8 thoughts on “Affiliate Program Agreement (Terms & Conditions) – Facts & Template”

  1. Geno,

    Huge fan of your blog–you’ve really created an incredibly valuable resource. Thank you!

    I have a question about how an affiliate programs can affect the ROI of a pay-per click campaign:

    What happens if a customer clicks on an affiliate link decides not to buy at that time, but now has the affiliate cookie, then later buys by clicking on one of your pay per click ads.

    Have you ever found that having to pay both affiliate commissions and pay per click costs on some sales at all effecting the ROI of pay per click? Does increased cookie life raise the cost of pay per click at all or is the effect too small to be worth considering.

    i.e. Say I convert 1% of pay per click traffic and my cost per keyword is $1 and my profit on the sale is $150. My cost per sale through pay per click is $100–therefore I make $50 on those customers.

    Say I extend my cookie life to attract affiliates and now I find that 1/2 of those sales also have affiliate cookies on them. I pay a $100 commission to affiliates.

    Now instead of a $50 profit I am paying out on average a $100 for PPC and $50 to affiliates—leaving my profit at 0. Is PPC now no longer profitable?

    (This could also apply to other marketing methods–such as offline– a customer buys by responding to a direct mail piece and also was referred–I pay a referral fee and the cost of the direct mailing.)

    Or am I missing something obvious?

    Thank you so much for sharing your vast knowledge–it is highly appreciated!

    —Luke

  2. Luke, first of all thank you for your kind words about the work I’m doing through my blog. I meant to create a “valuable resource”, and I’m glad you’re finding it to be such. Thank you.

    Re your question: with affiliates, it will be the same way as with any other marketing channel you may employ in the process. Say, in addition to (a) your PPC campaign and (b) your affiliate program, you also (c) have a display advertising campaign paying according to a CPM model, (d) pay a placement fee to have a banner up on a niche content site, and (e) pay a comparison shopping engine to feature your products. In an event when the end consumer uses all 5 of the above-quoted channels, and buys, you’ll pay all 5.

    Will limiting the cookie life help? It may, but not much; and neither do I recommend it (your competitor will most likely offer longer cookie life). See this post: Cookie Retention Study Reveals Important Data.

    Why not let affiliates do the PPC instead? 😉

  3. Hi Geno,
    You’re great! Reading this article and getting the how-to for a TOS saves me TIME and MONEY!!! Thank you so much for being a leader in Affiliate Marketing and a mentor to so many!

    1. You’re most welcome, Mai. Just remember (a) that not all of these points will fit your situation verbatim (so, do adjust it to fit your context), and (b) do not treat this as any sort of legal advice.

  4. Thanks – I forgot to mention that I did make adjustments (a) and gotcha on (b). Another question – what is your opinion on direct linking to a merchant’s website rather than re-direct from an affiliate’s website? From the TOS template (8.2) it would be a trademark violation so I’d appreciate a clarification.

    1. While 8.2 really does bundle DTM (direct-to-merchant) PPC ad linking with TM bidding, they are by no means one and the same (or even interconnected). Trademark violation is one thing. DTM ad linking is a completely different subject. If you Google “affiliate direct linking”, “DTM bidding” and such, you should find a lot of material on the subject. Much will depend on what you yourself (i.e. as a merchant) are doing on the PPC front.

  5. Thanks for this template. I spent a while looking into what was needed in my affiliate t’s & c’s as this is my first product. This is very clear and well set out. Thanks again.

  6. Thankyou for the template!

    ‘15.3. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to the conflicts of laws and principles thereof.’

    What is the reason for NY being used here? Is it were the Merchant’s business was based? Is it where SaS is based?

    Kind Regards,
    Karl

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