Affiliate Agreement

What is an affiliate agreement?

An affiliate agreement is a document used by a merchant and an affiliate marketer to outline the terms of the affiliate marketing and promoting the merchant's goods and services in exchange for commission or another type of compensation.

Affiliate agreements are very common nowadays, as many individuals who choose to work online can make significant income from affiliate relationships, depending on the reach of their websites or social media. Many merchants contract with influencers and other individuals with significant reach and following on large social media platforms to promote their products or services. When the company receives clicks or purchases from the affiliate's individualized links, the affiliate then receives a set fee, either per purchase or per click, or a percentage of the sale made.

What is the difference between an affiliate agreement and a marketing agreement?

Though both documents are used to arrange a business relationship involving promotion and sales, they are used for different types of marketing strategies and relationships. In an affiliate agreement, the affiliate uses a unique tracking link to promote the merchant's company. They are then paid a commission based on the number of clicks or sales made through their unique link. This is most commonly used for digital marketing on platforms such as blogs or social media.

In a marketing agreement, a marketer creates a full on marketing campaign for a client. This typically much more comprehensive than affiliate marketing and includes multiple marketing strategies, such as print ads, commercials, or radio ads. The marketer is then paid a fee, typically an hourly rate or a project-based fee, for their services.

Is it mandatory to have an affiliate agreement?

No, it is not mandatory to have an affiliate agreement. Especially for smaller merchants, they may create more informal arrangements to have friends, family, or local influencers spread word of their business. However, for larger merchants who want to create an affiliate marketing program with multiple affiliates, having a standard affiliate agreement can be crucial in the success of the program.

What is an "affiliate link"?

An affiliate link is a unique URL that is generated and assigned to an individual affiliate. By using an affiliate link, the merchant can track which clicks and sales come from the affiliate's promotional efforts.

What are the prerequisites of an affiliate agreement?

Typically, an affiliate agreement is one part of an affiliate marketing program arranged by a merchant. Therefore, they should also have a process where they select who they want to work as their affiliates. This process may include a formal application or researching potential affiliates to get a sense of their social media following and reach.

Who is involved in an affiliate agreement?

Although an affiliate agreement involves both the merchant and the affiliate, the affiliate usually does not get a say in the specific terms of the agreement. The affiliate simply signs up for the affiliate marketing program being offered by the merchant, and there is no bargaining over the agreement. The merchant is the party responsible for laying out all the terms of the affiliate marketing agreement, and then potential affiliates can decide if they would like to opt into those terms.

Who cannot enter into an affiliate agreement?

Generally, people under the age of 18 years old, known as minors, may not enter into affiliate agreements or other contracts. If they would like to enter into a contract, it is typically necessary for the merchant to get the consent of their parents or legal guardians.

What should be done once the affiliate agreement is finished?

When the affiliate agreement is written and all the relevant information has been included, the merchant should post the agreement on the company website as a complete document. They may then begin the process of recruiting affiliates into their affiliate marketing program. These agreements are not signed, they are simply posted up on the company's website for the affiliate to read and agree to before signing up for the affiliate program.

What must an affiliate agreement include?

An affiliate agreement must include at least the following mandatory clauses:

• Company: The affiliate agreement outlines the merchant that is creating an affiliate marketing program. It includes information such as the name of the company, its web address, and contact information.
• Payment calculations: The affiliate agreement describes in detail whow the affiliate will get paid for their promotion of the merchant. These payments can happen according to clicks, sales, or some combination of both. The agreement also outlines the amount the affiliate will be paid for each of these things, whether it be per click, per sale, or a percentage of total sales made.
• Payouts: The affiliate agreement describes when and how the affiliate is eligible for a payout from the merchant. There may be time requirements or certain sale thresholds that must be met before payout.

In addition to the above mandatory information, the following information may also be included:

• Age restrictions: The merchant creating the affiliate marketing agreement may elect to have a minimum age that individuals must be to join the affiliate program.

What laws are applicable to affiliate agreements?

Affiliate Agreements in the United States are subject to both federal laws and specific state laws, which cover general contract principles like formation and mutual understanding. The Federal Trade Commission, or FTC, in the United States, oversees affiliate disclosures.

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