Terms and Conditions to Include in Your Affiliate Agreement

In the last decade, affiliate marketing has taken the advertising world by storm, shaping most digital markets and becoming one of the most popular marketing strategies.

Affiliate marketing is the process by which companies outsource their sales and marketing by relying on affiliates who earn commissions to advertise their products.

These affiliates choose to promote their chosen products, often by going for the products or services they really enjoy. They then earn a portion of the profits from each sale they make.

As a result, affiliate marketers are essentially ‘productive consumers’, meaning consumers have become providers.

The term ‘productive consumer’ was coined by technologist and futurist Alvin Toffer in the 1980s. Despite being forty years old, the idea of ​​generating consumers (now known as affiliate marketers) is as relevant as it has ever been.

Today, companies like Slack have emerged as excellent affiliate marketing platforms where businesses and contributors (also known as affiliates) can work collaboratively to build profitable communities around specific brands and products.

It’s important to note that in our current digital market dominated by social media marketing, most influencers have become mainstream affiliate marketers in the industry, representing brands and companies on popular platforms like Instagram, Twitch, and YouTube.

Why do you need ‘Terms and Conditions’ Agreements?

However, the digitization of most markets and the rapid evolution of marketing strategies have brought with them a number of challenges regarding the legal and moral implications of selling products online.

Today, ‘terms and conditions’ deals are everywhere, from online shopping sites to subscription-based services, social media and entertainment platforms.

These legally binding agreements are necessary to help businesses establish a legal bond between customers and employees (or affiliates). While most affiliates are ethical business partners who want to add value to companies, unethical or illegal practices do happen.

Affiliate marketing mistakes can seriously damage a company’s brand image. This is why things like email verification are so vital (especially since email marketing has gotten its way).

Fortunately, we’ve compiled some ‘must-have’ items that any serious and solid terms and conditions affiliate agreement should include.

obvious things

First, let’s start with things that can be underestimated but sometimes overlooked. It goes without saying, but not everyone is ready to be an affiliate marketer. Therefore, it is important to educate newcomers on affiliate marketing.

When trying to promote something, those who represent the brand should know everything about the product or service they are trying to sell. Information such as prices, features or targets should take precedence.

Additionally, affiliates should promote products that are in stock. It may sound silly, but big companies like Sony have made this mistake before. During the launch of PS5, Sony’s long-awaited console, the company faced major stock issues, although most of the affiliates continued to promote the product.

To avoid such mistakes, which can have dire consequences for your brand image, it’s important to invest in Amazon inventory software that allows you to keep affiliates in the loop about the availability of your product.

Having legally sound members is even more important than these basic details. Any serious affiliate agreement should specify rules that comply with government regulations, especially those regarding FTC (Federal Trade Commission) compliance.

To be FTC compliant, the agreement must state that your affiliates have received compensation and that any such promotion is carried out in a transparent manner.

For example, if an affiliate is trying to promote a CPaaS product by calling it “the best virtual phone number provider on the market,” they should indicate that the content was promoted by that company.

Otherwise, this disclosure would be dishonest and would later violate FTC regulations. In such cases, the brand, not the affiliate, is held responsible for such practices.

It’s also important to protect your company from intellectual property claims. To do this, the agreement must include a clause regarding copyrights, patents, trademarks or any proprietary and sensitive information that the affiliate is not allowed to use.

Likewise, it’s important to ensure that your affiliates respect copyrighted content when promoting your products or services. If an affiliate violates copyright rules, the legal consequences can affect your company.

This rule applies to any company, no matter how big or small. Big brands like Apple, Microsoft and Samsung have been suing each other over copyright claims for over a decade.

About other subscriptions

Most affiliate marketers choose to join more than one affiliate program as it opens the door to monetization from several sources. But sometimes this is not recommended, especially if they want to work for direct competitors.

While there is legal authority for companies to restrict the number of affiliate programs a marketer can join, it’s important to be clear about their freedom to participate in competing programs. Affiliates are free to promote any company, but trying to sell products directly from competitors at the same time can hurt both brands.

What’s better? Engaging directly with your competitors can be a smart move for your business. By implementing a competitive collaborative marketing strategy, you can navigate the wave of success of your competitors and keep a close eye on their marketing and products.

This allows you to take control of your relationship with your competitors without leaving it in the hands of an affiliate marketer. Remember, sometimes a rising tide lifts all the boats, or in other words, if your opponents are successful, you will too.

Partnering with competitors can promote your brand and increase your market position, especially in highly competitive industries where a single business controls the majority of offer and demand. Fortunately, cross-selling (getting other businesses to promote your company) can help you turn into more leads and sell services to existing customers.

Keeping the contract up to date

All terms and conditions agreements must include an update clause that gives both parties an opportunity to renegotiate previous contractual clauses. Additionally, it is important that you forward any changes to the agreement to your affiliate partners.

Generally, an annual review of contracts is recommended. Companies like yours can handle employee pay, payroll, records, etc. You can automate this update process through the implementation of HR software that allows you to manage and edit

If you want to learn more about how these tools can help you, check out this HR software guide.

Using coupons and discounts

Coupons and discounts work better in highly competitive digital marketplaces where companies sell items like beauty products or clothing. Additionally, e-commerce businesses that offer services like cloud telephony for business can take advantage as this industry is so crowded right now.

To get the most out of your coupon affiliate marketing strategies, it’s important to select a handpicked group of high-quality affiliates to work with. Whether or not to accept coupon affiliates is an important choice, but either way, it’s important to make this clear in your affiliate program agreement.

Content Approval

There are many ways affiliates can promote your products and services. But you’ll want to ensure that their promotions fit into your overall marketing strategy and don’t have a negative impact on other channels. In other words, you don’t want to be in competition with your own affiliates.

This most commonly occurs in paid advertising, where affiliates run paid advertising campaigns using their own referral links in Google Ads, Facebook or elsewhere.

While this brings leads, it comes at a price. Affiliates will compete directly with you to reach potential customers, which increases their CPC (cost-per-click) costs. Besides, you won’t be reaching new audiences like you would through a blog or word of mouth, instead the affiliate will advertise to the audience your business has already reached.

Include guidelines on how and where affiliates can promote and share referral links. This could be to completely ban any promotions through paid advertising channels or limit paid advertising, such as not bidding against branded keywords.

Regarding the business structure of the subsidiary

When a potential affiliate wishes to participate in a program or promote a brand, they usually choose between two different types of business structures: sole proprietorship or limited liability company.

sole proprietorship

In essence, sole proprietorship means that the legal name of the affiliate is legally the name of their business. However, they may also choose to run their promotional business under another name.

This is often referred to as a ‘fictitious business name’. This practice appears as ‘do business as’ (DBA) in most legally binding documents. To operate as a DBA, most countries require affiliates to submit a formal application.

Limited company

Commonly known as an LLC, this business structure offers affiliates the chance to operate as a separate entity from their legal name. In contrast, limited liability companies allow affiliates not to be held personally liable for business mishaps.

Offering bonus commissions

Bonus commissions are used as an incentive to encourage affiliates to work extra hard. This technique rewards affiliates who sell more products than they are contractually obliged to.

As a result, affiliates tend to put in a little more effort to go the extra mile, which directly translates to more sales.

Such commissions are very common. However, it’s important to point out the three main factors that make bonuses so popular.

Amounts: This is a fixed bonus commission or a percentage-based bonus commission.

Time: The time it takes for affiliates to reach the target destination. Companies can choose to set their own specific timeframes, but it is recommended to go for a fixed timeframe, such as a calendar month or week.

Bonus tiers: Different bonus offers given when affiliates achieve different goals. Adjusting levels or tiers will help differentiate bonuses. If an affiliate sells five more items than expected, they should not be rewarded as much as another affiliate selling an extra 25 items.

The next time you draft a partnership agreement, put our advice into practice today to make sure you dot your Is’s and beat your T’s.

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