Affiliate Marketing: Growth, Taxes and Social Networks

08/01/2008

According to a recent report from JupiterResearch, online marketers are projected to spend over $2 billion on affiliate marketing fees in 2008. This is a 15% increase from 2007. The biggest spenders in this arena are retailers and financial services providers, making up about half of the total spending.

The five year outlook is just as rosy. Affiliate marketing is expected to continue to grow at an annual rate of 13% between 2007 and 2012, where it’s expected to reach the $3.3 billion mark.

Large affiliate networks like Commission Junction and LinkShare are expected to continue to thrive. And, private relationships, i.e., direct affiliate relationships between vendors and publishers, are growing as well.

A Fly in the Affiliate Ointment: Taxes

Earlier this year, the State of New York was the fly in the affiliate marketing ointment. It amended its laws, seeking to collect taxes from out-of-state Internet retailers who obtain customers through New York state-based affiliate sites.

Large e-tailers Amazon.com and Overstock.com fought back, filing suit. The gist of both suits: the e-tailers stated that as they maintained no physical presence in New York State, they should be exempt from New York State sales tax. The cases are still pending, with no ruling issued as of yet.

This action by New York lit a fire under some (i.e., Affiliate Classroom and Schaaf Consulting) to begin efforts to create an affiliate marketing trade association to fight moves like this.

Social Networking Creates a Boost to Affiliate Marketing

Social networking is a ray of sunshine for the affiliate marketing industry. It increases buzz, leading to increases in traffic and sales for affiliate marketers. And, affiliate marketers are capitalizing on it – using social networking communities by creating their own pages, groups and blogs around their products and services.

The growth in affiliate marketing spending is about the same as the growth in other online advertising. And the reason it’s not likely to slow down anytime soon is because affiliate marketing is a low-cost investment with payouts based solely on sales – a win-win for all.

For more insight visit Affiliate Marketing Management Services