Affiliate programs are becoming more popular with online businesses as they offer them a means by which to increase their customer base without having to spend money on advertising campaigns. These types of programs allow affiliates (people who promote the products and/or services) to receive commissions from sales made by customers that were referred to them via their website.
There are many different ways in which these companies run their affiliate marketing programs and this article will look at how you can create your own affiliate agreement and also explain what each section should contain within it. This guide will show you how to make sure that all elements of the agreement are included and also help you avoid common mistakes when creating a contract.
The first step into making any type of contract is deciding what information you want to include in it. For example, if you have decided that you want to use a specific template then this must be specified. If not, then you may wish to start off with a blank page and add content later on. You could even decide that you would like to go down a particular route but change your mind halfway through writing the document so always choose something that suits your needs best.
Once you know exactly what you want there are several options available to you depending upon whether you want to pay someone else to draft up a document for you or download a readymade template. The latter option usually comes under either "free" or "paid". Free templates often come with standard clauses such as non-disclosure agreements and privacy policies which need to be taken into account before signing anything. Others will only cover general matters such as payment methods and delivery times. Paid ones generally charge anywhere between $10-$50+ per hour and can be very detailed due to the fact that they are created using specialist software. It really depends upon what you require and the amount of time you have available to devote to the project.
You can find plenty of readymade documents online and some sites will let you search based on subject matter whilst others simply provide a list of samples for you to pick from. Whichever method you choose, it is important to remember that just because something looks good doesn't necessarily mean that it is suitable for your purposes. Always check that everything has been checked over carefully before finalising your purchase. Some websites sell documents that have already been completed and signed so you don't actually get to see the whole thing until after purchasing.
Although it isn't necessary to sign anything, it is advisable to read through the entire document prior to doing so and ensure that nothing is missing out or misrepresented. Once you have gone ahead and purchased one of those prewritten contracts you may well be asked to fill in a few blanks yourself. In most cases though, you won't be required to complete any sections other than the signature block.
If you prefer to work things yourself, then you can still save yourself a lot of hassle by following the same process outlined above. All you need to do is head over to Google and perform a web search for "simple affiliate agreement template", "one-page affiliate agreement template" etc. There are quite a number of results and the majority of them will give you enough information to write your own document. Just keep in mind that every single term used in a document must be defined precisely otherwise you risk breaching copyright laws.
This is basically the title given to the document that you intend to distribute throughout various media channels in order to attract potential users. Your main objective here is to convince people that you're trustworthy and reliable and therefore worth paying attention to. Most reputable firms will ask prospective affiliates to agree to adhere to certain guidelines before being allowed access to their platform. They will usually involve rules regarding confidentiality, no illegal activities and non-competition amongst other things.
These terms and conditions are known as Terms & Conditions and are typically found near the end of a contract. They outline the exact nature of the relationship between both parties and give them the right to terminate said agreement at anytime. Whilst most affiliate agreements focus on financial compensation rather than morals, it is still possible to breach these clauses and lose your license to operate.
Simply put, an affiliate agreement is a legally binding document that details the rights and obligations of both parties involved. It is designed to protect both sides against frauds and provides clarity about the way in which payments are to be made.
It contains a wide variety of clauses and stipulations including:
- Non-Disclosure Agreements - These prevent your competitors from learning any confidential information pertaining to the product or service that you are promoting.
- Payment Methods - Specify what currency you accept and how quickly you expect to receive it.
- Delivery Times - Make clear when you'll deliver your promotional materials so that clients know when they can expect to hear back from you.
- Confidentiality - Ensure that all communications remain strictly private and that neither party reveals any part of the contract to anyone outside of the partnership.
- Termination Clause - Allow you to cancel the deal if you feel that circumstances have changed and now warranting termination of the agreement.
- Dispute Resolution - Provide a procedure for resolving disputes in case they ever arise.
As you can see, it goes beyond just providing basic information to clients. An effective affiliate agreement sets out the ground rules for the promotion of the company's products and ensures that everyone knows where they stand in relation to each other. Without proper documentation, it wouldn't be possible to prove that the company was acting ethically and honestly towards its partners. Therefore, it is vital that you ensure that all aspects are covered adequately and thoroughly.
In simple terms, an affiliate refers to someone who promotes another person's product or service for a fee. Usually these individuals will have their own blogs or social networks dedicated solely to promoting other brands and products. However, there are many reasons why affiliates might be approached to join larger organizations too. Such examples include:
- Bloggers - People who blog regularly who are paid for referring new readers to a site.
- Social Networkers - Those who actively comment on numerous other peoples' posts and build relationships with fellow bloggers.
- Content Creators - Writers who produce original articles or videos featuring the company's products.
Whilst it sounds pretty straightforward, there are often issues relating to legality surrounding these types of arrangements. For instance, if you're selling items that you haven't personally bought or owned then you cannot claim that you are affiliated with the brand. Similarly, if you are not able to provide proof of ownership of the property then you shouldn't be allowed to represent it anyway! Many companies will insist that you sign a non-disparagement clause which states that you will never speak negatively about the firm. Failure to comply with this clause may result in immediate suspension of your affiliation status.
Some countries have strict legislation concerning the sale of copyrighted material so it is imperative that you research your local laws closely. A quick glance around Wikipedia will reveal countless entries detailing the differences across various regions. As you can imagine, the law varies greatly from country to country and even region to region within a nation. Therefore, it is strongly advised that you consult an expert in your field before proceeding further.
Affiliate marketing involves online promotion of products and/or services by third party affiliates (the "Affiliates") who are compensated on a commission basis when their referrals purchase from merchants that they promote. A common example would be an online retailer offering its customers the opportunity to become affiliates themselves and earn money whenever someone signs up under them.
While it may seem like a no brainer, there are many legal issues surrounding affiliate programs. One such issue is whether or not an affiliate needs to sign any kind of contract with the merchant before becoming an affiliate. The answer depends upon your state’s laws as well as how you choose to structure your affiliate program.
In this article we will look at what kinds of contracts you might use and explain why some don't work. Then we'll walk you through the process of creating a legally enforceable affiliate program agreement.
The first thing you need to decide is whether or not you want to provide your affiliates with written documentation outlining exactly how they are supposed to refer sales to you. If so, then you also need to consider what information you wish to include in the contract. For instance, should you specify the amount of commissions you're paying out each month, the minimum threshold of sales required for payment, what types of activities constitute valid referrals etc.?
If you intend to offer verbal guidelines only, then the best way to go about this is simply to ask your affiliates to follow those rules verbally while making sure that they understand the consequences of breaking those rules.
For more formalized arrangements, you will probably want to create a written contract. There are several different ways to construct these documents - depending on the type of arrangement you've decided to make between yourself and your affiliates. One popular method is to combine the general elements of a standard employment contract with an additional set of requirements specific to affiliate relationships. This approach has been used especially frequently by companies selling digital media where they require all their affiliates to agree to a series of specific terms and conditions prior to being accepted into the network.
Another option is to create a separate document specifically devoted to describing the expectations of both parties involved. In most cases, however, you won't find too much difference between the results obtained using either of these methods.
Finally, there are a number of prewritten templates available that cover everything from basic details to complex financial calculations. Many of these documents are designed to serve as templates for a particular situation but others are intended to act as starting points for negotiation. Whichever route you choose to take, remember that your goal isn't necessarily to get every detail right, just to ensure that everyone understands the expectations of the other side without having to spend hours going back and forth over the same things again and again.
Once you know what sort of contractual obligations you'd like to place on your affiliates, you'll need to figure out what sorts of benefits you expect to receive in return. These could range from anything from discounts on advertising space to access to special offers to exclusive referral bonuses. It's important to keep in mind that you shouldn't try to force your affiliates to accept unreasonable demands because doing so will almost certainly lead to bad feelings and resentment on both sides. Instead, aim for something reasonable and balanced.
You'll notice that most of the above examples have focused mainly on monetary provisions since that's usually the biggest part of any affiliate agreement. However, there are other aspects worth considering including non-monetary rewards such as guaranteed traffic or even customer testimonials. While these aren't really necessary, they can help build goodwill among your affiliates and increase your credibility with potential new ones. Keep in mind that you wouldn't want to put too much emphasis on them though since it's entirely possible that your existing affiliates will feel slighted if you start giving away these perks for free.
This question comes down to two factors: the legality of affiliate marketing itself and the tax treatment of income earned via affiliate links.
Legality
Depending upon your country's laws, it may be illegal to operate an affiliate program involving foreign sellers unless you obtain permission from the relevant government agency beforehand. Unfortunately, obtaining permits from local authorities can often prove difficult since they tend to view internet businesses very differently than brick-and-mortar operations.
Taxation
There are three main possibilities regarding taxation:
1) You operate within the US and sell internationally. In this case, you must charge your affiliates VAT.
2) Your affiliates are located within the EU. In this case, you must charge your affiliates VAT regardless of whether you actually collect it.
3) Your affiliates are located outside the EU. Here, you still need to charge your affiliates VAT but you don't have to collect it.
Your choice of country will depend primarily upon the nature of your product(s). If they consist of physical items, you'll likely be able to avoid collecting VAT altogether by shipping directly to users in countries that don't impose VAT on consumer goods. On the other hand, if you're selling digital content, you'll generally have little control over the location of buyers. In addition, you could end up getting charged extra fees imposed by customs agents if you ship overseas.
Given these restrictions, it makes sense to opt for one of the second two options described above rather than the first one. To sum up, here are four key questions you should always bear in mind when deciding how to deal with taxes:
a) Do my affiliates live in Europe? If yes, does the EU have any trade barriers against me exporting my products to them?
b) Are my affiliates based in the United States? How much profit am I losing due to international shipping costs?
c) What is the average price per item sold throughout Europe? Is it higher than the equivalent value in the U.S.?
d) Can I afford to lose half of my profits on top of the shipping costs mentioned above?
Because the vast majority of affiliate marketers do not run their own ecommerce stores, they rely upon third party providers to handle all the technical details associated with running successful campaigns. As a result, they typically delegate some of their duties to web hosting firms and domain registrars who manage the actual servers that store their websites. Since this task falls squarely upon the shoulders of these entities, it's unlikely that they'll bother providing services to people who plan to engage in affiliate marketing.
However, a few notable exceptions exist. Companies like Google AdSense allow individuals to add advertisements to their blogs in exchange for small payments. Similarly, Amazon allows publishers to display book reviews in exchange for a fee paid by the authors. Finally, Paypal provides similar services to anyone wanting to conduct transactions via their site.
These organizations clearly see affiliate marketing as something worthy of their attention and therefore compensate their partners accordingly. In fact, it's quite easy for ordinary folks to participate in affiliate marketing provided they have enough knowledge of HTML coding and the basics of SEO.
As long as you stick to the above strategies, you should never experience problems with taxes. Even if your earnings fall short of $10,000 annually, you should easily qualify for the 15% federal tax credit offered by the IRS.
The world of internet marketing has become increasingly popular in recent years as more people turn to the web for their information needs. This means that companies are turning towards online advertising methods such as affiliate marketing - where they promote other businesses' products/services by placing links to them on websites or social media platforms. There are many different types of affiliate networks available today, from those who require affiliates to sign up with a credit card number (which may be processed via Paypal) to those who only accept referrals from existing customers. The latter type of network is referred to as an 'earned referral', whereas the former is known as an 'unpaid referral'. In this article we look at how these various types of affiliate programs differ and what should happen if either party breaches its obligations under the contract.
There are several reasons why it makes sense for both sides to enter into an affiliate agreement. First, there is potential money involved. Some programs offer commissions ranging between 1% and 5%, whilst others promise much higher percentages. If your site attracts enough traffic to earn a few hundred dollars per month then this could make all the difference between being able to afford holidays, buying new clothes or even paying off debts. Second, there is also the issue of trust. It would be very easy for someone to steal your visitors and sell them on without ever referring back to your site - but if you've signed a binding contract agreeing not to do so, then it becomes harder for anyone else to cheat you out of any profits made. Finally, some affiliate programs will give you access to valuable tools and resources, including customer lists and data about previous sales. Having said that, affiliate partnerships must be treated like any other commercial arrangement and therefore need consideration from both sides before entering into a formal contract.
One common misconception amongst first time marketers is that when signing up to an affiliate program, they automatically receive a tax return every year based upon the amount of revenue generated. However, this isn't actually true. Because most affiliate programs operate on a commission basis rather than payment for each sale, the IRS does not treat them as self-employment earnings. Therefore no 1099s are issued.
However, there is an exception to this rule - namely if the affiliate earns over $20 per week. If he meets this threshold then he will need to file his own federal income tax return and include the relevant amounts within his annual tax return.
If you're earning less than $20 per week then you won't need to fill out a W2 form. Instead, you'll simply need to provide proof that you received payments during the past 12 months and attach it to your next tax return.
As mentioned above, Amazon offers paid and unpaid opportunities for affiliates. For example, if you were to join the Amazon Associates Program and drive users to purchase items from Amazon's website using your link, then you'd be eligible for a percentage of the total value of the item sold. On the other hand, if you had set up a blog offering advice on how to use Amazon and then drove readers to buy particular items from Amazon, then you wouldn't qualify for any commission because the reader wasn't purchasing anything directly from Amazon.
It is important to note though that while Amazon uses third party sellers to help facilitate transactions, this doesn't mean that you don't have to deal with taxation issues yourself. You still receive the same benefits as if you were driving traffic to your own website and selling things yourself. As long as you keep accurate records of your earnings and expenses, you shouldn't face any problems.
This depends entirely on how you define earned income. Many people believe that affiliate marketing is considered to be an 'earning opportunity' whereby the person making the advert gains nothing apart from recognition. Whilst this may be true in some cases, in reality it is often a lot more complex.
For example, let's say your friend runs a small shop selling books online. He decides to advertise on Facebook and Google AdWords and places ads promoting his store across sites around the Internet. When someone clicks on the adverts and buys something, he pays him £10 for the click and the £10 is added to his balance sheet. Does he now have £50 worth of profit? Well, yes and no. To begin with, he didn't put any effort into getting the advertisement placed on the page, nor did he spend any extra cash to place the advert himself. So, technically speaking, he has spent £0 and yet still gained £50.
Now let's go further down the rabbit hole. Let's assume that instead of placing the ad himself, he asks another seller on eBay to run the campaign for him. Now, he spends time researching the market, setting up the account, designing the banner image etc., and then submits the final product to eBay for approval. Once approved, he gets paid £10 for the job. Would this be considered to be an earned income? Yes, because the work was done solely for the purpose of generating revenue and therefore qualifies as a trade. But, again, did he really do any of the hard work? No! All he did was ask someone else to generate the revenue for him. Is this fair? Well, it's certainly not ideal, but it's better than having no income whatsoever. And remember, although he didn't invest any additional capital, he did gain the benefit of increased exposure and brand awareness. These things aren't always immediately apparent to us humans, but they are beneficial nonetheless.
Affiliates tend to fall into three categories - high earners, mid-level earners and low earners. High earners generally refer to individuals earning over $100K per annum. Mid-level earners usually make somewhere between $30-$100K per annum, whilst lower level affiliates might be earning just a few thousand dollars per year. Each category has unique requirements and expectations, which you should carefully consider before deciding whether to pursue this line of business.
High earners expect to see significant increases in their monthly earnings after joining the programme due to the volume of traffic they bring. They also want to know exactly what kind of performance metrics exist within the system to ensure that they are receiving appropriate rewards for their efforts. They typically prefer a transparent system where they know exactly what tasks are required of them, how much they are expected to contribute financially and what reward they will receive in return.
Mid-level earners are far more flexible and open minded, expecting to find a suitable niche within the affiliate community and working closely with the owners of the company to build relationships with key decision makers. Their main aim is to secure consistent, predictable income streams that match or exceed their current spending levels. They are likely to be happy to perform menial tasks such as running promotions or providing support to fellow members. Although they may struggle to meet deadlines, they are unlikely to complain too loudly.
Low earners are probably best suited to the online environment since they already have established themselves as experts within their chosen field. Many of these individuals will have built up a large following of fans and followers who rely on them for useful tips and advice. Low earners typically enjoy doing promotional work for companies that they feel passionate about and therefore have strong opinions regarding. They rarely wish to compromise their integrity and may be reluctant to follow strict guidelines if they feel they are being asked to do something unethical.
Whatever stage you're at right now, it never hurts to start looking for ways to improve your chances of success. One way you can increase your visibility is by creating a landing page that includes a clear call to action. Another option is by writing articles and submitting them to blogs and forums related to your industry. Even if nobody reads your content, it gives you credibility amongst your peers and helps establish you as a thought leader within your field.
Finally, here's our guide to building an effective email list that converts well.
Just follow our battle-tested guidelines and rake in the profits.