This article is written by Shivani Garg, pursuing a Diploma in Business Laws for In House Counsels from LawSikho.
Table of Contents
Introduction
We negotiate in our daily life in day to day activities, especially when it comes to our business we take extra care and why not?! Who wants to be at a loss, right? The moment you want someone to say ‘yes’ to any of your proposals, you are entering into a negotiation before you even realize it: a yes to a raise, yes to grant a favor, yes to buying your product, yes to granting a deadline extension, list goes on and on. According to Chris Voss, an FBI hostage negotiator, a great negotiation is actually a great collaboration. We know well that a great collaboration requires a huge trust between people as they are investing in their future individually as well as together towards the positive outcome. Negotiating any affiliate agreement is somewhat like collaboration only. Before I tell you how to go about negotiating an affiliate agreement, it’s important to know what affiliate agreements are and the basics related to that.
Fact about such agreements: Affiliate Marketing has made businesses millions and ordinary people millionaires. It may turn your life upside down as the beauty of such a thing is you don’t actually have to invest the time and effort to create a product to sell.
Also known as an ‘affiliate program agreement’, let’s check it this agreement is all about.
Affiliate agreements: meaning
To understand in depth, let’s break affiliate agreement into two words: affiliate and agreement. In layman language, an ‘affiliate’ refers to a person, an establishment, an organization or even a website which is actually a commercial entity and also having a contractual relationship with another but larger entity or a group, an organization or an establishment. An ‘agreement’ is a legally binding document with terms and conditions mentioned and mutually agreed by both the parties.
Affiliate agreement is an agreement with terms and conditions between an affiliate, who is usually an ‘independent contractor’, and the advisor, who at times is a bigger entity, where the former agrees to market the product/brand of the latter, without forming any separate entity or a joint venture. It is one form of marketing via an online platform. The whole concept of affiliate agreement is based upon ‘mutual benefit’ which comes from mutual trust too.
P.S. all you have been thinking while reading this definition, you guessed it right, it’s completely based on a commission system and depends on parties as how they want to go about it. It is one of the ways to promote your business.
But do you know, you can actually have the upper hand while making such agreements and negotiate the terms and conditions that suit you. Of course, you have to be very careful while negotiating such affiliate agreements.
The art of negotiation
During a negotiation, it would be wise not to take anything personally. If you leave personalities out of it, you will be able to see opportunities more objectively – Brian Koslow
Negotiation goes way beyond than one can imagine. You see, you might have the knowledge or dictionary meaning of the word ‘negotiation’ yet you could fail in negotiating even on the least important events in your life. Simply because you don’t know its value and how it could actually change just not your business deals, but also the quality of your lives. Negotiating is a form of art let it comes to negotiating with the terms and conditions of any agreement or anything else.[1] To be able to negotiate with other people in any aspect of life, you need to be able to negotiate with yourself first. Yes, it may sound surprising to you, but think about it, if you are not convinced with yourself, how will you be able to come up with the terms and conditions of an agreement? The other party will easily catch upon your weakness and dwell upon it, as a result before you even realize you will agree with the things you might not even have a clue about which will probably give you the loss you never planned for even in the wildest dream.
Negotiating affiliate agreements
There are certain things one need to be sure of before you start to negotiate a deal that will actually help to strike a better while negotiating affiliate agreements[2].
- Commission Research: Well, that’s the common rule and smartest move- do your homework well before making a deal or agreeing to certain terms and conditions. It can save you from becoming a fool as well as loss. Commission part is the most important part of the terms you will negotiate upon so you need to start your research from this particular area before anything else in the mind.
As an affiliate, you want to know three things precisely:
- The trends, changes and the time limited opportunities. As in, what are you being paid at present, what lies in the coming times along with what you have made in the past until now.
- What other merchants are offering you for the same deal.
- What other affiliates are being paid.
As a merchant, you want to know three things:
- Pay scale of the competitors.
- What are you paying to affiliate apparently along with what have been paid to them in the past.
- What your competitors are paying out to stay in the market.
- Performance Data: Another point that will take your time is gathering and checking performance data from everywhere you can. This part is for both the parties as well. You definitely just don’t want to believe in what people claim, but to check out yourself, people lie according to their comforts, don’t you think? Few pointers that you should check out are:
- Social media handle, the level of interaction and the response.
- Traffic levels for the affiliate.
- The performance rate of affiliates in the last few months.
- Number of newsletter subscribers.
- Cookie length in comparison to when customers actually buy.
- EPC for the merchant across all affiliates and this affiliate in particular.
- Exclusive Opportunities: Creativity lies in this part where you have to figure out what other party values the most or what they are really looking forward to, maybe even a bit desperate about staying in the game.
From the aspect of affiliate, what could they possibly get from the merchant/other party?
- Products for reviews or rewards.
- Coupon codes, vouchers to attract more followers.
- Mention of the affiliate or their posts on their handles.
- Any sort of bonuses.
- Invites for launch.
From the aspect of the merchant, what can be provided by the affiliate?
- Features, newsletter inclusion.
- Social media sharing.
- Timely promotion through pictures, interesting short videos etc.
- Inclusion in gift guides.
- Homepage or sidebar placement.
Well, these are a few pointers that I have mentioned, you can obviously come up with many more.
- Put everything together to negotiate: After putting in a lot of effort and time, you got all the pictures with you and now all you have to do is put them together to see the complete picture. By now you will already have all the things in your mind as well as in your hands through which you can extract the mutual benefits and come to the settling terms.
You must have heard about the growth mindset, thought: You water me, I water you, we grow together.
Standard clauses in affiliate agreement
Like all the various agreements made, your affiliate agreement will be able to answer you with the simplest and basic questions[3]. There are three standard clauses you may see:
- NDA/confidentiality clause: It keeps the details of your business safe and sound, restriction on sharing with others. What I mean is this clause keeps the affiliate from sharing proprietary business details with others and gains any sort of benefit out of it in any way.
- An indemnification clause: the clause which protects either party from the repercussions for the actions of the other party. This clause is also known as the ‘hold harmless’ clause. Basically, both the parties decide who will pay/indemnify the other party brought by the third party in case of loss, claim, demands, damages and any other expenses.
- Mandatory arbitration: This clause is related to dispute resolution method and now it’s like the standard clause in many of the business contracts. Litigation is a time-consuming process with no satisfactory results at times so people at times put a clause which requires arbitration in a legal dispute, rather than the long court process of litigation. Those who don’t know much about arbitration, you can say it can save both your time and money. It is a procedure in which a dispute is submitted, by agreement of both the parties and the decision made by the arbitrator is binding.
Conclusion
In today’s world, social media platforms act as a key to listen, engage, and build relationships. It’s not just a source of entertainment, but a huge source of money too. There is no denial to the fact that even big companies today will die without it. The role played by affiliates can bring home the money two-fold or even more. To grow your business, you need a strong marketing network that will make it happen, we all know that. What people miss out on this, is there are documents that can be come up with to save at every step in this journey and the best part is you can rightly negotiate. Affiliate agreements can be entered by any type of business with any other party having a good track record and a larger customer base to promote your business and get mutual benefit out of it. Since these agreements are in writing, it becomes crucial to negotiate with terms and conditions which are mutually and independently agreed by both the parties before signing it up.
So folks, before you do any stupidity on your end, have a good research, take a good amount of time, understand each aspect and then negotiate. Once you are done, you are good to go!
References
[1] Article: The most important negotiation in your life by Erics Ariel Fox, Harvard Business Review
[2] Article: Information you need to negotiate a better affiliate deal by Tricia Meyer, Tricia.me
[3] Article: Affiliates and Affiliate Agreements in Business by Jean Murray, thebalancesmb.com
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
