Spreading Your Affiliate Comission Risk

by Joel on December 29, 2008

Those of you who do a lot (or a little) affiliate marketing, better read today’s post and act upon it.

Ask yourself this question:

“Is my affiliate business hanging by a thread? If ___________ (fill in the blank) didn’t pay me next month, could I survive?”

If answering that question makes you feel a little squirmish…… it’s time for you to take action and protect yourself.

Several years back, affiliate marketers only had to worry about getting stiffed on commissions if a company went out of business or ran into financial troubles. Now affiliate commissions are “yanked” for all kinds of reasons including but not limited to:

1. Accusations of fraudulent traffic, clicks, or cookie stuffing.

2. Breaking the terms of service by bidding on disapproved keywords on PPC……. company trademark or product terms….. etc….

3. Lack of valuable content on your landing pages or “Not engaging” the user experience…. (nice one Ebay)

There are other reasons. One of the scariest things that has been happening…….. as companies are trying to make as many cuts as possible to remain profitable……. affiliate managers for some companies have been instructed to “find” ways to get out of paying some affiliate commisions….. either by reducing the amount of pending payments or cutting them out all together. They then tell the affiliate that they are on a watch list for suspected fraud or other infringement.

I have two associates who last month called me with that above scenario.

Scary.

So how do you protect yourself?

It’s pretty simple really.

You need to have multiple business entities and spread your affiliate commissions and sites around these companies you setup.

It’s really a statistics game. Your playing the game that if one account gets hit your others will remain.

The hard part is to keep everything separate. You can’t just switch over half of your sites one day to new affiliates links under your new company….. it doesn’t work that way. You pretty much have to start all new affiliate ventures under your new entities and links.

How do you set it up? Well that’s going to be different for everyone but the general method of practice is to setup on Corporation and have several LLC’s under the name INC. (Talk to a profession about this)

The other issue you need to think about is affiliate account logins…….. you don’t want to login from the same IP address into multiple accounts you have setup. They will be most likely linked together.

So the big question is this ethical?

I’m not going to answer that for you. You make the call. Just realize that at the end of the day, most affiliate managers, especially with the big dogs don’t give a “Jack” about you and your company.

Take eBay for example……. last summer, affiliates who were driving huge amounts of traffic with legitimate ways had their accounts ripped from under them………. most of them without explanation.

Just think if those affiliates had spread their traffic over 3 or 4 affiliate accounts….. many would still be getting a monthly check…..

I’ll let you make the call.

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