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Developing Effective Affiliate Policies

Posted on 7.31.2008

By Mark J. Rosenberg

Affiliates play a significant role in shaping consumer perceptions of you, the merchant, your brand and your products. Well intentioned or not, an affiliate’s shoddy website, deceptive practices and violations of the law can have devastating consequences for your business and your livelihood.

But many of these risks can be reduced by developing policies governing not just the affiliate selection process, but also their day-to-day conduct. With effective policies in place, you can take back some of the control handed over by employing affiliates and mitigate legal risks both on the business and personal ends.

These policies go beyond requiring affiliates to comply with all applicable laws such as false advertising, deceptive practices, CANSPAM, intellectual property and privacy laws. At a minimum, affiliate policies should cover marketing practices and use of the merchant’s intellectual property. And, they should apply to all affiliates regardless of whether you deal with them directly or use a third-party affiliate network.

Know Your Affiliates

Before doing business with a new affiliate, you should conduct a thorough screening process and set delineated standards. These standards should allow you or the network operator of an affiliate network to determine whether prospective affiliates are reputable businesses with professional and properly functioning websites. Do some research of your own – visit their sites, read customer reviews and ratings and conduct a few searches. An effective screening process can weed out those most likely to cause problems in the future. Also, in light of new laws requiring many merchants with New York-based affiliates to collect sales tax, the screening process can be used to determine which affiliates are located in that state or any other state that imposes similar legislation in the future.

Protecting Your Trademarks

Trademarks are often among your most valuable assets as a merchant – they instantaneously evoke your image and reputation to consumers. If your trademarks are abused by an unscrupulous affiliate or even improperly used by a well-intentioned affiliate, your brand image can suffer serious, irreparable damage. While the risks posed by bad apples can be reduced through the screening process, the best way to ensure that trademarks are not used improperly is through strict policies governing usage, if allowed at all.

Affiliates typically use trademarks in product descriptions, purchased keywords, metatags and domain names. While nearly all affiliates will need to use relevant trademarks in block letters to identify merchants and products, the need for more extensive trademark use varies from merchant to merchant. Will you allow affiliates to purchase your trademarks as keywords, use images of your logo, or use your trademarks in metatags or in domain names? If the answer is no, your affiliate policies must clearly state the same.

If the answer is yes, spell out the specific parameters of use. For example, logos should be provided solely by the merchant. Also, the manner in which the logo can and cannot be used should be clearly defined. Affiliate policies should govern whether the logo can be used in close proximity to logos or products of other merchants, appropriate sizes for the logo, and where it can or cannot be placed on the affiliates’ websites. If domains containing your trademarks are used, those domains should be registered in your name. That way, if you and the affiliate part ways, you retain control over the domain name.

Maintain The Marketing Message

Even the most well intentioned affiliates can sometimes mar your brand image and hinder marketing goals. Inaccurate product  descriptions, poor image quality of logos and products, or even photographs of the wrong product (sometimes not even your own) can wreak havoc on consumer perceptions of your brand. In order to prevent these problems, require that affiliates use product descriptions and images provided by you and that they should not be altered in any way.

Merchants should not permit their affiliates’ marketing practices to conflict with their own. For example, if certain affiliate programs offer free gifts, sweepstakes or email solicitations and you feel these practices are inappropriate to your audience, the policies should clearly prohibit these programs. If you are going to allow affiliates to
engage in email campaigns, you might want to require they use text you provide to better control your marketing message. In fact, the more marketing materials you can provide for affiliates — advertising content and images, product images, product descriptions, etc. — the greater the likelihood your marketing messages will be consistent to consumers. This can also help prevent affiliates from recycling marketing materials after a campaign ends. Publishing material created for a discontinued campaign can cause a host of problems. This is particularly important when a marketing campaign is cancelled for legal reasons.

Another important measure of control over marketing messages is to place limitations on search engine marketing. For example, if your brand promotes a wholesome family image it’s a good idea to prohibit your affiliates from engaging in practices that result in organic or sponsored links related to sex or violence.

Enforce The Policies

Detailed affiliate policies are useful tools that protect a merchant, its image, its message and ultimately, the bottom line. But your policies are only as good as your efforts to enforce them. If violations are discovered, you must take quick, decisive action. Notify offending affiliates of their violations and demand that they cease. If not, consider terminating the offending affiliates.

While developing and enforcing these policies requires some effort, the potential marketing, financial and legal risks that are avoided make it worthwhile.

About the Author: Mark J. Rosenberg is Of Counsel to Sills Cummis & Gross P.C.’s Intellectual Property Practice Group and is resident in the Firm’s New
York office.

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