Creating a Website Affiliate Agreement

Creating a website affiliate agreement goes hand-in-hand with affiliate programs. Affiliate programs are where vendors or merchants have a product to sell and seek more exposure for their product. They'll search for companies or sole proprietors, both known as affiliates, who agree to place the merchant's link on their websites. When customers go onto the affiliate's website, they'll see a link to the merchant's site.

In most cases, if the customer goes to the merchant's website from the affiliate's page and makes a purchase, the affiliate gets a commission or percentage of the sale. Sometimes, the merchant pays the affiliate even if the customer just visits the merchant's site but doesn't buy anything.

Affiliate marketing agreements

A business affiliate agreement, or affiliate marketing agreement, is a contract between a merchant and its affiliates that spells out how the parties will work together to promote their websites and products. The agreement is a form of marketing, as this is an easy way for the merchant to advertise their products without paying until they make a sale.

The agreement states how much commission the affiliate will earn. Both affiliates and merchants can benefit from forming affiliate partnerships that drive business to one site and bring commissions to the other site. The link to a merchant's site on the affiliate's website, called an affiliate link, occupies a prominent place on the website, so prospective customers can see it.

To make this affiliate sales arrangement work, the affiliate is ideally a type of business that's connected to the merchant's product in some way or that people visiting the affiliate's website would be interested in. For example, if the affiliate is a travel site, the merchant's affiliate link to their hotel website is a good match between the merchant and the affiliate. A merchant selling luggage would be another good match.

Standard affiliate agreements

An affiliate agreement can contain a variety of clauses. Some of the more common clauses in website affiliate agreements include:

• The definitions of affiliate and merchant
• The parties' relationship to each other
• When the affiliate agreement begins and ends
• How to terminate the affiliate agreement
• How the affiliate will promote the merchant's website on the affiliate's own site and drive traffic to the merchant's site
• What the merchant pays in commission, and how often the merchant pays it
• The right of the merchant to inspect the affiliate's website from time to time to approve the way the merchant's ads look on the site
• The affiliate's obligation to keep its website up and running, as well as up-to-date
• Who owns the trademarks
• If either business requires licensing
• If there are any marketing and promotional restrictions
• Whether the affiliate can use the merchant's name in its advertising
• What happens if a party breaches the agreement
• A hold harmless clause that protects each party from the other's actions

Other clauses that are often in an affiliate program agreement are how to modify the agreement, confidentiality or nondisclosure clauses, and which state's laws govern the agreement.

There are often many provisions in a website affiliate agreement, but you may miss something if you prepare it yourself. It's a good idea to have an attorney or an online service provider create your affiliate agreement to help ensure that everything that belongs in the contract is there.