An affiliate marketing agreement is a document that describes the working relationship between an affiliate and your company. It’s an essential part of any affiliate program, detailing the responsibilities and obligations of each party and all monetary and legal stipulations.
This affiliate agreement includes all the crucial details related to your program. It clarifies all the terms and conditions, and guarantees all parties are on the same page before they engage in the program.
If you’re running a business, and you’ve been thinking about signing on affiliates to promote your products, you’ll need to create an affiliate marketing agreement before you jump headfirst into your program.
To help you create a clear affiliate program agreement, we go over the basic terms and sections of an affiliate document. We also provide a free affiliate agreement template you can download and customize for your own program.
Who is an affiliate?
An affiliate is an approved content creator, like a blogger or influencer, who promotes your products or services on their own content channels. They post affiliate links (or tracked links) that bring others to your company’s website, and every time a lead or sale is traced back to an affiliate’s link, the affiliate earns a commission.
A popular example of an affiliate program is Amazon Associates, where affiliates promote Amazon products on their websites or social media accounts in exchange for commission.
The best affiliates for your company are largely determined by your target market. Affiliates allow you to effectively market your products or services on a low budget and with minimal effort, while receiving a high return on investment and increasing brand awareness.
What is an affiliate marketing agreement (affiliate marketing contract)?
An affiliate marketing agreement (also called an an affiliate marketing contract) is a contract between a brand and an individual or company that promotes the brand in exchange for commission.
The agreement clearly states the terms and conditions of this relationship, including commission rates, the payout process, the length of the contract, and the like.
The main purpose of an affiliate marketing agreement is to make sure both parties understand their responsibilities in the affiliate program.
We recommend all companies with an affiliate marketing program create a formal agreement. The agreement should be signed when an affiliate is accepted into an affiliate program, and should be kept up-to-date as the program evolves.
What should you include in an affiliate marketing contract?
An affiliate marketing contract should cover two key areas: legal and monetary requirements.
Yes, the entire affiliate marketing agreement is a legal document. But it should specifically outline brand requirements, content standards, intellectual property rights, disclaimer and privacy policies, etc.
While affiliates are free to promote using their own channels, this type of relationship must have clear guidelines. The more you can share about how your brand should be presented in the market, the better you can protect your reputation against any error free and unethical third-party marketing.
Every lead or sale generated by an affiliate earns them commission. This is the main purpose of an affiliate program, and it’s important to outline the monetary requirements of companies and affiliates.
- Commission rates
- Payment schedule (per sale or aggregate)
- Requirements to earn commission
- Any commission disqualifications
14 parts of an affiliate marketing agreement
The affiliate marketing agreement should include the affiliate’s role, the promotional guidelines an affiliate should follow, and how to earn commission. It should also lay out your company’s role, responsibilities, and the commission you offer in the affiliate program.
Here are some sections to cover in your agreement:
Define terms like company, affiliate, affiliate application, website, affiliate program, and others relevant to your business for the purposes of this agreement.
These definitions keep everyone on the same page as they read the agreement. Legalese often complicates an agreement, so clarifying terms at the onset will ensure an affiliate’s understanding of the document. List out the definitions and keep it to the point. Your primary goal here is to avoid misunderstanding.
Nature of the partnership
It’s important to note an affiliate is an independent contractor and not in an employment relationship with the business. Defining the role of affiliates exempts you from providing them with the employee benefits required by governing law.
Application and acceptance into the program
This section covers the requirements or steps an individual or company must go through to be accepted into your affiliate program. For example, some companies require an affiliate to have a certain number of followers or monthly traffic to their site. Others are particular about the affiliate’s personality and voice.
An affiliate program is usually open to the public, with all the company’s requirements and a signup form published on their website. The company then evaluates all applicants, follows up with any further questions, and either rejects or accepts them into their affiliate program.
Every company will have their own application and acceptance process. This section goes over these steps, any waiting periods, and what notifications someone can expect after applying.
How the affiliate program works
This section provides an overall description of your affiliate program. It includes everything an affiliate needs to know in relation to your business, from how your affiliates will get links to the specific products, to how they will receive their earned commission after a sale.
Add any requirements an affiliate needs to meet when publishing the links, which sales qualify for commission and which don’t, and how often you will pay out their commission.
Most affiliates are not in an exclusive relationship with your company. Many times, an affiliate will publish an article with multiple product reviews or comparisons, and include your affiliate link along with several other companies. Since affiliates earn from commission, it’s important for them to be able to promote other businesses’ products.
Responsibilities of the affiliate and the business
As with all contracts, it’s important to list down the responsibilities of all parties involved. When you and your affiliates know who should be doing what, your marketing program can run smoothly and bring in more sales for your business.
Commission and payment
This is the most important section for your affiliates. It covers not only how much they can earn, but also how and when to expect payment. It outlines any cases where a purchase isn’t eligible for an affiliate commission, and can serve as a guide for how your affiliates will market your product.
Cover the following in this section:
- How does an affiliate become eligible for commission?
- What must be done for an affiliate to earn a commission? Do you count purchases, qualified leads, or clicks? (Note that clicks are not the best option as they make you more vulnerable to fraud.)
- The total commission rates available and whether they are subject to change. If they are, include the due process for the re-negotiation.
- Whether there are bonus offers when affiliates meet certain conditions.
- How long is an affiliate eligible for a commission after someone clicks on an affiliate link?
- What fraudulent actions would make a purchase ineligible for commission?
- What requirements must be completed before an affiliate receives their payout (i.e., tax and bank account information)?
This section covers all link promotions in the affiliate relationship, including, but not limited to:
- What affiliates can and can’t do to promote their affiliate link
- Where the affiliate link can and can’t be displayed
- What counts as misuse of the affiliate link, such as using adware, cookie-stuffing, popups, etc.
This section covers all brand promotions in the affiliate relationship, including, but not limited to:
- What rules affiliates must follow when using your brand or trade names
- What are the messaging guidelines for presenting your product?
- What are the acceptable types of advertising an affiliate can use for this particular purpose
- Intellectual property rights guidelines: What logos, service marks, slogans, domain names, and product names are the property of your brand?
- Are there any proprietary rights or restrictions to using them, and what are the consequences of this unauthorized use. (You can also include best practices for non-infringement to help guide your affiliates.)
- Are there any restrictions on the affiliate’s use of the company’s promotional material?
Cover any technology used to track and report the affiliate’s activity. Will you use an affiliate software program or a third-party affiliate network? Do you use commission tracking cookies to automatically award commission for every sale?
Explain how your company’s tracking works and how it can be used to monitor the affiliate’s performance and payment status.
When working with affiliates, your company might need to share confidential information not available to the public. For example, this can include customer lists, supplier information, upcoming products that aren’t launched yet. To ensure confidentiality with affiliates, you need to explicitly mark any business, financial, or customer information as proprietary.
Conversely, an affiliate may also share confidential information with your company, especially regarding their previous experience, current followers and audience, etc.
Termination or suspension
How long does your affiliate marketing agreement last? Under what circumstances would an affiliate contract be prematurely terminated or suspended? What happens when there are changes to the affiliate agreement?
This section should also include what cases call for a suspension of the contract, as well as what happens after the termination of this agreement, specifically to any pending commission payment or affiliate accounts.
- Any applicable laws by the state governing the transaction
- The governing body used in arbitration in the event of a lawsuit
- Requirements for compliance with FTC endorsement guidelines
- Procedure in case of a default or breach of this agreement
- Licenses required by the business and affiliate and who will own them
- An indemnification clause to protect either party from liability caused by the actions of the other and consequential damages (i.e., data loss, service interruptions). Any clarifications of the limitation of liability.
- A severability clause, where necessary
Download our free affiliate agreement template
It is not advisable to run an affiliate program without an agreement in place. You are entrusting affiliates with your brand, so you need to set guidelines for how they will represent you.
Plus, having a formal affiliate marketing agreement also shows affiliates you take your brand and relationships seriously, and helps attract only the best applicants.
If the document ends up being fairly long, consider including an affiliate program FAQ (in addition to the entire agreement) to help affiliates find the most important terms of this agreement. And as with every business contract, consult with a professional for legal advice about specific provisions.
To help you get started, we created an affiliate marketing agreement template that’s free for download.
You can also read our other articles about running an affiliate marketing program for your business.