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.

Tags: affiliate marketing, affiliate marketing networks, amazon tax, merchant responsibility

Big Shout Out to Eastern Mountain Sports

I’d like to personally thank everyone at Eastern Mountain Sports for recognizing an opportunity, and taking advantage of it:

We would like to welcome all NY affiliates to join the Eastern Mountain Sports affiliate program on Performics. 

Eastern Mountain Sports has always been a leader in the industry, especially in the Northeast. We currently have brick and mortar stores across NY and we also collect taxes on NY sales on our website, so the new law should have no effect on our affiliates and we encourage you to join.

Read the rest of the info at Abestweb here.

That’s forward thinking.  Since EMS already has a nexus in New York based on their retail presence, they are picking up where REI.com dumped outdoors affiliates late yesterday.  This is a strong move, and is to be commended.

Further, EMS actually let it’s intentions be known.  As a NY affiliate myself, I dread the Zero Hour emails I’m going to get next week, advising me I’m being dumped.  Regardless of each merchants understanding of the new New York Tax law, they should be communicating with their New York affiliates, and very few are.

Thank you Eastern Mountain Sports.  And to Downtown ECommerce Partners, who brilliantly run their affiliate program

 

 

Tags: merchant responsibility, merchants we like, 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