How To Protect Your Affiliate Network When You Partner With An Advertiser
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How To Protect Your Affiliate Network When You Partner With An Advertiser

How To Protect Your Affiliate Network When You Partner With An Advertiser

If you want to protect your interests, you must have an agreement with every person you do business with.

Even if it’s your best friend in the world – you have to make a contract. 

Why? 

Because if you later perceive something differently than your partner, you just go to the paper and see how you defined the issue.

Today I’ll talk about what you should pay attention to when entering an agreement with an advertiser. 

These things will also allow you to protect your interests when you’re working with affiliates or publishers.

Just bear in mind – nothing you hear today can be considered legal advice! I’m not a lawyer and not qualified to do so.

In this episode, I just review nine business decisions to consider when partnering with an advertiser that will help you protect your interests in your affiliate network.

Tune in and find out how to avoid being circumvented, how to deal with late payments, and what achievement could be super powerful for you and your business.

So, let’s dive in!

Someone in the text community asked me to make an episode about doing the deal with an advertiser and things one should look out for. 

The main question is how to protect ourselves. 

I’ll point out four things here that I look at when making a business decision. If you listen to the whole episode, you’ll find five more. 

Once again – this is not a legal recommendation for you to do anything. These are some things I try to achieve when doing deals with advertisers. 

Non compete

 

When you’re working with an advertiser, you want to try to get them to a place where you have a non-compete. 

What does that mean? 

From your perspective, working with an advertiser means finding other affiliates, publishers, people who drive traffic to the advertiser’s offer. In that way, you bring distribution to the table that the advertiser never had before.

So, you have to protect your interest here. You don’t want a publisher to circumvent you, and start doing the business with your advertiser directly. 

It’s difficult to put that in your agreement with your affiliates and publishers. Instead, you define these things through advertisers. 

And it’s fair – you’re bringing value (traffic that they don’t have), working hard to help them get their offer out into the marketplace, and they’re only paying when you drive some action.

So typically, my company (UMP) puts in agreements that “during the term of this Order and for a period of 12 months thereafter Advertiser will not purchase or engage, either directly or indirectly, any marketing services from any third party that UMP purchased media from during the term of this Order”. 

The reason why you put “12 months thereafter” is that if advertisers fire you, they won’t be able to work with the people that you brought to the table for 12 months. Or if they do, they got to continue to pay you for 12 months. 

This clause protects you from getting fired when you didn’t do anything wrong, but they just want to circumvent you. 

Usually, advertisers don’t do that. Most advertisers won’t directly try to go around you. But, some affiliates will try to squeeze you out. And the advertiser may not know that. 

So this clause in the agreement protects you, and you’ll be able to warn the advertiser to stop working with those affiliates.

Liability

 

When it comes to liability, I like to put in the agreement that I do not have more risk than what the average monthly spend of the advertiser is with me. 

It means that you don’t want to agree that the advertiser, who spends, for instance, $20,000 a month with you, may sue you for millions of dollars. 

So what you could do is limit the sum they can come after you for to the average monthly spend of the advertiser. 

My company usually puts that in agreements in this form: “In no event shall UMP’s liability, if any, to Advertiser exceed the average monthly amount Advertiser actually pays UMP pursuant to this Order.

And this is a way to protect your interest so that your company doesn’t get killed.

Payment terms

 

I like to do net-15. Frankly, I want to get paid sooner than that, but net-15 is fair. Net-30 is also acceptable. You can work with that.

(Net-10, net-15, net-30, and net-60 specify that the net amount of an invoice is expected to be paid in full within 10, 15, 30, or 60 days of the date when the service is completed.)

The idea is you want to pay your affiliates and publishers sooner. The sooner you can pay them, the better. Sometimes I pay my affiliates before I even get paid. 

What you can also do is to agree with your publishers to pay on collected revenue. It means that you will pay your affiliates when the advertiser pays you. 

You don’t want to be in a situation where you go out and pay all your affiliates, and then the advertiser doesn’t pay you. In that case, you’re in trouble. 

Especially if you’re new and you’re just starting, you need that money coming in. 

Paying on collected revenue allows you to scale the business because you’re just taking advertisers’ money, keeping your margin, and paying out your publishers. 

So the sooner you can get paid, the better. Sometimes you got to negotiate that. And it all depends on the volume you’re driving. The more volume you drive, the better. 

If you’re working with big branded advertisers, payment terms might be net-45, net-60, net-90. 

I have some of those deals right now because I get good revenue from those advertisers. However, I don’t get paid for three months, and I have to pay out all my traffic sources. But, today, I’m willing to take a little bit more risk, and I have more money in the bank. 

However, I wouldn’t recommend that for anybody new.

Governing law and jurisdiction

 

This provision in a contract allows the parties to agree that a particular state’s laws will be used to interpret the agreement, even if they live in a different state.

Normally, everyone tries to get jurisdiction in their home state. So ideally, that’s the goal.

This is usually a battle back and forth with your advertisers. 

What I like to do, and what I feel is a good compromise, is to make the defending party’s jurisdiction. That means that if the advertiser sues me, we’re going to have jurisdiction in my home state and vice versa. 

It also stops people from suing partners and have conversations instead. Because most of the time, we can usually work things out. 

If you’d like to learn more about the things I want to have in my agreements with advertisers, make sure to watch the full episode here!

And if you find value in this content, join me next week. 

If you have questions or want me to share some specific content, shoot me a message on social media and let me know! I’ll talk about everything that makes sense! 

If you’d like to get bonus Performance Marketer content, sign up for my SurveyDetective VIP waitlist!

🕵️‍♂️  Sign up for the SurveyDetective VIP Waitlist HERE

See you next week!

 

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Transcript…

Read Full Transcript

Eric Beer 00:00

You always need an agreement no matter what you do, OK? I don't care if it's your best friend in the world. You have to have it. You must have an agreement with every person you do business with - advertiser, affiliate if you're doing 1099, where you're hiring people. Obviously, if you have employees, right, you have an employment agreement. Anything you do - agreements. Always have it in writing. So, there's something very clear about what you're doing. So, that if there're any issues later on where you perceived it differently than I did, then we just go to the paper.

I spent the last 17 years building my eight-figure performance business without using any of my own money, working with some of the most brilliant direct response marketers in the world today. Now I'm looking for entrepreneurs to join my affiliate army built on ethics, transparency, and good old hard work. Join me to change the perception of how people view the greatest business in the world, affiliate marketing, and follow along as I learn, apply, and share performance marketing strategies, working with some of the brightest people on the planet. My name is Eric Beer, and welcome to the Performance Marketer Podcast.

Alright, what's up, guys? Eric beer here, coming from old New York. It's summer. I hope everybody's having a good time. Today we're going to talk about the advertiser, how to do a deal with an advertiser. Things to look out for when you're working with an advertiser, that will allow you to protect your interests when you're working with affiliates or publishers. Someone in my text community asked me to do this for them. So, I'm going to do so. This is the benefit of being part of the community. So, if you want to be able to get me to do some content that might be helpful for you and your business, join the text community, ask me some questions. Yeah, I answered them and then also do some content, if it makes sense. So the number is 917-636-1998.
So, today, we're going to talk about doing the deal with an advertiser, and things you should be looking out for, OK? I want to be really clear on this. I'm not a lawyer. This is not legal advice. I'm not going to get into anything on the legal side. I appreciate you guys being here. If you're not subscribed, subscribe, like the button, comment on anything you see here that may be of interest to you that could help you. Yeah, let's get some things going. If you agree, great - tell me. If you disagree - tell me. If you have any questions - fire away. And, of course, as I said, you can text me at 917-636-1998. And I will be able to communicate with you directly.
So, like I said, someone in the text community asked me to do this. They said they were running some advertiser deals with some affiliates, and they got burned. And they were like, what do we look out for? How do we protect ourselves? So, we're gonna dive in a little bit on some of the things I look at from a business decision. And some of the things that we do to protect ourselves. This is not a legal recommendation for you to do anything, right? You need to talk to a lawyer on creating your own contracts. Nothing I say here is going to help you - I'm not a lawyer, I don't not giving any legal advice. I'm just kind of going over some of the things that we do when we do deals in our contracts that try to help us and benefit to our advantage in the marketplace. So, with that said, let's dive in pretty quickly.
Let's keep this quick and short - advertiser contract, how to protect your interests, OK? Some contract sections here. So you want to have the contact information of you and your advertiser. Of course, the deal, the details, like what are you doing, right? Is it a CPA? CPL? Are there any restrictions on the offer, like a geo is what locations they're allowed? Are you capping it on how many leads per day, how many leads per month, etc, etc, any kind of bonuses, whatever's in the deal that you're doing with the advertiser, you want to have that in some sort of like, Notes section, allowing you to write that stuff in as you're doing things and then there's just purpose definitions, confidential information and non disclosure non us right maintenance and confidentiality, ownership and no license warranties, limitation of liability remedies, term, non solicitation, non compete, non trade, dispute resolutions, miscellaneous, jurisdiction, all that stuff, right? I'm not going to get into that, because I am not a lawyer. So I'm just showing you some sections that would be in your contract. But that is not my expertise. That's not what I do. So we're not going to talk about that today. What we are going to talk about is some of the things within the contract on when it's a business issues, business decision.
So number one, when you're working with an advertiser, what you want to try to do is you want to try to get them to a place where you have a non compete, what does that mean? Right? So from from my perspective, the way I look at it If I'm working with you, and you're an advertiser, and I'm going to go out to the marketplace, as a network, and go find affiliates, publishers, people that are going to drive traffic to the advertisers offer that they do not have today, OK? That means that I'm bringing people distribution to the table that they never had before, right? I want to protect my interest there, I don't want a publisher, to start running an offer from an advertiser, it starts working well, and then they try to go and circumvent me, and go talk to my advertiser directly, right? Sure, you want to have that in your agreement with your affiliates and publishers. But it's so hard to do that, right. So you want to do that through the advertiser if you have a good relation with your advertiser, and they can agree that you're bringing value to the table, and you are actually working your butt off, to help them get their offer out into the marketplace. And they're only paying when you drive some action. I mean, it's really a no brainer for them, right? And thing is, is today, they don't have that traffic. So it's not about traffic that they currently have, it's just anything you bring to the table today, from the minute they sign that contract with you, you should have some ownership there, right, some protection with your business. So typically, we put something in the agreement saying during the term of this order for a period of 12 months thereafter, that's important. 12 months thereafter, advertiser will not purchase or engage either directly or indirectly, any marketing services from any third party that you purchase media from during the term of this order? OK. The reason why you put 12 months thereafter, is that if they fire you, right, you want them to not be able to work with the people that you brought to the table for 12 months? Or if they do they got to continue to pay you for 12 months. All right. If you don't write that, then yeah, you could have a noncompete during the term, once they fire you, well, then what? You're out, right. So that's to protect you from you getting fired, when you really didn't do anything wrong, they just want to work direct and go around you. Normally, advertisers don't do that. Normally, it doesn't happen. And this is why you put in here, you don't want them to do it either directly or indirectly, right? Most advertisers won't directly try to circumvent you ever, but will happen is the people that you're working with, there are some affiliates that just they will try to circumvent you, they'll try to squeeze you out. And the advertiser may not know that, right? They don't know every source that they're getting from you as a network. So what we want to put in here is indirectly meaning, like, if you bring to the attention if you ever Hey, you know, you just started working with that, that affiliate who's been running traffic with us for the last 12 months? Oh, we didn't realize that, sorry, then the advertiser would go to that affiliate say, listen, we, you got to work directly through Eric, Eric's company, your company, right? So that's the way to protect yourself, right?
So number two liability. And really important here, when you're agreeing something from liability, what I like to do is I like to put in that I do not have more risk than what the average monthly spend of the advertiser is with me, right? So what that means is like, why would I agree for them to sue me for millions of dollars, if they're spending 20 grand a month with me? Makes no sense, right? The risk reward isn't there. If something goes wrong, they're gonna sue me for millions and take my company down, but they're paying me $20,000 a month? No. So what I could do is, I like to do it where it's on an average monthly, what you could do is you could say over the over the last three months, whatever the average monthly spend of the advertisers, that is the limit that they can come after you for. And this is a way to protect you and your interest and your company, so that your company doesn't get killed. If you're working with a big advertiser that wants to come after you and just go after everything, right? When it doesn't make sense, right? If they're spending a lot of money with you, great, then that case, whatever that is, that's what they can come after you for. But if they're not really spent a ton of money, then it doesn't make sense for you, as the network to go and work for them to try to get them distribution when if something were to go wrong, that you're going to get killed when they're willing to spend a ton of money. So I like to put that in.
Payable actions. Well, here's we just want to kind of define what the payable actions are. Right. So all payable actions, including leads, clicks in orders are accepted after 24 hours, 24 hours, fine, you could put that there, that's going to be a negotiation. advertiser can notify
the the UMP which my company in writing, within the timeframe of the dispute of the leader, click right whenever that actual deal is that you're making with them on the table action, they'll be waived the charge for such payroll actions, meaning like you You won't necessarily have to pay for leads or clicks or anything that they're saying is invalid. So they just have to let you know within a period of time, what you want to try to do is you want to try to have all payable actions billed based off of what your system is showing. Right? So that's going to be a back and forth where the advertiser might say, No, we want to bill off of our numbers. And that's going to be a give or take, yeah, ideally, would want to bill off of your numbers. However, if, if they want to bill up their numbers, you can agree to that it's not a big deal, right? You just got to watch and make sure that the numbers always match your system. Because what will happen is, if you have a network, and there's affiliates coming in running traffic, right, what you don't want to happen is you don't want you to go work with an affiliate, OK? they go and they generate 1000 sales for the day, right? Being the affiliate, and your system has 1000 sales a day, your pixel fired, and now they're getting paid 1000 times whatever the payable action is. If you go and look into the advertisers system, if they're only paying you on 700 of those sales, well, then you're upside down, and you're in trouble. Right? So if you're doing that, you want to make sure that their system matches your system. And if they don't, you need to understand why. Right, and you need to make sure that those two are matching, so that the affiliate isn't going to be getting paid more than what you're actually getting paid and you get run over, OK?
Payment terms, I like to do net 15. Personally, I like to get paid sooner than that be honest with you. But net 15 thinks fair, because what happens is, if I can get paid net 15, then I can go out and pay my affiliates, my publishers sooner, right? The idea is you want to pay your affiliates and publishers sooner, the sooner you can pay them, the better. Sometimes I pay them before I even get paid, right? The sooner you get paid, the better on that. net 15, you got to be doing some real volume with the partner, or it depends on who you're working with is payment terms. But it could be net 30. net 30 fair, you can work with that. Right. And you can, when you do deals with affiliates, what you want to do is you want to do pay on collected revenue, when you're doing a deal with an advertiser, and you do net 30. When the advertiser pays you, that's when you want to go and pay your affiliates, right? You don't want to be in a situation where you go out and pay all your affiliates. And then the advertiser doesn't pay you. And in that case, you're in trouble. Especially if you're new, and you're just starting out, you need that money coming in. Right? If you do something on a pay on collected, let's say you do $500,000 in a month with an advertiser, right? Well, you're likely don't have half million dollars sitting in your bank. So what you're doing is you're paying when you collect the revenue, and that allows you to scale the business to whatever you can do, right millions, millions of dollars, because what you're doing is you're just taking the advertisers money, you'll keep your margin, and then you'll pay out your publishers on whatever it is they generated from when you collect on the revenue. So the sooner you can get paid, the better. Sometimes you got to negotiate that. And it all depends on the volume you're driving, right, the more volume you drive, the better. If you're working with big branded advertisers, well, then payment terms might be net 45, net 60, net 90. I have some of those deals right now. And early on in my my stage of my business would have been hard to run that business, because we'll do some good revenue with those advertisers. However, I wouldn't get paid for three months, and I have to pay out all my traffic sources. Today, it's a little bit different, I'm willing to take a little bit more risk, and I have more money in the bank to front by advertiser. However, I need to make sure that the advertiser I'm working with is paying getting paid on time, and I have to measure how much risk I'm willing to take to work with them. So there's always that balance there. But I wouldn't recommend that for anybody that's new. So don't do so. Scrub rate, what you want to do with advertise, you want to put a max scrub rate in what does that mean? It means that they can only charge back a certain amount of clicks or leads or sales for that month, right. So a lot of times standard is 10% max flow rate, which means that if you get generate, you know, 50,000 leads in the month, they can't return more than 5000 leads to you. That's it, you max it out, you know, you're getting paid for every other lead outside of that. I mean, 10% shouldn't be like just automatically not paid. It's just if they see things that went on in the business, that doesn't make sense for them the pain, you want to work with your advertisers in that respect. If they do scrub leads, you want to get something back, you want to get some report, you want proof, because you you want to be able to take that proof and show it to your affiliate or your publisher. OK, listen, if, if you're driving traffic to an advertiser, and they're they're returning leads, because they don't like the leads. You don't fight them on it, right? It's just something's going on, something's wrong. So it's not your fault, right? You're working with an affiliate who might be driving bad traffic. So all you really need to do is understand what's going on. You need to understand as soon as possible. Timing is really important. You need to know this within a period of time, that's where you want to put 10 days because there are guys that are out paying maybe their publishers if they are brokering a deal that you have. You may not want them to broker the deal. That's a different conversation. However, you want to be able to tell them what's final and billable that they're going to receive from you. And you need to know from your advertiser what you're getting paid before you can tell them. Normally you want to have some sort of time that they're going to tell you, your advertiser what the billable leads are. And if they don't you want them to show you They say that there's bad emails, send the bad emails, if there's bad phone numbers, whatever, you want to get a report that then you can afford to them on fraud, fraud, fraud, right? You could put whatever you want in here, you try to define fraud. But at the end of the day, fraud is fraud, someone breaking a law someone doing something like with with fraudulent activity? It's it's very hard to limit fraud, right? You can talk about getting timing of what's payable, and when and how long that yes, but you want to reach with your advertiser, and you can't go back your narrative, hey, you didn't tell me in time that there was fraud, some advertisers have these credit card offers that they might do a free trial for 30 days, and then it takes them 6090 days to know what's going on. Right? They're still paying you out on that traffic, but you got to work with them. If there's fraud going on, you need to figure out how to fix that and go after the affiliates, cut them, shut them off, do not work with them, whatever you can do to help your advertiser. It's not your fault that there's fraud. But you can only do something when they tell you. The advertiser is telling you there's fraud. And when you find that out, that's when you need to go and police that and take action and shut shut that down immediately. Obviously, they're not going to get paid for that traffic. It's not even a question if they're getting paid, right? Like a lot of affiliates, we promise fraud, come back and they'll say, well, what's going on with the email that you're focusing on the wrong thing? Like, oh, what am I getting paid? You know, we need to focus on it, you just sent fraud to my advertiser, that's a problem. Don't worry, when you're getting paid. Don't worry about like you seeing all these different things will get you that. But right now, there's fraud, there's, there's bad credit cards going to my advertisers page, and it's coming from you, that is a problem. And now they likely will know what's going on because they're placing the media. Most of the time, I'd say nine out of 10 times the affiliate or publisher knows where they're buying traffic and, and why there's bad traffic coming through. So they won't fight back once you get them to the point where they understand that your relationship with your advertiser is now being threatened because of them. And that is not OK. late payment from an advertiser. I don't really follow this, but you could put in the agreement where you can accrue some interest. For as long as they don't pay you. It's good to have in there, you don't have to enforce it. But I typically don't. But it's good to have in there. Oh, and you also entitled bet to your attorney fees, if you have to go and chase the money. Right? That's normally like, if it gets to that point, that's a different convert. If you're starting to get into like, you know, collecting and legal and having to sue people to get money, then that's where it comes into play.
So it's good to have governing law jurisdiction. Right. So again, I'm not a lawyer, I'm not giving you legal advice. But normally what you want to do you want to try to get jurisdiction, wherever you are, whatever your home state is. So ideally, that's the goal is that you want to go if the laws of what you your lawyer knows, right, like you're in New York, so I want to go off of the the laws of the state of New York, right? And more importantly, it's what's the jurisdiction. And what that means is where if there's some sort of issue we are going to have, we're going to have some legal battle, where are we going to do this? Is it going to be in New York, if I'm working with a company in California, they're going to want California? Right? This is usually a battle back and forth with your advertisers. And what I like to do, and what I feel is a good compromise is I usually make the jurisdiction the defending party. So what that means is we don't decide that it's New York or California, right, what we say is in the agreement, the jurisdiction is the defending party. And what that means is, if the advertiser is going to sue me, then we're going to have jurisdiction in New York. If I were to sue the advertiser, the jurisdiction is in California. And what it does is it also like stops people from going and suing them, right, and just having conversations because most of the time, usually can work things out. If you if you're work with people that are good people, you never really have to do anything with an agreement. You know, like, it's relationships. But you do always want an agreement, I will stress that no matter what business one on one, you always need an agreement no matter what you do, OK? I don't care if it's your best friend in the world. Yeah. You may never look at it, but you want to have it, you have to have it. You must have an agreement with every person. You do business with advertiser affiliate, if you're doing 1099, where you're where you're hiring people. Obviously if you have employees, right, you have an employee agreement, but anything you do, agreements, always have it in writing. So there's something very clear on what you're doing. So that if there's any issues later on where you personally Do that differently than I did, then we just go to the paper. This is it guys, you know, for the most part, these are some of the decisions that you want to look at and make when you're working with an advertiser that are going to protect your interests.
And I'll leave you with one that's not on here. Here's the bonus one. And this is something that you want to do when you're working with advertisers. If you can get the advertiser to become exclusive with you, you become agency of record, that is so powerful for you and your business. What that means is, the advertiser is going to work exclusively with you. And your job is to get them distribution throughout the network, throughout your network throughout all the affiliates in the world. You it's there's a lot of advantages to an advertiser by doing that, right, if you can move the needle, right, they pay you one time, they deal with you, they don't have to police, any affiliates, you're doing all that stuff, that's your job, right? But you know, well, and if you can get them to a place where they're looking for X amount of traffic per month X amount of sales, and you can over deliver and get that for them, that's where you have a chance to become the agency of record, right. But if you're somebody that can't really have any volume, and it's very hard to become exclusive, because they need to go outside your network, because you're not delivering what you promised for them. So even if you do get exclusivity, if you're not delivering, it's not going to work, and you can get fired because you're just not doing your job to get them what they need, right? As much as they're willing to do so, it doesn't work. But if you can, it's so powerful because then what happens is that offer in the marketplace is ultimately yours. It's like having your own offer, right? Anybody who wants to run that specific advertiser offer would have to come through you in your network. And that is super, super powerful. That gives you so much leverage and the ability to go out and find awesome affiliates and advertisers that will work together and build a huge business. I know at times, I'm even transparent, right? Like, a lot of people have these networks that are closed, meaning they won't tell the advertiser who's running traffic because that's their value on the back end with their affiliates. But that's why I like to put in the non-compete of Hey, listen, anybody, I bring - they're mine, right. And what happens is now, you'll know everybody I'm running traffic with. I don't have to hide anything from you because you're not going to go around me. So, we all can work together. Right? There are times where I get my affiliate or a publisher on the phone with my advertiser and me, right, because we just, we're all going to, like brainstorm and think about what's the best way to go about building and growing this business. And it works, right? Full transparency - the more transparency you can have, the better. But relationships with advertisers are huge. But the whole idea is to protect your network. Protect your interests when you're working with affiliates. You really want to have a good relationship with your advertiser. And once you do that, then you're protected. Sure, you can try to get your affiliates to agree to all these things on their agreement if you can (kudos to sexual protection), but a lot of them won't agree to that. That's not worth it, right? Because at the end of the day, if you have something in writing where the affiliate can't go to you, but then the advertiser wants to work with that affiliate, you're going to stop them. I mean, it doesn't look good, right? It just doesn't look good. And it's not good business. So it's like, at the beginning of the relationship, when you're with the advertiser, just get them to agree on all these things, that you're protected. And at that point, whenever this business starts getting going, and you're kicking it, you're really not in a place where you can get squeezed out. And you know, all this hard work goes to nothing.
So with that said, I hope this was helpful for you guys to the person that asked me on my text community to do this. I hope this is helpful. If I didn't answer every question you had asked me in my text community, right, you know what to do. For the people that aren't part of the text community, 917-636-1998 ask me questions. I will answer them. I will help you with your business. If you want me to do something of content on the podcast on YouTube, I will do it if it makes sense. And if it will be helpful for you and others, I'll do so. So hopefully, this is helpful. With that said, I appreciate your guys time. Thanks for being here. Enjoy summer.

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