Five days ago Nielsen reported a 10.5% year-over-year growth in the number of online video viewers — “from 127.6 million unique viewers in February 2009 to 141 million in February 2010.”
Two days ago I’ve found out about the birth of a new affiliate network — a video-centered network, founded by John Ferber, the co-founder of Advertising.com.
So, I reached out to John to interview him on this new venture of his; and here is the interview:
GP: Over the weekend I’ve learned from a friend about the Video Performance Network which was launched about 3 months ago. She was really excited about starting to work with you, saying that your stive is “to establish an ethical video affiliate network.” Could you please tell me more about VPN?
JF: The Video Performance Network is fairly self explanatory in it’s name — we focus on the video advertising format and servicing advertisers whose campaign focus is ROI based. We provide high revenue earning potential for the sites that have video placements available yet have been turned down by other video networks who deem their sites not prime candidates for Brand Advertisers who prefer to only buy on premium, known (non-UGC) content… We have more than 60 campaigns for our publishers all providing high quality and multiple format video creative solutions.
GP: The stats on the popularity of online video is simply mind-blowing. An average US Internet user watches 182 videos a month, and 82% of US Internet users are doing it. Seems that you have certainly chosen the right niche. What other information can you share with advertisers and publishers on online video, and especially the conversion rates that it tends to generate? How do video creatives compare to banners or text links?
JF: On a generalized basis, video creatives get a higher click through and overall conversion rate than any other creative format. This is primarily driven by the fact that video creatives include Sight, Sound & Motion, whereas most banner ads for instance only have sight, and maybe motion, a text link only has sight, etc… The combination of all three major components of Sight, Sound, and Motion create a more effective advertising format. We have seen click through rates that are 10-50x greater than a typical banner and conversion rates upto 10x greater through video creatives.
GP: I see that the majority of online video is currently being served through (and watched on) sites like YouTube (which alone serves 1 Billion videos a day). Do you allow affiliates (and advertisers) to use videos from YouTube, Viddler, and others, or is having a raw file a must?
JF: We are very open, we provide video creatives in every major file format as well as IAB standard. We have 15 second videos, 30 second videos, Auto-Initiated Play, Auto Initiated Sound, User Initiated Sound, etc for all of our clients campaigns. Our publishers are free to use them as they see fit, and it’s within the service guidelines of any third party services… We are creating new videos on a daily basis — many times to a publishers specifications/request. If a publisher can use our playerless videos, or even allow multiple videos to be served up in the same placement and optimized based on revenue, great! If they require a raw format such as FLV or MP4, or if they want to serve the videos themselves, we can accommodate that as well.
GP: I see that you’re using HasOffers as your affiliate tracking platform. What made you pick them from all the other platforms available on the market?
JF: We felt their feature set and overall quality of the platform and their customer service combined with cost made them the best choice for our affiliate tracking platform provider.
GP: You’re calling yourself a “CPA network”, a term that has quite a bit of negative popularity attached to it. What do you put into these words; and how else apart from being video-centered do you differ from other CPA networks out there?
JF: The A stands for Action, and we are all about that, our advertisers pay us for something. More than just an impression, whether it is a click, or a lead submit, etc. While we recognize that may have some negative connotation, we feel that we are providing a strong value to the publishers who have video advertising inventory out there but are unable to attract brand advertisers to it because of perceived quality or other types of concerns. The fact is that branded advertisers are only buying 5-10 percent of the total video advertising inventory available and as such we provide a valuable solution to the other 90 percent of the publishers out there to maximize their revenues from the fastest growing source of content online. Many of our publishers earn equal to or more on an effective CPM basis than those on a premium network.
GP: Thank you for your time, John.
Tags: affiliate network, affiliate networks, affiliate video, online video, video
The easiest way to recruit affiliates into your program is to place a link to your affiliate program signup page on your website (this should be the very first thing you do as soon as your affiliate program is launched). Simple, and very natural, isn’t it? Yet this could possibly be the most underutilized method of affiliate recruitment! Do you have a link like that on your website? Some merchants do, but you’d be surprised how many do not.
I was looking through lists of merchants yesterday evening, and was literally shocked to see how many of the established brands ignore this easy recruitment tool. Over 60% of websites I’ve looked through (I browsed through about 40 of them) lacked that affiliate program sign up link.
Here’s a brief report of the problems I’ve registered:
Nonexistent Link
- Apartments.com
- Equifax.com
- GameHouse.com
- Allstate.com
- Cars.com
- TradeMonster.com
- …and many others
Broken Link
- Real.com – Links to http://www.real.com/www.realnetworks.com/about-us/affiliate.aspx (instead of omitting the www.real.com/ part) which lands every prospective affiliate on a “Sorry, we can’t find the page you were looking for” page.
No Real Info
- TradeKing – I don’t see a word about payout, cookie life, platform used, or anything else that could attract me as an affiliate.
- Automotive.com – They just link to their CJ page which contains with no info on commission. Inviting affiliates “along for the ride earning high commissions” is not very motivating without the actual commission info.
Vague Verbiage
- LowerMyBills.com – Say that they have “two different commission structures”: (i) a “traditional” one “with multiple ways to earn huge commissions”, and (ii) a “geo-targeting solution” with “bounties of up to $70 per lead” and “minimum volume requirements” to be eligible for it. This is just too vague.
If you have an affiliate program, and do not have an easy-to-locate “Affiliate Program” link on your website, you are losing out on valuable partnerships. Fix this problem today!
Tags: affiliate recruitment, recruit affiliates, recruiting affiliates
On more than one occasion I have heard marketers and web analysts bring up the subject of “conflict” between affiliate marketing and other online marketing channels. The primary area of concern has always been the attribution of an online sale. What really helps close that sale, or land this or that prospect? Is it a paid search campaign, an organic listing, advertising through a comparison shopping website, or a banner with a compelling message, or maybe an affiliate pre-sells the customer skillfully and enticingly enough for them to place the order through?
First of all, it is important to understand that affiliate marketing is not a marketing “channel”, but rather, a way of remunerating a marketer (based on performance). Hence, affiliate marketing really exists on the crossroads of a number of online marketing channels, and works with nearly all of them.
Secondly, why does it have to be an “either.., or…” question, and not a “both.., and…” one?
Thirdly, I believe such debates to be akin to a debate between an existentialist and a utopian. The latter believes in building a perfect human society, while the former focuses on the existence of each individual, believing each person to be fully responsible for giving his own life meaning, and making the most out of it. Not widening this allegory any more than we have to, I believe that in the question of online marketing attribution it seems that either side can be argued at any time. While we should definitely strive for appropriate remuneration of every individual and channel involved in the pre-sale process, the perfectibility of online attribution is yet to be achieved. There are various solutions in the works, but not one is universally accepted yet.
So, instead of arguing, before we do have a better system that online marketers currently have, it seems sensible to follow the example of the larger brands, and strive for the widest online presence possible, reaping the fruit ripened under a bouquet of factors (and through an array of marketing channels). You can think of your search engine optimization efforts as fertilizing the soil, social media marketing and branding as the rain, while reviews, comparison shopping, paid search, coupons, loyalty marketing and other channels — be they handled with or without an affiliate marketing payment model in place — as the sun that brings about the desired outcome: that sale or lead you are ultimately seeking to land. Utilize all, measuring and improving all, and at all times.
We were looking to organize a bunch of stuff (my tools, fishing accessories, bags, cleaning supplies, etc) that has piled up in the corners of our laundry room over the past year and a half. Well, my wife was… I suggested the modular wire shelving, but she likes to keep stuff in aesthetically pleasing furniture, and so we looked all around the place, trying to find affordable, spacious, yet good-looking piece of furniture suitable for the storage needs we’ve had. She finally found this 5-shelves bookcase at Target: white, with pillar molding on each side, yet right within our price range.
I have just finished assembling it, and we are utterly pleased with the result (how it looks, and how beautifully it fits into the small room, yet being high enough to fit everything it had to fit).
As I was working on it, with my little six-year-old Princess assisting me literally on every step of the process, I couldn’t help but be once again amazed at how ingenious the idea of self-assembly furniture really is! It must be very inexpensive to manufacture (hence, affordable to buy), and it is so easy to put together that a six-year-old can do it!
End results: (i) manufacturer is happy, (ii) distributor is happy, (iii) customer is happy. Stress the “inexpensive” part through your marketing, and you’ve got an extremely successful company (implying IKEA, of course), even though, frankly, their furniture is frequently not as inexpensive and they make it sound.
The fact I was sold 8 pieces of painted wooden fiberboard (not even wood) and a pound of screws, bolts and nuts for $150, and this made me as happy as I am now is a business miracle in itself.
Today’s market, where people are looking for ways to save money, may quite possibly be the best time ever for this type of products (not only furniture, but anything else that the consumer would be able to “assemble” themselves). Are you selling something like this through your affiliate websites?
Performance Marketing Association has posted an important news earlier today. Apparently, the state of Virginia that faces a close to 4 billion budget deficit this year, has not included the affiliate tax (the bill for which was tabled by the House finance sub-committee on 24 February) in the budget bill. PMA wrote:
We just received hopeful news: the Virginia budget conferees did not include the ad tax language in the budget bill they submitted today. There is one more step to go: the governor needs to sign the bill into law. We don’t expect him to ask for the ad tax to get put back, but this isn’t over until the budget is signed.
We’ll now wait for Governor McDonnell’s signature, knowing that he rules out tax increases as a solution for Virginia’s budget shortfall, and trusting everything goes well for Virginia-based affiliates.
Tags: advertising tax, affiliate sales tax, affiliate tax, amazon tax, virginia affiliates
In the U.K. an ad agency has developed a tool that seeks to leverage the growing popularity of Social Media introducing affiliate marketing to the wider masses (essentially, anyone who is on Facebook can use it, and earn money through it).
Dan Clays of BLM Quantum that has created the tool says that the “Social Affiliate” tool “will open up affiliate marketing beyond typical channels to anyone who has a web space” as brands will benefit “by aligning with sites run by fans who are more likely to drive a sale, while site owners can generate revenues from their Facebook page or blog.”
The first brand to try the tool out will be Domino’s Pizza. They have already signed a contract with BLM Quantum to be the pioneer here. MarketingWeek.co.uk writes:
The pizza delivery firm has signed a deal with digital agency BLM Quantum, part of Arena BLM, to test a new “social affiliate” tool, a widget that combines social media and affiliate marketing.
Any consumer that uses the widget will be able to promote products or services within a framework of designated brand guidelines. They can then earn money whenever a sale is driven from their ad.
They will be able to track the sales generated through their web page on a dashboard, which has been created by BLM Quantum and runs on the Affiliate Window network reporting system. [underlining mine]
It is being claimed that this is the “world’s first” tool in its class. This may be a good PR move, but I do not believe this to be any kind of breakthrough. Widgets that have sought to monetize on Social Media’s popularity have been out there for a while already. Amazon has been offering affiliate widgets since 2007 [see here], and many blogs are using them alongside Google AdSense units. Also, a post by Linda Bustos that goes 2 years back, and talks about monetizing Facebook and MySpace profile pages, comes to mind. Additionally, some affiliate networks (and stand-alone affiliate programs) also offer merchants (and/or affiliates) capabilities of creating their own widgets. So, neither the thought of monetizing “sites run by fans”, nor the idea of doing it through widgets are new, but it will be interesting to see how this develops.
Tags: affiliate tool, affiliate widget, blog widget, social media affiliates
Some of these have been announced earlier elsewhere, while others are really fresh baked, but here are the 4 new tools I haven’t yet blogged about, and want to mention them before I get swamped with other topics for blog posts:
1) NexusAware Database — it is a brand new (and one of a kind) database created by the good folks at GTO Management for affiliates to be able to find out by state what any specific merchant’s nexus status is.
2) Affiliate Aquarium by ShareASale — a new social network for affiliate marketers. Created for ShareASale-based merchants and affiliates as a “more open communication platform” where mutual interests would facilitate a deeper level of interaction. More at ShareASale’s and AffiliateTip blogs.
3) Deeplink Generator by Buy.at — a FireFox add-on which makes deep linking as easy as a click of a button. Read more about it at Affiliates4u and AffiliateTip blogs. Also, here’s an excellent comparison of all similar tools by Keith Bond: One Click Deep Linking – Affiliate Network Tools.
4) Gift Cards Database by LinkShare — a compilation of this particular network’s advertisers, which shows publishers/affiliates which merchants pay commission on gift cards, together with info on trademark bidding and direct linking restrictions.
Have I missed a tool (or development) that has recently come out? Feel free to post about it below.
Today I have had a chance to interview Jen Goode, a Colorado-based affiliate marketer and business owner, to get her inside perspective on the Colorado Internet sales tax bill, Amazon’s termination of Colorado affiliate accounts, and other related questions.
Here is the interview:
GP: Once again, thank you for agreeing to be interviewed on the topic, Jen. I know how passionate you are about it, and I really appreciate you dedicating the time to this.
JG: Geno, thank you for the opportunity to share my perspective on this issue. Getting involved in fighting the Ad Tax in Colorado has definitely been a learning experience and whirl wind at that. Let me preface all this by saying I am by no means claiming to be an expert on this topic. I am not a political guru, nor do I know the exact thought processes or reasonings behind what Amazon or the legislators are doing — I am merely sharing my views as I see them.
GP: Jen, besides being a good friend, a talented artist, blogger, and a great affiliate marketer, you’ve been an active advocate for affiliate marketing in Colorado. Could you give us a quick overview of what has happened in Colorado as far as the so-called “Amazon tax” goes?
JG: I came home from a series of business trips in early February to hear that HB-1193, the Colorado Internet Tax bill, was on the table and being debated/discussed down at the capitol. It literally popped up overnight. Before I had returned home, there had already been a hearing in the House where there was a fantastic turn out of Colorado affiliates opposing the bill and testifying on behalf of the industry. The Colorado affiliate community began working together to contact legislators — sending letters, making calls and even visiting the House and Senate offices to speak to legislators in person. The bill then moved to the Senate Finance Committee where again the troops were rallied to show support and testify. At this point, with the help of countless people, the legislators and affiliates had worked together to drastically change the language of HB-1193 so that the affiliates were removed all together. The state government knew they would be passing the bill regardless — so the primary goal was to help protect the residents of Colorado, the Affiliates. The bill then moved on to the Senate floor — and again it passed. The bill traveled back to the House for a final vote and then on to the Governor for his signature.
The State officials were satisfied that the bill no longer endangered the livelihoods of the affiliates and the affiliates were happier that they were no longer a direct piece of the bill’s language — although many were relieved, I believe the affiliate community was still in a “wait and see” mode. The fact there was a bill at all that passed, we’d never crossed this bridge before so we didn’t know where it would lead.
GP: Monday morning (8 March, 2010) all Colorado-based affiliates were terminated from Amazon.com’s affiliate program. I’ve seen you say you’re “very tired of all the ignorant comments by press and opposition that Amazon is holding CO affiliates hostage or using CO affiliates”. What exactly is your take on all of this? What is Amazon doing, and what should Colorado affiliates do now?
JG: First I have to say that statement was made because I am tired of the media sensationalizing the story� against the “big bad Amazon”. 
I realize the media is being media, but it’s irritating. Yesterday I had the chance to speak with the Denver Post — the reporter didn’t particularly like that I was not simply agreeing with him about evil Amazon. I’m not mentioned in any of the stories the Post published today (grin). The media is reporting from very biased angles, sharing information yet not understanding the industry. When we cried for media help during the bill debates and hearings, they weren’t interested. But now that there is a big corporate America guy appearing to avoid paying taxes, it’s all over the news.
I’m also tired of legislators again pointing the finger at Amazon as being greedy and bullying. Over and over we’ve heard that “it’s just not fair” to our local businesses. In the business world, sales tax is not the biggest obstacle to becoming competitive. I don’t want to come across as disrespectful. I sympathize with the local business owners struggling to keep up with internet retailers. I can relate — I am a local business owner — I even sell in brick and mortar retail shops. But sales tax is not the differentiator and definitely not when it’s handled on a state by state case.
I feel that Amazon is purely working on their own agenda — which to many can be construed as bulldozing over everyone else. I don’t like the tactic and I am not happy that I can no longer promote Amazon products, mainly because it’s a brand everyone knows and trusts and the prices are fantastic… So from a business perspective, it’s a great merchant to work with. But Amazon has bigger issues than just Colorado’s take on Sale Tax or Use Tax or any Internet related legislation. Amazon is in a batter across the country. I don’t know the logistics and I don’t know the details. I am just looking at it from a very speculative business view — a federal tax would better serve the cause.
I had the opportunity to speak with Senator Johnston for a few minutes yesterday — he is one of our opposition. Right now those who like this bill are claiming that Amazon “simply doesn’t want to pay sales tax and is holding affiliates hostage to avoid paying taxes”. I believe this is simply not true. His argument was that Amazon is already dealing with taxes for Target. I believe the technical tax aspect for Amazon is much more complicated and involved than any of the legislators comprehend. I wish Amazon could explain it more clearly and obviously than the big bully actions they have to take. I asked Senator Johnston if he had spoken with Amazon about their view of paying sales tax and if he has asked them if they would pay a sales tax if it were a nationwide/federal mandated tax vs individual state taxes. He said “no” but did say he would contact them. Let follow up on that in a few weeks.
Right now those on our side understand the pain and the need to fix the problem, they are in the minority, their hands are tied. Those against us (even when claiming they are for us) are simply putting the blame on Amazon and won’t budge. They are claiming they are fighting for the little guy. So there isn’t much we can do in the way of expecting the law to change. We won’t be heard and we’re only be fueling the fire that Amazon is bad. The more we show how much we’ve lost or the impact because of Amazon, the worse Amazon looks and the more they want Amazon to pay.
What I think we can do, however, is let those legislators on our “team” know that we are here if they need us. Ask them how we can help. Currently the Republicans are on our side. I think a few Democrats might be as well, but Colorado is too partisan right now to really tell. But more importantly take care of our businesses and families first. Don’t wait for the government to fix the problem, be proactive and work on a solution for your own situation. If you are looking for replacement merchants and want to be extra protected, there is a new service provided by GTO Management that allows you to search for merchants based on their involvement in state tax or nexus status called Nexus Aware.
I also recommend — with any business — diversify. It’s important not to put all your eggs in one single basket (to be a bit cliche) without a plan “just in case”. If you build your business entirely around one merchant, you’re leaving yourself vulnerable to issues out of your control. Not a good idea.
Some other things affiliates can do to help:
- Educate your merchants. Let them know that the Colorado internet tax does not apply to affiliates nor nexus.
- Get to know your legislators so you can educate them on the way this industry works, most really have no comprehension of the enormity of this industry let alone how it all works.
- Build relationships within the industry so that when issues like this arise, you’re not alone trying to figure out what to do next.
GP: What do you recommend online merchants do in connection with the ever-growing number of states considering similar, or most of the time more affiliate-focused tax laws?
JG: This is a tricky question. I am not very versed in legal terms and definitely not in the position to give business nor legal advice. However, I think it is extremely important that merchants really understand these laws and how they will impact their businesses. Prior to Amazon’s termination I received notice that I was not longer eligible in two other programs… Just because I am in Colorado. Merchants need to not simply hear “ad tax passed” and have a knee-jerk reaction. In the case of Colorado, affiliates or nt, the bill applies to all online merchants — so dumping affiliates does no good. Amazon is acting out of of a bigger cause than simply affiliate nexus issues.
GP: Thank you, Jen. I certainly echo most of what you have said above. Once again, thank you for your time.
Here are my 5 questions:
Geno, thank you for the opportunity to share my perspective on this issue. Getting involved in fighting the Ad Tax in Colorado has definitely been a learning experience and whirl wind at that. Let me preface all this by saying I am by no means claiming to be an expert on this topic. I am not a politic guru nor do I know the exact thought processes or reasonings behind what Amazon or the legislators are doing � I am merely sharing my views as I see them.
- Jen, besides being a good friend, a talented artist <http://www.jgoodedesigns.com/> , and a great affiliate marketer, you’ve been an active advocate for affiliate marketing <http://www.performancemarketingassociation.com/blog/2010/02/17/shout-out-jen-goode/> in Colorado. Could you give us a quick overview of what has happened in Colorado as far as the so-called “Amazon tax” goes?
I came home from a series of business trips in early February to hear that HB-1193, the Colorado Internet Tax bill, was on the table and being debated/discussed down at the captial. It literally popped up overnight. Before I had returned home, there had already been a hearing in the House where there was a fantastic turn out of Colorado affiliates opposing the bill and testifying on behalf of the industry. The Colorado affiliates community began working together to contact legislators � sending letters, making calls and even visiting the House and Senate offices to speak to legislators in person. The bill then moved to the Senate Finance Committee where again the troops were rallied to show support and testify. At this point, with the help of countless people, the legislators and affiliates had worked together to drastically change the language of HB-1193 so that the affiliates were removed all together. The state government knew they would be passing the bill regardless � so the primary goal was to help protect the residents of Colorado, the Affiliates. The bill then moved on to the Senate floor � and again it passed. The bill traveled back to the House for a final vote and then on to the Governor for his signature.
The State officials were satisfied that the bill no longer endangered the livelihoods of the affiliates and the affiliates were happier that they were no longer a direct piece of the bill�s language � although many were relieved, I believe the affiliate community was still in a �wait and see� mode. The fact there was a bill at all that passed, we�d never crossed this bridge before so we didn�t know where it would lead.
Then Monday morning (March 8th, 2010), Amazon terminated all of the Colorado affiliates. The exact reasoning, I don�t know. I can speculate that it�s not personal, it�s not Amazon against Colorado � it�s Amazon against state mandated sales tax laws.
—————— this might be a completely different question 
� sorry to ramble ———————–
First I have to say that statement was made because I am tired of the media sensationalizing the story against the �big bad Amazon�. I realize the media is being media, but it�s irritating. Yesterday I had the chance to speak with the Denver Post � the reporter didn�t particularly like that I was not simply agreeing with him about evil Amazon. I�m not mentioned in any of the stories the Post published today (grin). The media is reporting from very biased angles, sharing information yet not understanding the industry. When we cried for media help during the bill debates and hearings, they weren�t interested. But now that there is a big corporate America guy appearing to avoid paying taxes, it�s all over the news.
I�m also tired of legislators again pointing the finger at Amazon as being greedy and bullying. Over and over we�ve heard that �it�s just not fair� to our local businesses. In the business world, sales tax is not the biggest obstacle to becoming competitive. I don�t want to come across as disrespectful. I sympathize with the local business owners struggling to keep up with internet retailers. I can relate � I am a local business owner � I even sell in brick and mortar retail shops. But sales tax is not the differentiator and definitely not when it�s handled on a state by state case.
————————————————
I feel that Amazon is purely working on their own agenda � which to many can be construed as bulldozing over everyone else. I don�t like the tactic and I am not happy that I can no longer promote Amazon products, mainly because it�s a brand everyone knows and trusts and the prices are fantastic… So from a business perspective, it�s a great merchant to work with. But Amazon has bigger issues than just Colorado�s take on sale tax or Use tax or any internet related legislation. Amazon is in a batter across the country. I don�t know the logistics and I don�t know the details. I am just looking at it from a very speculative business view � a federal tax would better serve the cause.
I had the opportunity to speak with Senator Johnston for a few minutes yesterday � he is one of our opposition. Right now those who like this bill are claiming that Amazon �simply doesn�t want to pay sales tax and is holding affiliates hostage to avoid paying taxes�. I believe this is simply not true. His argument was that Amazon is already dealing with taxes for Target. I believe the technical tax aspect for Amazon is much more complicated and involved than any of the legislators comprehend. I wish Amazon could explain it more clearly and obviously than the big bully actions they have to take. I asked Senator Johnston if he had spoken with Amazon about their view of paying sales tax and if he has asked them if they would pay a sales tax if it were a nationwide/federal mandated tax vs individual state taxes. He said �no� but did say he would contact them. Let follow up on that in a few weeks.
Right now those on our side understand the pain and the need to fix the problem, they are in the minority, their hands are tied. Those against us (even when claiming they are for us) are simply putting the blame on Amazon and won�t budge. They are claiming they are fighting for the little guy. So there isn�t much we can do in the way of expecting the law to change. We won�t be heard and we�re only be fueling the fire that Amazon is bad. The more we show how much we�ve lost or the impact because of Amazon, the worse Amazon looks and the more they want Amazon to pay.
What I think we can do, however, is let those legislators on our �team� know that we are here if they need us. Ask them how we can help. Currently the Republicans are on our side. I think a few Democrats might be as well, but Colorado is too partisan right now to really tell. But more importantly take care of our businesses and families first. Don�t wait for the government to fix the problem, be proactive and work on a solution for your own situation. If you are looking for replacement merchants and want to be extra protected, there is a new service provided by GTO Management that allows you to search for merchants based on their involvement in state tax or nexus status called Nexus Aware (http://www.nexusaware.com).
I also recommend � with any business � diversify. It�s important not to put all your eggs in one single basket (to be a bit clich�) without a plan �just in case�. If you build your business entirely around one merchant, you�re leaving yourself vulnerable to issues out of your control. Not a good idea.
Some other things affiliates can do to help:
- Educate your merchants. Let them know that the Colorado internet tax does not apply to affiliates nor nexus.
- Get to know your legislators so you can educate them on the way this industry works, most really have no comprehension of the enormity of this industry let alone how it all works.
- Build relationships within the industry so that when issues like this arise, you�re not alone trying to figure out what to do next.
3) What do you recommend online merchants do in connection with the ever-growing number of states considering similar, or most of the time more affiliate-focused tax laws?
This is a tricky question. I am not very versed in legal terms and definitely not in the position to give business nor legal advice. However, I think it is extremely important that merchants really understand these laws and how they will impact their businesses. Prior to Amazon�s termination I received notice that I was not longer eligible in two other programs… Just because I am in Colorado. Merchants need to not simply hear �ad tax passed� and have a knee-jerk reaction. In the case of Colorado, affiliates or nt, the bill applies to all online merchants � so dumping affiliates does no good. Amazon is acting out of of a bigger cause than simply affiliate nexus issues.
Once again, thanks in advance, and looking forward to your reply, my friend.
Tags: advertising tax, affiliate tax, colorado affiliates, colorado internet sales tax, internet sales tax
Brad Crooks, a Colorado-based photographer and affiliate marketer, has posted an important link on his Facebook wall — a link to Tax Foundation’s new report on the harm and failures of the affiliate/advertising tax:
I have purposely highlighted, Brook Schaaf’s comment which I echo 100%. I agree that calling it an “Amazon tax” narrows (and shifts) the focus, and does a disservice to the affiliate marketing industry, hiding the real damage done to thousands of small businesses. I was happy to see though that the Tax Foundation has actually got their conclusions right, stressing that that such “taxes are unlikely to produce revenue in the near term”, burdening interstate commerce, and harming economic growth. Also, some states have already “seen a drop in income tax collections due to the law” instead of the originally projected budget increase [more here]. They will, because in states that decide to collect the affiliate tax, merchants (sad, but true) instead of collecting the tax, often choose to terminate their business relationship with affiliates, thereby removing their liability for the tax collection. Such merchant solutions cause a great harm to thousands of local affiliate marketing businesses, negatively impacting their income.
Tags: advertising tax, affiliate tax, amazon tax, internet sales tax
Earlier today Colorado-based affiliates participating in the Amazon Associates program (Amazon’s affiliate program) have received a notice of immediate termination. Shawn Collins posted the full text of it here. Here’s an excerpt:
Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.
We and many others strongly oppose this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states…
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date… [key points underlined by me]
The law Amazon is referring to is the Colorado Internet Sales Act signed by Governor Ritter on February 25, 2010 [more here]. What surprises me is that amazon is intending “to continue to sell to Colorado residents”, but not through Colorado-bases affiliates. Upon reading Brian Strahle’s post on the matter, Melanie Seery’s post, and this article at TheDenverChannel.com, I was under an impression that this law affects all online merchants doing business with Colorado residents. However, Amazon is making it clear that they are not withdrawing from Colorado altogether, but are ceasing relationships with their Colorado affiliates only.
Is Amazon doing this to draw the Colorado government’s attention to the matter once again, and do this through affiliates (again)? It certainly seemslike it, as the above-referenced letter to Colorado-based affiliates also says:
…we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly [http://www.leg.state.co.us/Clics/CLICS2010A/csl.nsf/directory?openframeset=] and to Governor Ritter [http://www.colorado.gov/cs/Satellite/GovRitter/GOVR/1177024890452], who signed the bill.
I thought affiliates have already expressed their views loud and clear [more here], and it was because of their effort that the focus on affiliate marketers has been removed from the bill. Yes, it is true, that a law like this makes things extremely burdensome for the merchants that sell to Coloradans, but why remove the affiliates? Does a step like this resolve the issue, and make a merchant non-responsible for the compliance with the new Colorado law? Nothing in what I’m reading is pointing to this. Please correct me if I’m wrong.
Tags: amazon affiliate program, colorado affiliates, colorado internet sales tax, internet sales tax
Recent Comments