Affiliate Program Pitfalls
SUMMARY: Here's a short list of pitfalls you should be
considering when you weigh up whether to join a particular
affiliate program. Most of the answers will be buried somewhere
in the "Affiliate Agreement" or "Terms and Conditions", the
legal document that you have to sign when joining an affiliate
program. Since it is usually written in language that only a
lawyer could truly love, make a cup of coffee before you start
reading, and keep an aspirin at the ready...
commission-based affiliate programs pay a certain percentage of
the revenue generated by your site visitors. However, the
meaning of "revenue" can vary wildly depending on which site's
affiliate program you're looking at.
majority of affiliate programs calculate commissions on
the gross value of a sale, that is, the amount of money
the site will receive in payment for the goods or services being
ordered. This almost always excludes credit-card or other
payment processing surcharges, and delivery, packing,
gift-wrapping and handling charges.
affiliate programs apply a much narrower definition of
"revenue". For example, some only calculate commissions
on the "profit margin" in a sale. As many Hollywood
players have found to their cost, it's very easy to massage the
bottom line figures until "profits" melt away like snow in the
sunshine. Unless there is an incredibly compelling reason to
join, you're better off avoiding this kind of affiliate
of revenue definition is often buried deep in the
Affiliate Program Agreement you will have to commit to
when joining the program. Always read the Agreement very
carefully, and be on the lookout for odd clauses that could trip
you up later.
understandable from a business perspective, you need to be aware
of the fact that affiliate programs only pay for sales that have
completed and where the customer has chosen to keep the goods.
If a customer returns the product, your commission is likely to
be cancelled, and you may even be billed for the outstanding
commission if you do not have any earned affiliate credit on
record with the company.
occur when a customer returns the product to a company.
Chargebacks occur when a customer disputes a credit card charge
with their credit card provider, and has the money refunded to
their account. You need to keep a close watch on what percentage
of orders get charged back or refunded, and be on the lookout
for suspicious patterns of behaviour. For instance, if the
orders that get charged back are always the
highest ticket orders, it's possible that the affiliate
program manager is feeding you false chargeback statistics in
order to minimize the commission payable to you.
charge backs and returns can also be an indicator of other
problems. For example, if most customers are choosing to cancel
a service during an initial 30-day money-back guarantee period,
it's likely that the service is being misrepresented or is
otherwise of very poor quality, and is not what customers had
been led to expect. Again, if the pattern you're seeing is an
initially large number of commissionable orders, most of which
are later reversed, there's clearly a problem somewhere along
You need to
be clear what you will earn commission on, and - more important
yet - what products or services are excluded from an affiliate
program. Some merchants only offer commission on "selected"
products or services, so if a visitor from your site buys
anything that's not included in this category, you're not going
to get paid for it!
affiliate programs go as far as only paying you a commission on
the specific item you link to, or even only if the visitor fills
in the payment details immediately without clicking on any other
link out of the order page! In this case, even if your intrepid
visitor goes on to buy 30 kinds of widget from The Widget Store,
you'd only get paid if they happen to buy the Purple
Citrus-flavoured Widget that your site links to. Amazon.com
operates on a hybrid model, whereby affiliates get paid more
when their visitors purchase the specific products being linked
to, but where (most) other sales also get rewarded, albeit at a
lower commission rate.
affiliate programs pay a commission on all products purchased
during a given site visit, or even on all the items sold during
a given time period starting at the time of the visit (for
instance, 30 days). Affiliate programs that continue to reward
affiliates for purchases made by visitors after their initial
session almost always rely on cookies to track such purchases.
make use of a tracking technology known as "cookies" to keep
track of a visitor's progress across the site. A "cookie" is a
small piece of data that is stored automatically by your web
browser. Inside the cookie, the site will have encoded a certain
amount of information about the customer, such as a unique
tracking code or address details.
with this approach is that cookies can be refused, discarded and
eaten. Some paranoid web surfers, worried about their online
privacy, systematically refuse to accept cookies from web sites
they visit. In this case, their purchases will not reward you in
any way since the site has no way to track them. Cookies will
also be discarded when the storage area for cookies fills up
(depending on your web browser, the storage area has space for
up to a few hundred cookies). Again, if you are participating in
a program where you are supposed to receive income over an
extended period of time, you may well find yourself empty handed
if the cookie expires and gets overwritten by a new one.
Finally, certain system maintenance programs also "clean" your
computer by deleting cookies.
Unfortunately there is very little you can do about this
problem, except be aware that it exists, and that it may well
have an impact on your results.
Unrealistic trial periods
affiliate program relies on cookies on an ongoing basis to track
conversions from an extended free trial (e.g. 30 days free use
of an email service or hosting provider), there are many chances
for the cookie to get deleted or overwritten before the free
triallers convert to paid users. If the cookie is gone, or the
user signs up from a different computer from the one that the
cookie was stored on, you're going to miss out on a commission.
On the other hand, some affiliate programs will associate free
trial accounts with the unique affiliate code of the affiliate
that sent the visitor over, meaning that in theory all
conversions should be successfully tracked.
thresholds, roll-overs and deductions
affiliate programs operate on a monthly or quarterly basis. That
is to say, at the end of each month or quarter, they will
calculate the commission payable to each affiliate based on the
amount of business generated by the affiliate during the period,
and issue a cheque to the affiliate if they have passed
the minimum earnings threshold for that particular affiliate
program. Such payments are typically made within a few
weeks of the end of the preceeding period.
three related elements of an affiliate program that have a
potential effect on your eventual chance of receiving a cheque:
commission threshold is the minimum amount an affiliate
has to earn in order to get paid that period. Many affiliate
programs set this threshold at a relatively approachable level,
typically US$25-50. Beware of affiliate programs that have an
excessively high commission threshold, or that have a commission
threshold that's totally disproportionate to the average
commission generated by a single transaction. For example, if an
affiliate program has a commission threshold of US$250, you may
have to wait a VERY long time before you see a cheque.
Similarly, if an affiliate program pays a commission of US$0.50
per lead and has a US$100 commission threshold, you will have to
send at least 200 leads before you can get paid!
roll-over (or carry-over) criteria define how a
particular affiliate program will handle payments to affiliates
that have not reached the minimum required for a cheque to be
issued. Most affiliate programs will roll over the payments into
the next monthly or quarterly pay period, and will continue to
roll over payments until an affiliate either reaches the minimum
amount required for a cheque, or gives up completely. However,
some affiliate programs will not roll over earnings at all, or
will stop rolling over earnings at the end of a predefined
period (for example, earnings are not carried over from one
calendar year to the next). In this case, if the affiliate
program had a minimum commission threshold of US$100, for
instance, and you'd earned US$99.99 when the commission stops
being rolled over, you've just waved goodbye to that cash!
Unless there are other exceptionally good reasons for using such
affiliate programs, you're better off avoiding any that won't
allow you to work slowly but steadily towards accumulating
enough commissions to get paid.
affiliate programs make deductions for all
kinds of reasons. For example, they may charge you a fee to
issue you with a cheque (processing fee), or they may deduct an
amount every payment period as an "administrative fee" on all
commissions being rolled over. Again, unless exceptional
circumstances dictate otherwise, you're better off giving such
affiliate programs a wide berth.
affiliate programs pay promptly, a few days after the end of the
previous month or quarter. With other programs, you'll grow old
waiting for a cheque to arrive - some pay as late as 90 days
after the end of a quarter, exposing you to risks such as
bankruptcy or server clashes for an uncomfortably long time.
While you will have to weigh the merits on a case by case basis,
you may be better off working with an affiliate program that
pays slightly less than a competing program, but which pays you
much more quickly than the competition will.
clients and existing clients
affiliate programs will only pay you for the first sale to a new
client. In other words, if your site sends them a visitor who's
already purchased from them in the past, you won't get credit
for anything they buy. This leads to the paradox that the more
successful the site gets, the less desirable the affiliate
program will become, since the probability that you're referring
visitors who have shopped there before keeps on increasing and
therefore the chance of getting paid decreases over time.
dreaded "E" word! While affiliate program managers are generally
becoming more savvy about such issues, some affiliate programs
still place very hefty and unreasonable exclusivity provisions
in their Agreements. Some affiliate programs may specify that
you are forbidden to work with competing companies for a period
of months or years, and will even seek exclusivity over an
entire network of sites, even if your intention was only ever to
include their ads on one site.
NOTE: Not all
exclusivity clauses are automatically bad... there is certainly
a case to be made for affiliate programs demanding exclusivity
on a page-by-page basis, i.e. requesting that their ads will not
appear on the same web pages as those of their direct
competitors. Similarly, the idea that affiliates should not make
use of competing affiliate programs on sites that use content
supplied by the affiliate program also has merit.
throw all your hard work away...
affiliate programs will penalize you if you try to buy products
for yourself via your affiliate link in order to get commission
kicked back to you. In the worst-case scenario, you could lose
all the commissions you generated after placing a single order!
So don't make a mistake; always approach any site you are
affiliated with through the "front door" (their main URL) and
not via the link from your own site.
to take away
majority of affiliate programs have logical, realistic terms and
conditions that apply to them. It's the bad apples you need to
be on the look out for - which is why it's essential to get into
the habit of reading (or at least skimming) every Affiliate
Agreement you come across, watching out for pitfalls such as
those outlined above. Unfortunately, ignorance is generally not
considered a valid excuse, so if you've executed an agreement
binding you to very onorous terms, you're likely to be stuck
with it. Proactivity up front could therefore save a ton of