.  You can work when you want, on what you want, and to a degree, how you want.  And that’s great.  It’s a dream career really, if you can pull it off.  With that though comes a grave responsibility that I think a lot of affiliates fail to see.  The lack of transparency, on the affiliate side, is beginning to cause issues.  And what they think they are hiding from other affiliates, in many cases, they are hiding from smaller merchants without the funding and staffing to watch every click that comes through.  That will be bad for the industry, long term.  Which is Number 2.

2.)  Higher Cost of Entry than it had been.

You might think I’m crazy for saying that, given how easily you can set up a program at places like Shareasale or other smaller networks.

But that’s just a fee.  The real costs are now monitoring your protected keywords, should you choose to have them, keeping the true poachers out, and watching all of the other bad actors that “slip” into the networks.  Getting an OPM isn’t cheap, and it takes some serious commitment, knowing that your program might not gain real traction for months.  You can easily be $20,000 or $50,000 into an OPM alone before you see the affiliates really driving you qualified traffic.

That doesn’t even take into account other promotional costs.

And I can hear some affiliates scoffing now, saying, “Well, if they don’t have $50k+ to throw at a marketing effort, are they serious about doing it?”

My response to that would be:  Then why do places like Shareasale exist?

Wasn’t it to lower the cost of entry, so that more companies could get involved?  That brings us to number 3.

3.)  The Networks

On paper, the idea of an affiliate network is a great thing.  Consolidated payments, a layer of protection between affiliates and merchants (and merchants and affiliates), and a way to manage your links, etc.

I’m not sure though that they were meant to simply be a conduit, were they?  Is that how they bill themselves to prospective affiliates and merchants?  (”Yeah, we’re just a pipeline between the two sides”).

All of the networks that you can name off the top of your head are now mature enough as organizations to be going the extra step in keeping affiliate marketing a high ROI proposition for a merchant, and protecting their affiliates from bad merchant partners as well.

I’ll get more into what I think they should be doing in the coming weeks.

So that’s the Big 3 as I see it.  I had a hard time keeping OPMs out of the list, as I believe in some cases we’re being sold a bill of goods there as well.  But they didn’t make the list because there are still a lot of good ones.

Tags: affiliate marketing, affiliate networks, new affiliate programs, trademark poaching