Effect on Ecommerce Merchants #bitly

Effect on Ecommerce Merchants #bitly

19.Oct.2021

You may be wondering how affiliate marketing affects ecommerce sites and whether or not it should be considered a commissionable activity.

Ecommerce merchants, take note: If you're looking for an answer to the question of whether or not you should pay affiliates for sales driven by fully disclosed affiliate marketing activities, consider this your starting point.

 

This article was inspired by a recent thread on Quora.com regarding the effects of affiliate marketing on ecommerce merchants and if this is considered a commissionable activity (see infographic below).

According to Charles Ngo - "a lot" of merchants sell via referral programs and/or affiliate efforts and these can constitute as direct conversions (translation: commissionable occurrences).

However, just because you create a process that enables affiliates to sell your product, does not automatically mean that you are required to pay out commissions for these sales.

The key here is completely disclosing the affiliate relationship and ensuring that all terms of this agreement can be very easily understood by both parties (e.g., merchant and consumer).

This will help ease tensions between merchants and affiliates as well as provide a clear set of guidelines on how they will work together effectively and successfully whether they build a long term relationship or not.

As per David Rodnitzky - "To comply with FTC rules, any advertisement containing one should also include the following: 'We are paid advertisers on www...com.' They can put it in their ad banner." This way, there is no question as to how this relationship is working.

But as Roger Dooley - "If you're selling through affiliates or other types of sales partners, it's good practice to disclose that fact up front and educate your customers about how you work with those partners."

It will really help to ensure that affiliate efforts do not work against your company as well as provide clarity to consumers who may be unaware how certain relationships function between brands and affiliates. This way, any potential misconceptions can be addressed swiftly and even prevent their perpetuation in the first place!

According to Logan Lenz - "I believe there is a difference between someone acting as an affiliate and someone acting as a consultant". He advises that consultants should retain the right accept fees outside of the referral program and that this should be disclosed in the terms and conditions.

This can help companies who may have a strict policy against paid affiliate relationships but want to utilize consultants for their marketing efforts - whether they are affiliated with your company or not.

Also, take note of the fact that Logan says "I believe there is a difference". That means there really isn't written law (yet) regarding how these factors must be handled. So if you find yourself in a place where you feel like your hand is forced into opening up an affiliate program due to potential revenue loss, make sure to clearly disclose any affiliation between both parties and provide clear guidelines on how this relationship works.

An example: "We offer an affiliate program and would love for you to participate. Here are the terms and conditions for this program. If you have any other questions, please reach out to us at xyz@newsite.com."

Being open with customers about how your business works via affiliate relationships will not only keep your company safe from fines but also protect your consumers from potential scams or misunderstandings regarding how their purchases work! This can go a long way in keeping both parties happy - regardless of whether they are buying through an affiliate or directly from you.

So if you deem it necessary to engage affiliates for your ecommerce store, take the proper time to lay down key guidelines and rules that everyone involved needs to follow before they do so.

This may be a good idea regardless as there seems to be some debate as to whether or not a paid affiliate relationship is actually a commissionable event.

However, just because you create a process that enables affiliates to sell your product, does not automatically mean that you are required to pay out commissions for these sales.

The key here is completely disclosing the affiliate relationship and ensuring that all terms of this agreement can be very easily understood by both parties (e.g., merchant and consumer). This will help ease tensions between merchants and affiliates as well as provide a clear set of guidelines on how they work together effectively and successfully - whether they build a long term relationship or not.

As per David Rodnitzky – "To comply with FTC rules, any advertisement containing one should also include the following: 'We are paid by the following companies mentioned in this article/advertisement.'"

Being open about any affiliate relationships can help prevent misconceptions between parties as well as ensure that consumers know how they are working together.

However, if you decide to create an affiliate relationship with someone outside of your company (e.g., consultant), it is important to disclose this information and provide guidelines for engagement between both parties up front. This can help protect your business from potential fines as well as provide a clear set of expectations regarding how these two should work together effectively and successfully - whether they build a long term relationship or not.