Operating AgreementOperating an affiliate marketing network can be an effective means of leveraging the marketing capacity of thousands of web venues and marketers without actually incurring the expense of establishing those venues and hiring those marketers, as applicable.

Importantly, well drafted affiliate marketing agreements with the affiliates and advertisers participating in your network can also greatly reduce your exposure and potential liability.  With the right contracts in place, you could be left with a marketing business that has a lucrative upside with very little risk.

Let’s You and Him Fight

The primary goal for the network in creating affiliate marketing agreements should be to ensure that the network itself remains above the fray in terms of liability.  In other words, the network should push as much liability for the advertising material and featured products on to the advertisers, and liability for the marketing methods and venues on to the affiliates.  Where a dispute arises, a network with properly drafted affiliate marketing agreements will be able to direct the adversaries at each other, and get out of the way when any potential litigation between them commences.

In essence, the network should seek to establish itself as a passive conduit – a marketplace where advertisers and affiliates can each benefit from the other’s offerings – without being responsible for the offerings or practices of any party involved.

Good Fences Make Good Neighbors

Even though the network’s objective in drafting its affiliate network agreements should be to keep the network out of trouble, as mentioned above, that does not mean that the agreements should neglect to establish clear rules of conduct, and effective enforcement methods to be employed as needed.  There are numerous contingencies, regulations and laws that need to be taken into account for these purposes, including deceptive marketing laws, privacy laws, the CAN-SPAM Act (governing email marketing) and the Telephone Consumer Protection Act (“TCPA”) (governing telemarketing), among others.

Without strict rules ensuring compliance and governing marketing practices, the online venues being utilized, advertising materials and the products that are marketed therethrough, there is an increased likelihood that the advertisers and affiliates in your network will suffer significant liability, which will make your network less attractive to them.  Thus, it is not enough to simply keep the network itself out of harm’s way – affiliate network agreements must establish a framework that will compel good behavior from participants such that the network’s appeal and participant profitability will be maximized.

Under these circumstances, it is highly recommended that you retain qualified legal counsel to ensure that any affiliate network agreement that you intend to use, or currently use, is drafted and/or revised, as applicable, in order to ensure that you are protected, and that your network’s participants will feel confident in utilizing your venue.

If you are interested in learning more about this topic or require the preparation, or negotiation, of affiliate network agreements, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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