In my mind it is a turbulent time to be in the affiliate marketing niche. Several states (including CA, IL, NY, AR, NC, and RI) have passed affiliate nexus laws. If you are not familiar with this legislation it is basically a law that seeks to force online retailers (like Amazon) to collect sales taxes. Constitutionally sales tax does not have to be collected from customers who live outside of any state where that retailer has a physical presence… think warehouses, shipping centers, and corporate offices. These laws seek to force them to collect the taxes by saying that using affiliates as independent sales people creates “presence” or nexus in the states where their affiliates reside.
For all the reasons why this is horrendous news for affiliates read Sales Tax Laws May Kill Affiliate Marketing. Even worse news is that recently an Illinois Senator took this shakedown attempt national. To put it simply though imagine that you are a big corporation and a state law passes in California that states your business relationship with John Doe in that state now requires you to collect sales taxes for all California customers. Jumping through those hoops will cost you money and lots of extra work so it is not hard to figure out the easiest course of action… simply fire John Doe and avoid all that extra money and paperwork. That is exactly what large retailers are doing. They won’t be strong armed by state governments, they simply fire their affiliates and devastate thousands of small businesses that reside there.
So, the million dollar question is.. what do you if your state passes an affiliate nexus law and you got your walking papers from Amazon and other large retailers? Here are some ideas:
Move to Another Location – This is the most obvious one and if you make a substantial income with affiliate marketing it may well be worth it. Of course this law may follow you to the new state as well, so keep that in mind. You may choose to live in a state where your largest affiliate company has a physical presence but you may lose your relationship with others. Another option would be to move out of the country. Just make sure the income tax there isn’t greater than what you pay here or it may not be worth it. There is also the possibility of incorporating in another state but you should talk to a tax professional about the legalities of it.
Find Affiliate Programs in Your State – Any retailers based in your state must collect sales tax already so they are unlikely to fire affiliates from their own state. It wouldn’t make sense to do so. This may not be as profitable as before but you may be able to get creative and salvage some income. You can always try niche sites that center around what is available in your state.
Sell Digital Products – This option may not be available for long since many states are looking to tax digital products as well but for the time being you may have luck promoting ebooks and info products as an affiliate.
Sell Your Own Products – You can also make and sell your own digital products. Think eBooks, eCourses, teleseminars, audio recordings, plr articles, etc. And of course you can sell physical products by opening a retail shop online.
Sell Ad Space – Many bloggers and site owners already do this to some extent but it can be a great source of revenue if you have a high traffic site. You can sell the ads yourself directly or you can use an ad network. You can do both even. Offer banner ad spots as well as text link ads and you may just come up with a steady new income stream. Forming a products and/or services directory on your site is another option. Small businesses would then pay a small yearly amount to be displayed on your site.
Sponsored Posts/Paid Reviews – When companies contact you with press releases or product pitches send them a form email informing them of your compensation rates for helping them to promote their products or services. Many will simply ignore you and move on to find other bloggers who will do this for free but some may take you up on your offer, thus providing new sources of income.
Membership Sites – If you have managed to establish a nicely trafficked site or a sizeable online community it may be time to create an inner circle. This can be done via a private forum or a password protected area on your blog where you share specialized content with paying subscribers. It can also be a place where you offer coaching and personal assistance with those interested in your niche. If you run a recipe blog for instance this can be a place where you offer exclusive recipes, step by step instructions, videos of you cooking and sharing tips, menu planners, shopping lists, and other value added features. Your particular niche will determine if this is feasible but many bloggers and site owners have had great success with offering their best content to paid subscribers.
Squidoo and HubPages – Both of these sites allow you to create your own content and be paid a percentage of commissions from ad clicks and affiliate sales. You basically split the profits from your pages 50/50. While it may seem foolish to create profitable pages on someone else’s virtual real estate this is a great option to have if you cannot collect these commissions in your own state. Product reviews and write-ups do especially well on sites like these and they can be very profitable. And another tip… you can make your own online purchases through your Squidoo or Hubpages affiliate modules and get money back via commissions.
Market Locally – In addition to finding local affiliate programs you can also reach out to local businesses and/or start a blog or web site about your city or township. This will give local businesses more incentive to seek you out for paid ads, sponsored posts, and product/event reviews. Some opportunities that come your way might not be paid, they may just offer you something of monetary value in return for a review or endorsement but when the opportunities are local it may help your bottom line regardless, in services or products that you didn’t have to pay for. Mom blogs especially, that are location specific, can be a great way to leverage free services and entertainment for your family.
Group Deal Sites – This is another option that will not result in cash payments but it can result in shopping credits. Group Deal sites (think Groupon) are popping up all over and there is usually incentive to share these deals with friends via email, blog, Facebook, and Twitter. When someone you referred buys the daily deal you get credit that can be used on future purchases.
If you want an affiliate based business to survive and thrive you may need to get creative find new income streams. Do you have any ideas or tips to share?