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The First Step to Working with Influencers - Affiliate Contracts!

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In this age of social media, it is common for businesses to outsource their marketing to social media influencers. How this works is a business will contact an influencer who is involved with their market. The business then moves to discuss a potential partnership opportunity with a social media influencer. From there, a business might send a promotional package, or exclusive product, to an influencer so they may review, or share the benefits of the product/service. In return, the influencer receives payment for the promotion, credits to the business, or a formal sponsorship from the business.
 
To properly negotiate a partnership agreement that mutually benefits the business and the influencer, you should first draft a Free Affiliate Agreement. An affiliate agreement forms a legally-binding relationship between two parties (typically, two businesses), where one party, the influencer, receives compensation for promoting the other, the business, to visitors of the business’s website, app, product, or service.
 
A typical affiliate agreement is structured to provide compensation to the affiliate in 2 situations. The first, when a visitor purchases goods on the company’s website. The second, when a visitor clicks on the link to the company’s website (called “pay per click” or “PPC”).
The payment structure you pick will rely upon the sums to be paid by the organization to the partner. Think about the accompanying components when concluding how to diagram pay in your member arrangement:

  • The conversion rate of the company’s site
  • Average number of sales
  • Average profit margin
  • Traffic to the affiliate’s site
  • Percentage of users that are likely to click on the link to the company’s website

There are no principles with regards to drafting an affiliate agreement. Therefore, it is imperative to run the numbers and make an arrangement that is useful and maintainable for the two parties.

 

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