Affiliate Tax

Are we really independent?

by Joe Sousa on March 15, 2011

in Affiliate Stuff

One of the best things about working for myself is the “independence”. I get to work from home, I can work whenever I want, I can build whatever sites I want. Pretty much all the day to day decisions regarding my business are made by me. But am I really independent?

I was thinking today about how, as an affiliate, I am dependent on nearly everyone but myself. I guess every business is dependent on many people like customers, landlords, distributors, advertisers, employees, and so on but I don’t want to be dependent on others! I want to control my own business and run it the way I want! How dependent are affiliates? There have been a few recent developments that showed me how dependent this business is on others and how the actions of others really do affect it. Here are a few examples

1. The Illinois ”Affiliate” Tax –  The state government of Illinois has passed a very short-sighted, flawed law that would force merchants to collect sales tax on sales made through their affiliates. As a result of this law Amazon and other merchants with affiliates decided they don’t want to work with affiliates in Illinois any more.  This law was passed under the auspices of “fairness” and was meant to help local merchants but it will do no such thing. I don’t want to get too far into the whole situation here because there are plenty of other people who know more about the particulars and you can read more here:

Governor Quinn Abolishes Affiliate Marketing In Illinois
Illinois Gov. Quinn Flaunts “Fairness” in Passing Nexus Tax, Cuts off Nose to Spite Amazon
The Senselessness of Illinois Legislation

So how does this affect affiliate marketers? Well, there are a few very large affiliates in Illinois who are making plans to move out of the state due to this law. Since as an Illinois affiliate they can no longer work with Amazon and many other merchants they would be losing a signifigant portion of their revenue if they stay in Illinois. These aren’t just small time affiliates like me who crank out sites in their basement. These are companies with dozens of employees and millions of dollars in revenue every year. The state of Illinois will lose jobs, lose income taxes, lose some great community leaders, and all in all cost themselves a lot of tax revenue because of this law instead of making money.

If a law like this was passed in Washington State it would force many affiliates to rethink their businesses. I am dependent on our state legislators and government to make wise decisions and reject any similar legislation. It does scare me to be dependent on the government to do what is in my best interest but the truth of the matter is I am dependent on them. One law could change my whole business and a large portion of my life.

2. Google “Farmer” Update – Once again Google reminds so many people how dependent many of us can be on their traffic. None of my sites were really hurt but there are lots of people who lost a ton of traffic on this update. It isn’t the first time Google has made some big changes (Remember the “Florida” update years ago? Nov 16th, 2003) and it won’t be the last. But it was yet again a good reminder that I am fairly dependent on Google for a good portion of my traffic and in turn my income. One click of the mouse and I could be in trouble.

I think now there is less and less of a need to be dependent on Google as a main source of traffic with other sources like Facebook, Twitter, Youtube, etc. but for most of us Google is still where most of our traffic originates. It kinda reminds me of a restaurant located right next to a big shopping mall. Can the restaurant generate their own visitors? Of course they can. But they are dependent on the mall staying around to be the source of the majority of their diners. Yeah, if Google went away there would be something else to replace it but like it or not many of us are pretty dependent on Google right now.

3. Merchants Screwing Things Up- This happens all the time. A merchant might add some PPC restrictions where there were none before, they might lower the commission level, and they might drop their affiliate program all together. The merchant could also just go out of business, be sold to another company who doesn’t see the value in affiliates, or any of a number of situations. But all in all as an affiliate I am dependent on the merchants I work with staying in business, offering at least a decent shopping experience to the customers, shipping the products, and paying me.

There are a ton of things a merchant can do to screw things up from changing their affiliate agreememt to breaking some trade laws to making stupid business decisions. I am reliant on the merchants I work with doing their job and doing it well. I depend on them to do their job and that can be scary at times.

So what can we as affiliates do to be more independent? Is there any way we can truely be independent? Do we just need to trust those we depend on to make smart decisions even when the track record is sketchy? Is it just one of the issues we have to deal with in this industry? Leave a comment and let me know your thoughs.

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Say No to the Ad Tax

by Joe Sousa on February 19, 2010

in Uncategorized

The Advertising Tax Hurts Affiliates

I haven’t said much about the advertising tax on this blog but I figured it is time I mentioned it. There are plenty of other people who know much more than I do about it but here is a quick video I put together explaining how this tax would be detrimental to me, to any affiliate, and to the states that try to pass this tax:

As an active member of the affiliate marketing community, I am opposed to any state legislation that would attempt to use affiliates to establish nexus for out-of state merchants.

Also the Performance Marketing Association put out this unified message that I totally agree with that will be able to state things better than I can:

I depend on my relationships with many out-of-state merchants for my livelihood. I put their advertisements on my website and earn a commission when someone clicks on that link to make a purchase or registers with that merchant. I am not an employee of any of these companies. I do not collect any money. I do not make the transaction. And I do not ship any goods. I simply advertise these offers to consumers for merchants.

This type of business model does not meet the definition of nexus.  If bills like this pass in my state, many retailers will terminate their relationships with me and I will lose a large percentage of my income. That will impact my ability to provide for my family. I t will also impact the levels of income tax I pay to the state.

In fact, a handful of states that have passed legislation of this type (such as Rhode Island) have publically admitted that the states never realized the projected revenue and lost many small businesses in the process.

I want the affiliate marketing space to continue to thrive and grow. These types of laws will put small businesses, like mine, out of business.

So please do what you can to fight this. I will do my best to learn more about this, learn how I can better fight this, and how I can support those who are fighting for us daily.

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Affiliate Marketing Recap – The past couple weeks

by Joe Sousa on February 11, 2010

in Affiliate Stuff

Of course you want to hear my opinions on some recent happenings in the world of affiliate marketing.

Since I don’t really want to take the time to focus on one specific topic I think I will just briefly comment on some of the stuff happening in the industry over the past couple weeks.  Let’s jump right in:

The “affiliate tax” hearings in Colorado: I will readily admit I don’t know anywhere near enough about this tax issue.  I have been a total slacker in doing my research, writing to my state legislators, and all in all getting involved on this issue. Luckily there are some great people like Jen Goode, Jennine Crooks, and others that took up the fight in Colorado. It was a close vote and for a while it looked like the law could pass but through the hard work of those ladies and hundreds of others the bill was passed but it didn’t include a tax on affiliates.

So if (more likely when) this becomes an issue in Washington I will definitely be calling on my friends for help and information in fighting this issue.  If you want to read more about what happened there are many more people who know much more than I do: 
http://www.jgoode.com/things-i-learned-from-battling-the-government/
http://affbook.com/what-really-happened-in-colorado/
and http://www.performancemarketingassociation.com/blog/2010/02/08/colorado-advertising-tax-is-dead/ are good places to start. Thank you all for your hard work!

Affiliate Summit West is moving from the Rio to the Wynn!

http://missyward.com/2010/02/08/affiliate-summit-west-2011-january-9-11-at-the-wynn-las-vegas/
http://www.affiliatesummit.com/2010/02/08/affiliate-summit-west-2011-at-the-wynn-las-vegas-%e2%80%93-save-the-date/ 

I gotta say, this is one of the best announcements I have heard lately. I for one hated the Rio. I love Affiliate Summit, I love Shawn and Missy, but the Rio pretty much sucked. The walk to get back to the conference was like walking down an endless hallway in an Escher drawing. The rooms were nothing special. The casino was pretty lame. The restaurants (other than the 50 cent wings at the All American Grill) were pretty lame. The Wynn is a HUGE upgrade from the Rio and the rooms probably won’t be that much more. Also since it is on the strip there are a ton more good lodging options for attendees. This last Summit I stayed at the Palazzo and having the conference at the Wynn could have saved me a couple hundred in cab fares.

Also since it is the 9th-11th that means I will once again be in Vegas on my birthday. So keep that in mind for next year.

Legacy Week from Legacy Learning Systems: For the second time in the past year Matt McWilliams ran the Legacy Week promotion. http://www.legacyaffiliateblog.com/bonuses/legacy-week-final-398  All in all they paid out just over $2300 in bonuses. This is just one of the reasons Matt won the Affiliate Manager of the Year Pinnacle Award.

On the Both Sides of the Tracks podcast a couple weeks ago Jason and Eric were talking about running contests and this Legacy Week promotion was a perfect example of one that works. In my mind an affiliate contest should have three main goals: Recruit new affiliates, encourage existing affiliates to get off their butt, and reward performing affiliates. With the 6 different incentives Matt used I think he accomplished all three.

I for one already work with Legacy and I sell a few ballroom dancing courses a month. Nothing huge. But when I saw the triple commissions on the painting course for the week I decided to give it a shot. So throughout the week I think I ended up selling 10 painting courses. Without the triple commissions I might not have tested it out but now I see that it converts better than the ballroom dancing and I will definitely be promoting that more in the future. So because of the bonuses I was able to find another program I could make money with.  And I know a couple affiliates who tried out Legacy for the first time.  Well done Matt.

Google Buzz launches:  What is Google Buzz? Kind of like Twitter but different. Kind of like Facebook but different.  Basically it is another “social media” type site that pulls in content from your profiles on Twitter, Youtube, Picasa, Youtube, and other sites. The thing I like about it is that it is right there when I go check Gmail so it isn’t really another social site I need to think about going and visiting. I don’t know if it will hurt Twitter that much but I really do like the threaded discussions.

The Saints Win the Super Bowl!!! Well, this doesn’t really have a ton to do with affiliate marketing but it does give affiliates a bunch of new stuff to promote. Within a couple hours of the game concluding I put up Saints Championship Gear and today I finished it off by adding in over 300 products from a datafeed. Hot markets like this are always good ones to jump on. It doesn’t have to be sports though. Maybe you want to somehow capitalize on an oscar winning movie or some merchant or product mentioned on Oprah. There isn’t necessarily a ton of long term potential for stuff like this but I do still see some sales now and then from the Phillies World Series win a couple years ago and the Steelers Super Bowl last year.

The Video Boss: Don’t want to say too much as I might keep this for a longer blog post but I am very impressed so far. I usually hate this type of stuff but Andy Jenkins knows his stuff and his new Video Boss videos are pretty awesome. Can’t wait to see the final product.

I think that is all for now. It seems like I am missing something. Was there something you would have liked to see me talk about? Leave a comment below and let me know.

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