Is Affiliate Marketing Dying?

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aula

13 years ago

why the governemnt is on keen to kill affiliate marketing?

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Ernie Lo 13 years ago

Originally Posted by aula

why the governemnt is on keen to kill affiliate marketing?

The government love making our lives a misery, havent you noticed.
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paulie888

13 years ago

Originally Posted by aula

why the governemnt is on keen to kill affiliate marketing?

Simple, they want a piece of the pie, i.e. sales taxes on products shipped to their respective states. They don't realize they're shooting themselves in the foot in the process, because they're taking away indirect revenue from their respective states by doing this.

By the way, this pretty much only applies to affiliate sales on physical products. There's no tax (as far as I know of) that needs to be paid on digital product sales of ebooks and courses.

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Steve Faber

13 years ago

Originally Posted by paulie888

Simple, they want a piece of the pie, i.e. sales taxes on products shipped to their respective states. They don't realize they're shooting themselves in the foot in the process, because they're taking away indirect revenue from their respective states by doing this.

By the way, this pretty much only applies to affiliate sales on physical products. There's no tax (as far as I know of) that needs to be paid on digital product sales of ebooks and courses.

Ahh, but that's precisely where you're wrong. In Washington State, where I'm located, you are liable for B&O taxes on digital goods you sell, and have been since 2009. I would expect several states have much the same provisions, or are working like hell to implement them ASAP.

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Wills

13 years ago

Not sure I would say affiliate marketing is dying. Surely there are ways around this, even if there was a blanket ban.

They can close down entire affiliate programmes and merchants. But I think there are ways to keep your business alive.

I am only thinking out loud here, but perhaps product creators could offer some sort of re-sell rights for their products. Or, people could set up their own affiliate programmes easily enough, without the use of larger companies.

Personally, I'd rather think of ways to change, rather than throw my arms up in the air and moan that something is dead, so give up.

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DanielleLynnCopy

13 years ago

Originally Posted by Wills

Personally, I'd rather think of ways to change, rather than throw my arms up in the air and moan that something is dead, so give up.

Very true - those who adapt are those who succeed

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claudius chan

13 years ago

Personally I don't think so.. As long as internet is alive, there will be internet marketing.. unless the world is not using internet~!

Know what, Internet just 10 + yrs old.. and it is still growing....

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Ernie Lo

13 years ago

Originally Posted by claudius chan

Personally I don't think so.. As long as internet is alive, there will be internet marketing.. unless the world is not using internet~!

Know what, Internet just 10 + yrs old.. and it is still growing....

I suspect the Internet will be a whole lot different in 10 years times and not for the better. I doubt it will keep growing and blossoming, I bet the Government will get their greedy claws on as much of the web as they can and ruin it just like they have done to "real life".

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AnniePot

13 years ago

Originally Posted by claudius chan

Personally I don't think so.. As long as internet is alive, there will be internet marketing.. unless the world is not using internet~!

Know what, Internet just 10 + yrs old.. and it is still growing....

Actually, the Internet as we know it today with web pages and email has been around since around 1991 but the infrastructure that it all runs on has been in development since the mid 1970's. It was first developed as an academic aid.

I opened my first website by moving a catalogue online in 1998.

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entry 13 years ago

Originally Posted by DanielleLynnCopy

Very true - those who adapt are those who succeed

could this mean Clickbank/ Amazon's affiliate programs get cancelled?

And how can you adapt around this? (if CB and Amazon stopped their affiliate program) ?
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- Bozigian 13 years ago
  
  The TAx man is only making us poorer.
  Thats what everyone says about us
  
  Heck then even charged a man 237$ in taxes for free donuts
  Baseball Fan Owes $237 In Taxes For Free Doughnuts | Neon Tommy
  
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R. Hershel Wright 13 years ago

I don't think the government is keen on killing affiliate marketing. I believe it is the Tax man at his best. Most government are hurting for tax revenue because they have been freely spending our money for decades and the economy has taken a nosedive. Tax revenues went down so they are looking for anything else that they can tax.
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- ladywriter 13 years ago
  
  Originally Posted by R. Hershel Wright
  
  Tax revenues went down so they are looking for anything else that they can tax.
  
  This is exactly it. Everyone's losing money and they're desperate. If they could tax thoughts they would.
  
  The internet has been somewhat of a wild west for years, it was really only a matter of time before the government wanted in.
  
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InternetContentCreation

13 years ago

its a good post but I think affiliate marketing will always be around, in some way shape or form

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sbucciarel

Banned 13 years ago

This is much ado about nothing IMO. You go to a store and you pay sales tax. What is the difference between that and paying sales tax online? Nothing.

When all or most of the states adopt an online sales tax law, the big companies will get their programmers working on setting it up ... or lose business.

It makes no difference to me whether or not I'd be charged sales tax online. I'm still going to buy it if I want it.

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Steve Faber

13 years ago

Originally Posted by sbucciarel

This is much ado about nothing IMO. You go to a store and you pay sales tax. What is the difference between that and paying sales tax online? Nothing.

When all or most of the states adopt an online sales tax law, the big companies will get their programmers working on setting it up ... or lose business.

It makes no difference to me whether or not I'd be charged sales tax online. I'm still going to buy it if I want it.

There won't be a difference if they simply make a blanket tax that applies to everyone. There will be a huge difference if they set it up so that you're required to adhere to every state and local jurisdiction's tax codes as if you had a local presence. The compliance cost for such an initiative would be prohibitive. Most small businesses could not clear the hurdles required to comply, because it would take too much time.

Can you imagine having to (even on a per state basis) having to collect the applicable state and local taxes, and then remit them to the appropriate agencies? I can, and it makes me want to hurl. To top it off, you'd then be subject to all sorts of taxing authorities who could claim at any time you owed them back taxes, interest, and penalties for a myriad of real and imagined offenses.

They do this to businesses all the time, on the theory that most can't afford the time and money required to fight it, so they'll simply pay. Don't believe me? Ask any off line business owners if they've ever faced a similar situation. It won't take too much asking until you've found one.

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Dave Rodman

Banned 13 years ago

The states can pass all the laws they want, as long as the online companies can just terminate affiliates in that state, it won't bring in any revenue. What did they think Amazon.com was going to do? Take their millions of customers in IL and start charging them more by charging tax. Or take their small amount of affiliates and just fire them? Seems like a no-brainer.

I also don't think that people have the stomach for more taxes, so a national VAT on online sales would probably not be wise. The states can use "We're protecting local businesses from big bad amazon" as cover. But what's the Fed's argument? That they just need more money?

So I don't think much will happen. BUT I also don't think that being an affiliate is really the best business model for the future.

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Boris_yo

13 years ago

There is another problem as well. Let me quote someone:

Originally Posted by ralf_skirr

Taxing affiliate referred sales based on the affiliate's location is a big thread to the affiliate industry. Amazon for example is losing a huge number of affiliates right now, with no end of this trend in sight. That's bad for Amazon, but it won't kill them. It DOES kill the affiliates though, unless they move their business.

It's just the tip of the iceberg though, only a first glimpse of the tough times affiliates and the affiliate program owners will face.

I think an even bigger thread is the privacy issue.

Many people seem to think that every kind of tracking is a bad thing by nature, and we will see more and more tools coming out that will efficiently disable any cookie based tracking - thus leaving affiliates out, even if a sale was referred by them.

I believe that this kind of tools a nd privacy protection will become default in browsers and at some time they will have enough intelligence to disable cookies automatically and selectively.

This might even go as far as not only removing cookies, but even removing URL parameters that could be used to identify affiliates when the sale takes place right away.

While figuring out ways to prevent cookie based tracking, the same privacy protection freaks already figured out to disable alternative tracking methods, for example flash cookies. (probably not the correct technical term)

Not being able to track a sale back to the referring affiliate will be the real problem affiliate marketing is facing world wide, not only in the US.

Ralf

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CDarklock

13 years ago

Originally Posted by Dave Rodman

But what's the Fed's argument? That they just need more money?

That fewer people are employees and subject to tax withholding.

Individual people suck at paying taxes, and the government is constantly trying to find ways to make sure the taxes get paid. They have done well using a pattern of "make the business send in the tax, then let the taxpayer apply for a refund."

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Dave Rodman

Banned 13 years ago

Originally Posted by CDarklock

That fewer people are employees and subject to tax withholding.

Individual people suck at paying taxes, and the government is constantly trying to find ways to make sure the taxes get paid. They have done well using a pattern of "make the business send in the tax, then let the taxpayer apply for a refund."

Eh, that'd be a horrible argument to make. So the feds need to raise taxes on me, because of some tax cheats? Like I said, you can make the argument on a state level using the argument that Amazon.com's status allows them to crush local businesses, but that won't fly on a national level.

You're talking about a blatant, obvious tax that would effect pretty much everyone. Only the democrats would be REALLY tempted to take the bait, but they aren't stupid enough to touch political dynamite.

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CDarklock 13 years ago

Originally Posted by Dave Rodman

So the feds need to raise taxes on me, because of some tax cheats?

Nope. They're not actually raising taxes. They're simply changing where and how those taxes are collected, because it will make things easier and cheaper and harder to cheat.

You know, instead of raising taxes on you because of some tax cheats.
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talfighel

13 years ago

This is the weirdest thing I have ever heard. Why would they cut these companies and their affiliates when these people will all pay some taxes on what they earn.

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Greggg

13 years ago

Originally Posted by talfighel

This is the weirdest thing I have ever heard. Why would they cut these companies and their affiliates when these people will all pay some taxes on what they earn.

You're under the mistaken impression that people who come up with this stuff are smart. lol! :-) They don't know ANYTHING about economics, running a business, making payroll, etc. and most definitely don't know anything about how taxes and tax rates affect behavior.

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TurnkeyBusinessBlogs

13 years ago

"Oh Canada.....Our Home and Native Land."

Now if our merchants would start paying us in Canadian we would get a raise. Damn crappy funny money down there these days.

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dgoodhart

13 years ago

the government wants us all to return to a 9 to 5 job where we slave for little money

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oDigger 13 years ago

One reason affiliate marketing became so popular in the first place was that it broke down classic barriers to entry into entrepreneurship. You didn't need loads of money or assets or networks of contacts to start your business. You simply needed some good ideas and dedication.

Even with the implementation of these new tax laws, businesses will always benefit from cpa based contracts with online (or mobile) salesmen.

Affiliate marketing won't die but it will change and those who take advantage of the new opportunities that arise will win
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DocReed

13 years ago

Good thought provoking question.

I think that affiliate marketing as we know it is bound to decline. Not only for the reason(s) stated in the article, but because of tech advancements that will allow a product creator to clone as many of their sales page/sites as they want, with all of the traffic that they need. Furthermore, I just heard a major advertiser talk about the shake out of CPA accounts in 2010, which was brought about, in part, because of widespread affiliate fraud (stolen products and credit cards). The FTC shakeout evidently depleted their ranks by half (less advertisers, less product to affiliate with). He claims that the CPA networks are now begging him and the remaining advertisers to associate with them and to come out with more product because they don't have enough to offer affiliates.

And finally, I think that there will be fewer and fewer affiliates because much of the ClickBank offerings are of poor quality. People are going to buy less and less of that trash, to the point that a significant number of affiliates will decide it's more profitable to do something else.

That my 2 cents worth. What's yours?

Doc Reed

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Jon Tees

13 years ago

Affiliate marketing is declining anyway as many people find it more lucrative to create their own unique products and services. I don’t think sales taxes for online goods will discourage people from buying them as online shopping is obviously more convenient than having to deal with crowds and traffic.

FYI, there are too many affiliates competiting for the same sales someone else’s success equals your failure as they just stole your commission legally. There are many times as an affiliate that I would have much rather have been the product vender with affiliates working for me and selling my stuff.

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uleesgold

Banned 13 years ago

I think if affiliate marketing becomes too popular, the chances of success will be too low.

I think as a way of making money it may become too popular, and thus less effective.

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1 reply

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Boris_yo

13 years ago

Sorry guys, i am foreigner and do not fully understand the following:

Originally Posted by Dave Rodman

The states can pass all the laws they want, as long as the online companies can just terminate affiliates in that state, it won't bring in any revenue. What did they think Amazon.com was going to do? Take their millions of customers in IL and start charging them more by charging tax. Or take their small amount of affiliates and just fire them? Seems like a no-brainer.

What sales tax has to do with affiliates? I understand it has a lot to do with customers, but why affiliates?

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Dave Rodman

Banned 13 years ago

Originally Posted by Boris_yo

Sorry guys, i am foreigner and do not fully understand the following:

What sales tax has to do with affiliates? I understand it has a lot to do with customers, but why affiliates?

States typically can only tax purchases from an online retailer if the retailer has a "Physical Presence" in the state. So ABC Company, based in Indiana, would charge their customers tax for Indiana purchases but they would NOT collect tax if they sold to the other states.

Recently, more states have been defining affiliates as being the physical presence. So if Illinois passed this law and ABC Company had affiliates in IL, then it would require them to collect tax on all sales to IL. So what ends up happening is the ABC Company just drops all affiliates in IL so they don't to charge tax on IL sales.

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JohnMcCabe

13 years ago

Originally Posted by Dave Rodman

Eh, that'd be a horrible argument to make. So the feds need to raise taxes on me, because of some tax cheats? Like I said, you can make the argument on a state level using the argument that Amazon.com's status allows them to crush local businesses, but that won't fly on a national level.

You're talking about a blatant, obvious tax that would effect pretty much everyone. Only the democrats would be REALLY tempted to take the bait, but they aren't stupid enough to touch political dynamite.

Dave, you have to quit looking at this logically and think like a politician.

It gives them a chance to to make a whole new group of people (people who still don't buy much online) into victims. Instead of talking about local business, they use a line like "why should you have to pay taxes on the stuff you buy and your neighbor doesn't because he ordered online?"

It's the same line they use when they want to jack up anyone making more than minimum wage.

Or, for another example, look at the logic used to oppose the construction of new stadia.

"Why should we use taxpayer money to build a stadium for a billionaire? Let him buy it himself!"

Well, maybe because:

> The project will generate hundreds of construction-related jobs for at least 3-5 years, and those people will be paying income tax, etc.

> The project will generate hundreds of permanent service jobs, both directly and indirectly.

> Each event is a tax-generating opportunity - taxes on tickets, concessions, not to mention the salaries of the players, coaches, etc. for BOTH teams.

> There's more...

The opponents don't see that. All they see is giving money to rich people. Which plays very well when campaigning for votes among poor people.

Going back to the original question...

Affiliate marketing in its current form may or may not survive. But people have been making money selling things on commission for a lot longer than the Internet has been around. My bet is that it will continue to happen in one form or another.

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Dave Rodman Banned 13 years ago

Yeah, I understand what you're saying. But I think we've reached a tipping point in this country to where SO MANY people are shopping online, that it would effect far too many people for it to go unnoticed. If they were to have done this in 2000 or 2001...even 2003, it could've passed without much fanfare.

But things have changed. Distrust of Gov't is ULTRA-HIGH. And I think they'd have a hard time selling a MASSIVE tax increase on the middle class by using that argument.

Besides, anyone can counter the argument by saying the advantage of no-tax is negated by the fact online retailers have to charge for shipping.
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jacklins

Banned 13 years ago

[DELETED]

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DocReed 13 years ago

An excellent analysis and well written commentary.

Thanks,
Doc Reed
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NicolaTewhare

13 years ago

It can happen in other countries. Not so long ago on the news was a caption about online spending and how to collect taxes from New Zealanders spending overseas. It is far more widespread.

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LiamP 13 years ago

The laws of supply and demand will keep it alive.

Blue widget vendors will continue to demand customers to buy their widgets, regardless of any law.
If you can supply these customers to vendors, a way will be figured out to get you your cut.

An affiliate marketers job is to
(1) Find people who are interested in a product,
(2) Do some pre-sale to get them more ready to buy
(3) Send them to a vendor

If you are skilled in that 3 part process, you'll find a way to adapt. It's an timeless in-demand skill set - basically a high tech version of the person outside a store hustling people into the store.
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RogerAderholdt

13 years ago

Thanks for the post...

If their is money to STEAL the Government will be close behind.

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simbot82

13 years ago

Interesting read, cheers

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BDubC

13 years ago

That does sound interesting, but we will still be able to keep making money off the net some way or the other. I might have to start developing products sooner than I thought. Who knows it might even start a new wave that will blow up, something we have not thought of or only few people are doing now.

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octavyo

13 years ago

Article Marketing has received a big hit but is still good to do it for backlinks. Those days articles don`t rank like they should but if you know what you`re doing is still a good method to increase your online exposure and generate some traffic to your main site.

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DireStraits

13 years ago

Originally Posted by octavyo

Article Marketing has received a big hit but is still good to do it for backlinks. Those days articles don`t rank like they should but if you know what you`re doing is still a good method to increase your online exposure and generate some traffic to your main site.

The thread is about affiliate marketing, not article marketing. :p

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jiantastic

13 years ago

interesting read. 10 years from now you will have a lot more restrictions using the internet. internet usage tax, web hosting tax, etc. just wait and see...

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tyang

13 years ago

This article is a good reminder why I we need to have a backup plan.

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Moneyerr

13 years ago

There are people who will give big speeches about why they think affiliate programs are dying. That is not what I am seeing. More and more people are finding out how to make money online and they figure out pretty quickly that affiliate programs are usually the easiest way.

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