Google Affiliate Network Summit 2011

The Google Affiliate Network Client Summit of 2011 is this upcoming July. The dates and times are:

Monday, July 18th
3:00pm–6:00pm: Caucus
7:00pm–10:00pm: Reception

Tuesday, July 19th
9:00am—5:00pm: Summit

You can learn more about the summit, the speakers, the times and some travel information here at the official Google GAN Summit page.

From the GAN Summit page:

We all share a common interest: advancing the affiliate channel and affiliate program growth. That common goal, shared by advertisers, publishers, and Google, is what makes affiliate marketing unique. Our interests are aligned, so let’s meet in Chicago in July to focus on results.

GAN SummitThe speakers and agenda look very interesting. On the first day there is a reception at the Museum of Science and Industry. There are speakers and sessions about product engineering, display advertising, affiliate marketing, the Google affiliate network and more.

Will Amazon Drop 10,000 California Affiliates

We wrote about North Carolina and Amazon, the sales tax issue that led to Amazon dropping all the affiliates in North Carolina. Now California is raising the same issue. To learn more about your particular state and the North Carolina issue see our most recent post about the Performance Marketing Association.

Amazon said, through their Public Policy VP Paul Misener in a letter in February that Amazon would do just that. If necessary Amazon would end their affiliate relationship with all the Amazon affiliates in California estimate at around 10,000. This is an interesting issue that should be watched closely, particularly what your state is doing as other affiliate programs may follow California.

Become Aware of State Tax Issues and Affiliates

Finally an association for affiliate marketers. First of all the nomenclature is now Performance Marketing as opposed to Affiliate Marketing. As a Performance Marketer you will find the Performance Marketing Association (PMA) site to be extremely useful and interesting. You can also join as an individual or a company. There are member groups for more granular issues. According to their site here are some statistics, and I quote:

Performance Marketing is a multi-billion dollar industry that continues to grow year-over-year. There are more than 200,000 affiliate publishers and over 5,000 advertisers in the performance marketing space.

What got my attention was an e-mail about the fact that some new state laws are written in ways that may encourage Advertisers to remove Performance Marketers from their programs based on the state the Performance Marketer lives in. They have created google groups so you can stay up to date in the following states:

  • Arizona
  • Arkansas
  • Massachusetts
  • Minnesota
  • New Mexico
  • Texas

These issues could affect you depending on what state you are in. The most interesting issue now is one of Nexus and state tax, I had been following the Amazon and North Carolina issue that prompted Amazon to drop all the performance that lived in North Carolina. Fascinating. Take a look at the PMA and what they have to offer, follow the bills in your state and be proactive. Here are the articles about the situation between Amazon and North Carolina, a good read to let you understand what could happen to you in your state.


North Carolina and Amazon Update

Affiliates Canned
I first wrote about the sales tax issue and North Carolina’s suit against Amazon in March 2010 entitled Law Dictates Behavior and Affiliates Get the Ax. While I do find the issue of sales tax and nexus interesting (as I am an attorney, I just no longer practice) what I found most interesting was how law dictates behavior and Amazons reaction to end their relationship with all affiliates that are based in the state of North Carolina. I am not saying what they did was right or wrong, but I wrote that post in a humorous tone to point out that the state of North Carolina may have obtained a result they did not intend. That result was to end revenue for some of their citizens.

North Carolina Wants Back Sales Tax
The second article was the following month of April, 2010 about the North Carolina verse Amazon Sales Tax Issue in April of 2010, here is an update. While I do find the issue of sales tax interesting, what I found most interesting was how law dictates behavior

2011 Update
The issue is about sales tax. Essentially Amazon did not require those in North Carolina who bought from Amazon, from 2003 to present, to pay sales tax. An article in Tech Journal South lays out the issue very well here. A quote from their article explains the nexus issue and why legally they may or may not have to require North Carolina residents to pay sales tax.

Much of the dispute revolves around the legal concept of “nexus.” Out of state retailers cannot be forced to collect sales taxes unless the retailers have a physical presence in the state, such as stores, warehouses, or other facilities. In 2009, North Carolina passed a law that said Amazon was required to collect sales taxes because it had affiliates in the state, thus creating nexus. Amazon, in response, discharged its affiliates in the state.

Personally, whether sales tax is required or not, I found the North Carolina law that they intended to use to obtain revenue had such a huge back fire and resulted in hurting some of their own citizens. Always think before you act.

Affiliate Summit West in Las Vegas

Las Vegas in January
For many of you, depending on where you live, a couple warm days in January is not a bad idea. The next Affiliate Summit is in Las Vegas, their 2011 Affiliate Summit West. From January 9th to the 11th. You can register, see the agenda and more here at their site.

the Wynn
affiliates in vegasWhat better hotel than the Wynn, incredible choice. You will love the accommodations. They have various passes for the event: Diamond, Platinum and Gold.

Affiliate Rules Keep Changing

If you have ever been an affiliate of a company you know that there are always certain rules that each company has. For example the most common one has to do with their Trademarks, domain names, and how they are or are not used by you in search engine marketing.

Business and Affiliate Dynamic
I find the dynamic between a company, their affiliate program, and affiliates fascinating. In some cases the relationship is very open and in others it seems adversarial. Obviously businesses would prefer to have their service and product sales increase without affiliates or marketing. However let’s think about what the affiliate does for a business

Why Use an Affiliate?
In the 90′s the term CPA (Cost Per Action) was just taking off as were affiliate programs. I recall selling email marketing campaigns as a CPM (Cost Per Thousand) and always discussing CPA deals with advertisers as well as a hybrid. Why does an advertiser, or company, want a CPA? Because they only pay if there is a transaction, it is the perfect marketing model. Typically the marketing arm of the company has to market (be creative, create campaigns etc.) and spend money to do it, obviously without knowing the end result. They may or may not earn back their marketing dollars with a profit. Therefore if they could have someone else do all the work and only pay them when there is a sale then it’s a no brainer.

Who Has Control?
In the case of control you can compare a company and an affiliate marketer with an employee and a contractor. With an employee they have benefits, there are certain tax consequences and responsibilities of the company, different laws that apply etc., that differ completely with contractors. Businesses would prefer contractors they pay a flat hourly or monthly rate to, do not have to provide benefits and can say at the drop of a hat “do not come back tomorrow”.

That is not the case with employees, so why don’t all businesses just hire individuals as contractors? The issue is control (for the most part), if the business tells the person what to do, how to do it, when to do it, where to do it, and with company owned resources etc., then the person is considered an employee. If the business says to the person please do X task by Y date, and the individual does it however they prefer on their own equipment then typically they would rightfully be considered a contractor. Why make the comparison?

The reason I make the comparison is because the same issue comes up with affiliate marketing. The issue is control. I would have lengthy discussions with businesses who wanted to pay only on a successful transaction for their email marketing about who controls the wording and the creative. If the business wants to pay a CPM then they can dictate the campaign wording, creative, etc. But if the business tells you that you are fully responsible by only being paid upon a transaction, then it is a slippery slope to dictate how you do it. If they are not paying and the success of the campaign, ie whether or not you make any money, is riding on how the campaign is executed then it should be your call.

Social Media Affiliate Rules
So I call your attention to a recent email from a business about their affiliate marketing program and what you can and cannot do. This was not directed to me but sent to all affiliates. Here is a portion of an email sent about new rules the business has for affiliates when marketing online. I have taken out the company name and this is not the entire email (my disclaimer).

Please read this announcement carefully as it describes changes to the XYZ Affiliate Policy in regards to Social Media. Please be advised that XYZ’s Affiliate Policy no longer allows affiliates to use offer-based language in affiliate social media marketing campaigns. See examples of what’s prohibited below. Social Media Marketing is defined as a promotional technique using social medium to deliver advertisements on networks and websites with social interaction. Social Media Networks include Twitter, Facebook, Youtube, MySpace, Flickr, and other websites that allow interaction between a marketer and the general public.

What are examples of tweets that are not permitted?

* XYZ coupon – 20% Off
* XYZ coupon – $10 Off
* XYZ 30 Day Trial
* Check out XYZ coupons

What are suggested tweets for promoting XYZ coupons?

* Read reviews on XYZ {URL}
* I use XYZ for my business and love their service. {URL}
* Learn more how XYZ can help grow your business. {URL}

Caution
I would caution a company like this about their ability to have an affiliate program be as affective as it can be when tying the hands of their affiliate marketers. However the great news is that all affiliates can leave any affiliate program at any time. Also, there are thousands of affiliate programs out there as every business would love you to send them customers while only paying you if that customer buys something, so pick another if you like ;-)


Law Dictates Behavior and Affiliates Get the Ax

I do not know the originator of this quote, nor my law professor that I first heard this from – but it stuck with me.


“Law Dictates Behavior”

My disclaimer: I cannot confirm that any of the events below actually took place, I have made up these fictitious events and sprinkled them with sarcasm.

Consider the Consequences
It can be very frustrating when decisions are made without fully considering the consequences. There are always multiple potential outcomes and not always the ones you may want. This is particularly frustrating when legislation is considered or enacted. The knee jerk reaction to regulate everything is debatable by many. Sometimes communication with the parties involved before enacting new legislation can help to counteract negative consequences. This does not just apply to legislation, even with your own business you need to always consider the consequences or you leave yourself open to unfortunate ramifications.

Oops I Didn’t Think That Would Happen
Unfortunately as I read the stories of Amazon and affiliates in various states I have to wonder if someone said “I bet if we do X then Y will happen, oops looks like we were wrong and Z happened instead.”. What I am referring to are the various states that decided to enact legislation to have online retailers collect sales tax: Colorado, Rhode Island and North Carolina. Here is what they decided to do and say.

You Have Affiliates – Give Us Sales Tax!
In a nut shell these states said to themselves we want sales tax collected by an out of state online retailer for items bought by residents of our state if the resident got to the online site through a resident affiliate. Therefore the online retailer has a presence in our state through affiliates. They then smiled and said “Cool, we just solved our budget problem, instead of spending less we can just increase taxes and generate more revenue – we are sooo smart.”, after which there were high-fives all around.

Then Amazon, which generates phenominal revenue and has thousands, if not tens of thousands of affiliates, said “Wow, that is a huge operational cost and we do not want to take it on so we will just cut ties with all those affiliates in your state. Let’s just do a quick database query for all affiliates where state==Colorado, Rhode Island, and North Carolina. Okay now a quick email that explains they are no longer an affiliate, bye. [click send]. There, done, problem solved.”

So states like Colorado thought if they added sales tax due to affiliates in the state (X) then they would increase revenue through the sales tax from those like Amazon (Y), but did not consider (Z) that Amazon would just let those affiliates go. It seems that the law did indeed dictate behavior, just not the behavior the law makers intended. I for one hope the lawmakers at least had a discussion with Amazon and others prior to enacting such a law, otherwise they played loose with their own tax paying residents sources of income.

What Will Other States Do?
Now it will be very interesting to watch and see what other states do. What is most interesting to me is that fact that all of those that were just fired as affiliates due to their state laws may just leave that state. Now the states have two unintended consequences, they did not obtain the additional revenue and they lost a group of tax paying citizens – oops.

Conclusion
Much like you may incorporate in a state that is not your own due to the laws, and case law, that exists for corporate entities, you may now need to choose your state of domicile based on state e-commerce laws. Fascinating.

Here is the associated press article, and you can find others with regard to North Carolina and Rhode Island online as well.


FTC, Affiliates and Endorsement Guidelines

Let me first say I am not being paid by the FTC to write this article.

Now for the fun stuff. The FTC has updated their guidelines and of particular interest are the Endorsement Guidelines. These are being applied to bloggers. They have created a series of short videos to answer the basic questions, all the videos are found here.

There is not much clarity in the guidelines other than to say the bar has been raised with respect to disclosure. Exactly when you must disclose, how and in what form is a little gray. They do provide examples however questions still remain around affiliate marketing.

If you only have time to watch one of the videos take a look at this one entitled: “What do the Endorsement Guides mean for bloggers?” By the way you may want to read them all, whether you are an advertiser or a blogger as civil fines can be as high as $11,000 per violation.




An excellent discussion can also be found here at the Reve News blog.

Community Sites

godaddy_promo_codeOne of my favorite sites is FatWallet. They just seem to get it right. Their business model is great and the benefit to the user is excellent. Most importantly the company is motivated to make the customers happy. A customer will find great deals and cash back deals which in some cases provide a revenue stream for the company.

So instead of a site advertising things you may not want and making advertising revenue, this site appears to benefit when and only when you have benefited and are happy as most are affiliate deals or commission splits. FatWallet has been around for quite a while and is very popular.

I also believe they did a great job with their forums. As a business you could either build a staff and create editorial which may be considered somewhat biased by your audience or you can let the audience create the content. By allowing the deals to be found and discussed by their audience the benefit is twofold. First you do not have to utilize your staff and payroll to create content and secondly the visitors to the site will more than likely assume the content is less biased.

I do not mean to over simplify their site or service, they have many fantastic features. I, as a business owner, can appreciate the genius in aligning your goals with the goals of your customers so everyone benefits and have a good portion of content generated for free by your audience.

They have the best deals around, check them out.

eBay Webinar Explaining Quality Click Pricing Affiliate Model

Meeting about eBay
As I am sure you already know, eBay has changed it’s affiliate model and will be having a meeting about it. Last year they took the affiliate program in house. Now this year that changed the method of calculating how you, as an affiliate, get paid. They call it their quality click pricing model. There is a seminar you may be interested in. Here is the information as they emailed it out.

Quality Click Pricing Discussion – Live Webinar Tuesday 9/1

We encourage you to join us to hear first hand more details on how you can interpret the preview reports now available, as well as information on how to optimize your promotions to maximize your Quality Click Pricing EPC. Here is the link to login and the dial-in number to attend the event with Steve, Will, and the rest of the eBay Partner Network Team:

Attendee Direct URL is here

Alternate Web Login

Conference Site URL is here

Meeting ID: Sep01

Attendee Entry Code: Attend

U.S. Attendee Phone: US/Canada Dial-in #: (877) 252-8217

Int’l/Local Dial-In #: (660) 422-4755

Conference ID: 26202103