Affiliate program - what is it and how does it work?

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Most companies have their own websites. Usually, these are sources of information for potential customers or tools for conducting content marketing, but these two considerations do not exhaust the range of roles they can play. We can implement an affiliate program on the company's website.

Affiliate program - what is it?

An affiliate program is a type of cooperation between an entrepreneur or entrepreneur and a natural person. Its subject is the provision of advertising services by an affiliate, i.e. an entity that owns or manages a website. These services consist of placing a link or links to the advertiser's website (often an online store) - in return, the affiliate receives a commission in accordance with the provisions of the affiliate agreement.

The parties to the affiliate agreement are usually:

  • website owner - affiliate,

  • an entrepreneur who advertises his products via the website,

  • the customer who goes to the advertiser's website and possibly orders the goods or services he offers.

Another party to the contract may also be an affiliate network - a company that collects affiliate program offers, i.e. intermediation between affiliates and advertisers.

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Commission in the affiliate program

The commission is usually paid monthly, and both its amount and the method of calculation should be precisely specified in the contract. The most common are the following billing models:

  • cost per click - the advertiser pays the affiliate a commission for each click and the prospect's transition to the website with the advertised product,

  • cost per lead - the advertiser pays the affiliate a commission based on the number of people who have expressed interest in the advertised product or service, i.e. they will, for example, subscribe to the newsletter or fill out the contact form (if a potential customer does not take any activity, the advertiser does not pay a commission),

  • cost per sale - the website owner receives a commission for each purchase made,

  • mixed billing methods - usually based on a fixed monthly remuneration for the affiliate and bonuses, paid in the event of any activity by the user of the website.

The billing based on displaying advertisements to users of the website is also still used - the affiliate receives a fee from each user of the website to whom the advertisement was displayed, but it is more of a form of online advertising than billing in the affiliate program. These two concepts cannot be confused - the affiliate program is based on the affiliate's persuasion of the website user to perform a specific action, a kind of response to placing a link on the website. Internet advertising, on the other hand, is only to make the website user aware of the brand or bring it closer to its offer.

Affiliate program - contract

The affiliate program has not been included in any legal act so far, therefore the affiliate agreement belongs to unnamed agreements. Therefore, the parties may freely shape the legal relationship between them. What should they especially pay attention to? Mainly on:

  • precise indication of the method of settlement along with an indication of the activities of the website user for which the fee is paid,

  • provisions regarding a possible change in the settlement method of the parties,

  • advertising activities undertaken by the affiliate for other brands,

  • form of advertising activities - indication of whether the affiliate program will be implemented by placing links or banners or creating a separate tab or blog entry,

  • contractual liability of the parties - this may apply to both the activities of the affiliate (placing broken links, placing them in an invisible place or at an inappropriate time - for example, after the end of the sale of a specific product) and the advertiser (delayed payment of commission, change in the method of calculating remuneration).

The affiliate program can be beneficial for both parties - so consider introducing this type of promotional campaign on our website.