An affiliate agreement is a contract between an affiliate and a business (merchant) that outlines the terms of their partnership. It’s a foundational document that determines how much the affiliate earns, what’s expected of them, and the specific rules both parties must follow. If you’re an affiliate or considering becoming one, understanding these agreements is crucial for protecting your interests and ensuring a clear, profitable relationship.
Here’s what you need to know about affiliate agreements:
1. Commission Structure
At the heart of every affiliate agreement is the commission structure. This specifies how much you’ll earn per sale, lead, or action. Commissions can vary widely depending on the industry, the product, and the payment model (Pay Per Sale, Pay Per Lead, etc.).
Key takeaway: Know exactly how and when you’ll be paid. Look for details on payout thresholds, frequency (monthly, quarterly), and methods (bank transfer, PayPal).
2. Cookie Duration
Cookies track your referral traffic, and cookie duration refers to how long the referral is valid. A longer cookie duration (e.g., 30 days) gives you a better chance of earning commissions, as it allows time for the customer to make a purchase.
Key takeaway: Check the cookie duration. A short window (e.g., 24 hours) limits your earning potential.
3. Promotional Guidelines
The agreement will usually include rules on how you’re allowed to promote the merchant’s products. This could involve restrictions on where you can place affiliate links, whether you can bid on branded keywords, or use certain types of advertising.
Key takeaway: Understand what’s allowed and what isn’t. Violating these terms can result in termination from the program or loss of earnings.
4. Termination Clauses
Affiliate agreements often include clauses detailing how and why the partnership can be ended. This could be due to inactivity, policy violations, or the merchant discontinuing the program.
Key takeaway: Review the termination conditions to avoid surprises. Make sure you’re aware of any obligations you need to meet to stay active in the program.
5. Intellectual Property and Brand Use
Merchants usually have strict rules about how their brand, logos, and trademarks can be used. The affiliate agreement will outline what’s allowed in your promotions to protect their brand image.
Key takeaway: Follow the branding rules carefully. Misusing brand assets can lead to penalties or legal action.
6. Compliance with Laws
Affiliate agreements will often reference compliance with various laws and regulations, such as FTC disclosure rules, which require affiliates to clearly disclose their relationship with the merchant.
Key takeaway: Make sure your promotional materials are legally compliant. Failure to disclose your affiliate relationship could lead to fines or removal from the program.
Final Thoughts
An affiliate agreement is more than just paperwork—it’s a critical document that defines how you’ll earn money and what’s expected of you as an affiliate. By understanding these key elements, you can enter affiliate partnerships with confidence, knowing that you’re protecting your interests and maximizing your earning potential.
Action step: Before signing any affiliate agreement, read it carefully, ask questions if anything is unclear, and ensure you understand the terms that directly impact your income and performance.