Having a solid affiliate program contract is vital to any affiliate marketing partnership. It’s important to lay out what you are expecting from your partners and what they expect from you. It’s also important to do it clearly. Any misread situations could be disastrous down the line.
What is an affiliate agreement?
An affiliate agreement is a referral or marketing program created so that the affiliate receives payments from the affiliate manager or “merchant company” running the marketing campaign. It outlines that the affiliate’s actions will drive traffic to the merchant company’s website for compensation.
The two parties will agree to a written contract outlining the ins and outs of the agreement between the affiliate and the merchant company. It covers basic terms of business, including subsequent sales and commission and assures that the two parties will conduct themselves professionally and fairly during the campaign.
Why do you need a contract?
No matter how friendly you are with your affiliate partners, or how much time and effort you’ve spent fostering a welcoming environment, you are still running a business. An affiliate program is still a business agreement that needs both partners to uphold their end of the agreed terms. It is required to protect your business and theirs and will guarantee a productive and profitable relationship between the affiliate manager and their affiliates.
An affiliate agreement will be needed whenever you are looking to enter an affiliate marketing partnership, be that for the first time or with a partner you’ve worked with before. A new project or campaign will require a new contract.
To put it simply, you should offer an affiliate agreement when you want to enter into a marketing or referral program where the affiliate will receive payments from the company running the scheme, to allow an affiliate to promote your products or businesses on a non-exclusive basis, or when one party of the contract is expected to direct significant traffic and sales to the site of the other party.
What should be in an affiliate agreement?
There are a few elements that should be included in the affiliate agreement to cover all necessary bases.
It should cover all products and services to be marketed. Clearly outline what is being marketed and give a brief outline of how it should be marketed. Don’t go into detail, since affiliate partners will appreciate some breathing room to work creatively, but a brief outline will point them in the right direction. Outline where any affiliate links should be placed, how they should be maintained, or any other directions for content. Like would you prefer an Instagram story or post?
Your contract should also include a limited license to the content you are looking to promote, outline any warranties, liability, and confidentiality agreements. It should also offer the option of technical support if needed, and your approval to use any promotional material you can provide.
Payment for the affiliate should be clearly stated. How much the affiliate will be paid, what they need to do to gain payment, how they will be paid, and in what time limit they should expect their payment. Typically, the commission offered is based on the performance of the affiliate and how much traffic they have managed to direct to the site.
The commission is specifically based on a fee for each converted lead. A converted lead is a user that has originated from the affiliate and linked to the merchant’s site: “converting” viewers from the affiliate directly to your site.
The payment can be based on a mutually agreed percentage of the fee, like 10% of all sales from the lead, or a set amount based on price per lead. For the latter, it doesn’t matter if that user bought anything or led to another action, all that matters is that the affiliate’s job was fulfilled: driving users to your site.
It would be a good idea to run your contract past a lawyer to gain advice on how to draft the more bespoke terms of your affiliate agreement. You should also seek advice on any special data protection requirements to make sure that you are not breaching GDPR.
An affiliate agreement will protect you and the affiliate should something go wrong in the process. If you have a disagreement down the line your contract, if written clearly and correctly, should settle the matter. However, it should prevent problems if your affiliate knows well what is expected of them and what is expected of you. It will also offer an air of professionalism, which can be a red flag to affiliates who are often being offered new brand deals constantly.
For more information on managing your affiliate programs, you can take a look at our AffiliateINSIDER guides. Or for a more personalised experience, book a free call with a member of our team for more assistance in this area.