Depending on what the results from of the Finance Committee vote on HB 5481 is the bill may go back to the General Assembly for a full vote. This bill is exactly the same as last year’s bill (SB 806) and similar to other so-called Amazon Tax initiatives.

On Monday Amazon threatened to terminate all of their Connecticut affiliates, and is again showing that they have no qualms about using affiliates as pawns. Paul Misener, Amazon’s Vice President for Global Public Policy, said in testimony submitted to the Finance, Revenue and Bonding Committee:

“If Connecticut were to enact RB 5481, Amazon and presumably dozens of other out-of-state retailers would simply sever affiliate advertising relationships with Connecticut residents.”

Such a stance is a tactic Amazon has used in other states before with mixed success and is not one we, here at ReveNews, endorse.

Keith Phaneuf of Connecticut’s The Mirror writes “Both Rep. Cameron C. Staples, D-New Haven, the House chairman of the finance committee, and Rep. Vincent J. Candelora of North Branford, ranking House Republican on the panel, said state government is trying to walk a fine line. It can’t ignore a major portion of its sales tax stream that has moved online, but officials don’t want to harm businesses amid a slumping economy.”

Connecticut residents are required by law to pay the sales tax on goods purchased tax-free either out-of-state or online. Those obligations, known as the “use tax,” are supposed to be reported on annual state income tax returns.

But officials concede many residents do not pay the use tax. The $13.4 million in use tax paid last year by Connecticut income tax filers represented less than one-half of 1 percent of all sales tax revenue.

At risk of being terminated, by Amazon alone, if the bill is enacted are 70 percent of the 2,800 affiliates in Connecticut. Often other advertisers follow suit. Those are jobs that could be saved in this difficult economy and business taxes Connecticut will lose out on if the affiliate companies go under. Playing chicken with affiliate business does nothing to benefit the state since no tax revenue will be collected as merchants will simply switch to other marketing channels.

If you are a Connecticut affiliate, we urge you to speak out against HB 5481, to prevent more jobs from being lost. Both Affiliate Advocacy and  the Performance Marketing Association have resources that can help.

How did the deal come together with Global Media Minds, Joe Nemechek, and NASCAR?

The whole thing happened very rapidly. In NASCAR there has been a contraction in the amount of sponsorship money available for drivers due to the economy. GMM approached us literally weeks before the racing season started with the idea. We decided to take on the challenge as a case study with the goal of creating a different way of packaging various elements of online marketing within the world of NASCAR racing. GMM had all these parts for Joe in place that weren’t really being leveraged:  a late 90’s style website, a Twitter account that was sort of being used, and a Facebook account that was only partially up to date. Nothing was really integrated together. So we ripped it apart and put it together in the short timeframe we had. What you see now is just version one of our concept, there are two or three more evolutions yet to come.

How has the response been?

I have to say the attention we’ve gotten so far with this project is phenomenal.  We built the Media Trust brand leveraging social media but I don’t think you really understand the concept of engagement until you get behind the wheel of a social campaign with someone that is a celebrity. We first looked at Joe Nemechek’s personal site and his official site NEMCO Motorsports but decided that we should start from scratch with FrontRowJoe.com.

So we started with the fundamentals putting all the pieces together, setting up tracking to measure sign-ups and clicks, integrating Twitter and Facebook, getting Joe to personally buy into using the social platforms more methodically. Joe began posting regularly and the following grew quickly from about a thousand to just under five thousand users in Facebook and took the Twitter from in the hundreds to just under three thousand.

It’s groundbreaking because none of the other NASCAR drivers, to my knowledge, are remotely leveraging social media the way we did. Our efforts actually brought in two sponsors.  One of these is England’s Stove Works, which is not necessarily a typical sponsor. We were able to drive a half a million dollars in sponsorship revenue. For having put everything together in three weeks we’ve been enormously successful.

It’s kind of allowing Joe to be real spokesperson. Instead of the drivers just wearing the logos he can actually talk to the audience and react.

Exactly!  When we began working on the campaign we spoke with other companies who had sponsored NASCAR drivers and they all said, “We love NASCAR but we just could never figure out what our return was from it.” I talked to the CEO of Liberty Medical and he’s like “I love what you guys are doing!” And he even sent me a picture of his car and was like, “We love NASCAR, we’d love to sponsor it, I just couldn’t figure out how to make sense of it.”  Because what is my logo on the car worth?

But if you can have the driver talking about Liberty Medical its like  now he’s off and running. When the driver is talking about the brand you need the mechanisms in place to be able to really connect with the fan base. Not just through some static website but through interactive mediums like Facebook and Twitter. It’s amazing how quickly you’ll see people coming to that brand and transacting.

That’s how it was with England Stove Works. We drove half a million dollars worth of transactions initiated by our efforts with FrontRowJoe! In a way Joe became a super affiliate. That success with this experiment can certainly be replicated.

Quite an experiment; it seems to have out reached its goals. What were Joe’s team and GMM initially hoping for from this?

We really had no idea. This was a complete and total shot in the dark but it was better than nothing. Joe’s agency had been working with us on other projects and knew that we were able to look at the broad online universe and take a holistic new approach to the channel. It was either that or nothing so what have we got to loose in trying something new?  Let’s leverage Joe’s passion for the fans and history  as a driver and see if we can possibly generate revenue online. Let’s experiment and find out, we have nothing to lose, we have a willing driver, we have a great agency and a group of people to work plus if this model works it can be replicated within the NASCAR industry.

I’d say this has gone metric wise way past anything we could possibly imagine.  What’s great is that the season’s not even over yet and we’re definitely going to have a phenomenal case study.

How did you track the affiliate and social media ROI?

Everything was built in a dynamic environment so we could look at the results daily and start tweaking the campaign as we went. First there was the car itself which had no sponsors, so we thought “Let’s make Joe his own sponsor and put FrontRowJoe.com all over the car.” That would drive fans to a website designed purely with marketing in mind. We started to track metrics to optimize: how many people were coming in, from where were they engaging, what were they signing up for, the newsletter, what products were they clicking on.

Using Google Analytics we measured which channel, Twitter or Facebook, was stronger giving us a very clear picture of our efforts right down to the Tweet. We could see which Tweets and posts in Facebook worked, what type of call actions we used  in the posts did not. It’s been a very effective mechanism for allowing us to adjust as we go.

For the affiliate side, to track offers, we used our own proprietary affiliate tracking technology.  It’s really very interesting, prior to working with Joe, I didn’t realize how many affiliates are NASCAR fans. It’s huge!

For the New England Stove sponsorship we set up a tracking mechanism on their website. When a user came from NASCAR  a special discount or offer would trigger so we could see what the effect of the traffic that we were sending out was.

How are the offers on Front Row Joe picked?

At first it was fairly blind. We just looked at the demographics, the geographics, the “demo-geos”,  and where the races were held. We guessed the categories that would be popular, like DirectTV and offers from Force Factor because that was primarily more the “demo-geo” of Middle America. As the clicks came in we started to find out there were more females interacting with Joe and with NASCAR drivers than there were males which was something that none of us would have expected.  So what we are now doing is looking at the data of who is signing up into the database and which offers are getting interacted with.  Currently all the optimization is being done by hand but we’ll start applying technology to it.

So now that you’ve had this success what do you hope to replicate from the lessons you’ve learned?

What we want to do is really turn Front Row Joe into an actual brand. Not only for Joe, himself, but for NASCAR. The website will be completely rebuilt to focus on providing unique content from each race for the fans with content from the pits, from the front row with the drivers and will also provide visitors a much deeper integration with social media sharing features.  There have actually been other drivers that are interested in taking part after having seen this. Everyone is pretty astounded by the success, especially considering Joe has crashed and burned in every race but yet you’re still getting this incredible traction with the sponsors and the fans.

Once someone has gained some affinity with the fans it doesn’t necessarily matter if they’ve placed in the winner’s circle because they’ve built up this relationship over the years.

Exactly!  You know Angel, I’ve got a pretty big following within online marketing industry but I’ve never been able to generate the kind of response with my personal Tweets as I’ve seen Joe generate with NASCAR fans. The speed and responsiveness from those fans is just phenomenal! People are coming up to Joe in the pits and saying, “I saw your Tweet, “it’s faster than a tweeting bullet” that was great!”

My background is in mass media. Mass media and mass marketing is changing forever to “me media” and “me marketing” and I think this is a great demonstration of that.  And relationship is the point because consumers are getting so smart they can tell if someone has an  authentic social presence or not. We have tons of people coming on the site and saying, “Joe, is this really Joe?”

Which is why it’s important to have Joe excited and fully involved for this to work. You have to have the authenticity of the voice of these guys and this is what we’ve done with just one of them. The success certainly can be replicated.

Still, you have to be a little careful not to bastardize this because there is a lot of responsibility that comes along with engaging fans.  Social media is unregulated and if marketing agencies get a hold of a medium for the wrong reasons it can totally ruin this channel  just as quickly as it ruined other channels. I think there’s a big responsibility that comes along with this as we start seeing power of harnessing social media. Done right it can create a lot of value for the fans.

That’s the premise of Steve Rubel’s article on Forbes.com, and he makes an important observation worthy of discussion. Rubel is a well-known member of the digerati who is Director of Insights for Edelman Digital, the digital division of the world’s largest independent PR firm.

Rubel says marketers are making a massive shift to Facebook, Twitter, and YouTube, sometimes to the exclusion of mentioning their own corporate websites. He wonders whether the corporate URL is a dying breed.

But Rubel sees the potential for this strategy to backfire. He says consumers could “perceive corporate real estate on Facebook as a lame attempt to appear cool and hip.” “Many brands are just using their Twitter and Facebook presences to spew out updates, without any thought to how consumers will benefit by essentially opting in,” says Rubel. And most important, he says, “very few businesses treat social networks as personal, conversational spaces. Hardly any feature real employees. And a scant few aim to advance shared interests.”

I think Steve Rubel has given voice to something the big traditional marketers are missing – something savvy online marketers surely understand: social media is not just another channel for ads. As I mentioned in my post about Twitter going commercial, ads on Facebook and Twitter need to be a good fit with those platforms for them to be viewed as authentic.

In fact, authenticity may be the real issue here. Rubel’s observations point to the fact that some big marketers may be viewing social media in an entirely wrong context. Their quick fix answer is to muscle their way into Facebook, Twitter, and YouTube – but once they get there, they have no clue what to do. Think of it as a bully on the basketball court who has no shooting skill. He may be able to take the ball away from the other kids, but he’ll have a heck of a time scoring a basket.

I’m reminded of a time when marketers wanted to convert their messages to another medium called direct marketing. It was a sometimes painful transition: The marketers had to speak in a different voice that put the emphasis on “you” instead of “me.” That’s not easy when you have a corporate ego. Marketers had to learn that direct marketing was at its heart a correspondence relationship. The promotional approach had to be engaging. Copy had to be loaded with benefits, not just features. There had to be a compelling offer. And marketers had to have a strong call to action and numerous response paths – they’d get nowhere without asking for the order and providing specific ways to respond.

In the same way, marketers can’t just stumble blindly into social media. They need to learn the same kind of lesson they were forced to learn when they embraced direct marketing.

Social media is a different animal. Marketers have to engage in a two-way dialogue with consumers to make it work, and they have to be willing to expose themselves to possible negative feedback and open criticism. They have to budget and staff for social media. They need people whose responsibility includes engaging, responding to, and following up with consumers.

All of this takes a commitment to using social media on its own terms. If you want to play on someone’s field, you have to use their ball. Sorry, but social media doesn’t fit into that comfortable little box called traditional marketing. When you look at the way some marketers are approaching social media, you have to wonder if they will ever understand its potential.

The law also differs from its Amazon Tax brethren in that it purposefully, and with the support of large affiliates like ShopAtHome, attempted to spare Colorado affiliates from the fate they suffered in other states where similar laws have passed. For the Performance Marketing Association the removal of affiliate focused language was seen as a victory.

Unfortunately the attempt protect affiliates failed.

Amazon, who provided lobbyists during the fight against HB 1193, served termination notices over the weekend to thousands of Colorado affiliates saying:

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

Amazon is not alone in this stance. A handful of other companies including Oriental Trading Company, Hammacher Schlemmer, Terry’s Village and GiftBaskets.com have terminated affiliate relationships in the state. With Amazon’s announcement over the weekend many other are expected to follow suit including Overstock.

Many members of the PMA feel that such actions are due to advertisers who have not taken the time to familiarize themselves with the law’s new language. In Amazon’s case, Amazon does say it will continue to sell to Colorado residents, whether they will comply with providing lists of its customers who are Colorado residents to help with enforcement has yet to be seen. Knowing Amazon’s past behavior it is doubtful and a legal challenge against this legislation won’t be surprising.

Formerly the VP of Marketing & Product Development at Performics, Chris Henger was instrumental in guiding Performics’s transition into the Google Affiliate Network as part of Google’s purchase of DoubleClick in 2007. While at GAN Chris served as the Group Project Manager until early this year.

Catalina Marketing is a behavioral marketing focused company representing clients like Weight Watchers. Chris will manage the company’s in-store network, said to be comprised of 90 million households and 300 million weekly shopper transactions.

We wish Chris Henger the best of luck in his move. His leadership will be missed in the affiliate industry.

Public relations firm Edelman just released its 2010 “Trust Barometer.” It indicates that only 25 percent of the public thinks their friends and peers “are credible information sources about companies,” down from 45 percent the previous year.

Such a study can strike fear into the hearts of marketers who increasingly siphon budget dollars into Facebook, MySpace and Twitter; one of the reasons they do so is to take advantage of a social environment that encourages sharing opinions with friends. If three-quarters of those opinions aren’t viewed as credible, however, that could mean a marketing investment in social media isn’t such a great investment after all.

Edelman’s CEO, Richard Edelman, thinks the fact that consumers are less reliant on each other’s opinions suggests that “it’s a more skeptical time. … People have to see messages in different places and from different people. That means experts as well as peers or company employees.”

In Ad Age magazine, Michael Bush observes:

In some cases, social networks themselves may be contributing to the decline in trust. Platforms such as Facebook and Twitter have allowed people to maintain larger circles of casual associates, which may be diluting the credibility of peer-to-peer networks. In short, the more acquaintances a person has, the harder it can be to trust him or her.

This, it seems to me, is a core problem. In the pre-social media days, each consumer had a relatively small circle of friends and their opinions meant something. Now the meaning of “friend” has morphed into nothing more than an online contact. Such a contact hasn’t necessarily built up trust with the consumer over time. These “friends” couldn’t possibly have the same kind of influence as a closely knit group of personal friends with whom a relationship has been built.

If there’s a silver lining in the results, it appears that the credibility of friends outweighs the trustworthiness of television news, according to the Trust Barometer. But consumer trust is down across the board. Newspapers and radio news were trusted only slightly more than friends.

So what should marketers who are still enamored with social media do? Global brand strategist Jonathan Salem Baskin has a provocative answer:  Take a long hard look at where to spend your marketing dollars. “Nobody with responsibility for a bottom line has ever felt comfortable with social media as a replacement for traditional advertising,” Baskin says. In fact, Baskin thinks too many marketers may have gotten into social media because of “the allure of cost savings and glib convenience.”

Baskin thinks part of the reason consumers may have driven the popularity of social media in the first place is because “they ran away from commercial speech because advertising had proven to be so irritatingly useless. … If we renewed our commitment to selling based on credibility, authenticity and utility, maybe people would trust what we tell them, respect our corporate reputations, and give us their purchasing loyalty.”

If Baskin is right, marketers need to examine their own promotional strategy and make sure they are meeting the informational needs of consumers. They can’t abdicate responsibility for traditional marketing simply by picking social media over another form of communication. Sounds like marketers have some soul searching to do.

Still, it leaves open the question of the apparent decline in consumer trust. Consumers may just be feeling a general malaise about the economy. Or they may be telling us that they are less confident in the advice they receive from their friends – and the information they obtain from media channels. If the latter is the case, it’s something we should all be concerned about.

AOL, which separated from Time Warner Inc. late last year, bought Buy.at in 2008 for a reported $150 million,  a price unconfirmed by the company. The plan was to integrate it with the ambitious Platform-A, its ad platform designed to cover every market and niche for its own properties and its ad network.  Platform-A has been renamed AOL Advertising.

If anyone has more news on the transaction, please let us know.

From Rik Ferguson’s blog post (bolding by me for emphasis):

So what’s the point for the scammer? Well if you follow all the instructions, you first invite all your friends to come and check out this (cough) great deal. Then, if you are credulous enough to click the button, you are informed that in order to access the Account Upgrade page you must complete “1 quick, free survey”, different versions of the scam page offer different surveys, but this is where the money is made.

The survey I tested linked (via a couple of affiliate marketing services) to a “Werewolf vs. Vampire” quiz which promised to tell me which I am (surely I should know that already?) at the end of the ten questions I am invited to enter my mobile phone number to receive my results. If I do that I am agreeing to pay a £9.00 joining fee followed by £9.00 every week until I cancel my membership via SMS.

Of course, I immediately wanted to know which affiliate networks were involved considering TrendMirco’s report of around one million Facebook user’s being subscribed to the numerous fake gold account fan pages.

The Gory (Albeit Probably Boring) Details

Although, it was stated that the scam had been reported to Facebook and the content was most likely being removed, I got out my shovel and began digging. A quick Google search showed the content was being removed, but I was able to quickly pull up some of the offending pages courtesy of Google cache (see below).

The first thing I noticed was that the affiliate behind the fake Facebook upgrades appears to be geo-targeting the offers displayed to the end user. While Rik Ferguson obviously received UK cell phone offers, the offers displayed to me were US based offers (see below).

The actual offers differed at times, but all pretty much followed the same CPA network click stream. The irony of one of the quizzes being called “How Dumb Are You” was not lost on me.

The domain responsible for the above display on Facebook is corporate-promo-mfg.com. This domain was consistent throughout all of my research.

The affiliate link on corporate-promo-mfg.com is for CPALead with the publisher id 42109. Whois records for CPALead.com show the company as located in Wisconsin. The contact information on their web site indicates they are located in Las Vegas, NV.

CPALead redirects the click to click2go.org with an affiliate id of 3013 and sub id 42109 (passing the original publisher id). Click2go uses a Privacy Whois service, however the IP Location is tied to TattoMedia.

TattoMedia is certainly a player in these types of SMS ads and I’ve come across them numerous times in connection with adware usage. At this point, CPALead is acting as an affiliate/publisher of TattoMedia.

Click2Go then redirects the click to webventures.directtrack.com with the aff id CD43 and sub id 3013 (the id for CPALead as an affiliate with TattoMedia). Note that at this point, the original affiliate/publisher id is no longer being carried through on the actual tracking links. If you go to webventures.directtrack.com, you are brought to a sign-up page for MundoMedia.com. MundoMedia uses a Privacy Whois service as well, but their web site shows contact information for Toronto and Los Angeles.

MundoMedia  redirects the click to linktrack66.com containing the same aff id and sub id. Linktrack66.com is another tracking domain associated with MundoMedia.

Finally the click is redirected to MyMindQuizzes.com where the actual survey resides. MyMindQuizzes also uses a Privacy Whois service but resides on the same IP address as MundoMedia. Sometimes CPA networks will host a sign-up form for an advertiser on their own servers; other times it may be the CPA network themselves in ownership of the offer.  Looking at the Terms of Service page on MyMindQuizzes, I found mention of the company name Neo Image.

The short version is I found three CPA Networks involved in these deceptive Facebook ads: CPALead, TattoMedia and MundoMedia.

The Plot Thickens

You may be asking yourself “So what, the fraudulent ads were reported and Facebook removed the pages. It’s just a little bit of bad PR that will most likely quickly fade in people’s memory.”

If only that was case. The reality is that people who are making some nice change, regardless of how they are making it, aren’t always willing to give it up quickly. TrendMicro reported the incident on Monday. On Wednesday I did a search through Facebook (not Google but Facebook) and I found several new and active fake Facebook Gold Account fan pages with fan totals in the tens of thousands. When I viewed the profile pictures of one of these new accounts I saw pictures were added Monday. Even while Facebook was removing pages, new ones were evidently being set up.

Some of those pages are now gone, but I see new active pages again today with one simple search.

And while Facebook may be attempting to keep up the affiliate links involved remain active. There does not appear to have been any termination of the affiliate account by the CPA networks. Indeed, if you recall I went from a Google cached page on the account on Facebook to even track which CPA Networks were involved.

The Implications

There are several implications to this type of situation. The most obvious is  while the incidents were initially reported in the UK, they are now happening in the US as well. There is no way this ad promotion will meet the FTC guidelines regarding deceptive advertising practices. You don’t have to be a lawyer to figure that one out. When you start hitting numbers of consumers in the million plus range being potentially impacted, it’s almost like screaming for the FTC big stick to head your way. Everyone in the click stream trail is at legal risk.

What about those consumers? If you look at the last screen shot I posted, you’ll see that Facebook groups against this one particular scam are beginning to form. I’ll hazard a wild guess and say consumers aren’t happy about it either.

Is it a wonder that security companies tend to be less than affectionate towards affiliates? This type of activity certainly doesn’t help our case, particularly when they have seen affiliate links tied to scams, adware and the such for years now.  It should be noted that Rik Ferguson didn’t say “CPA Network affiliates”, he said “affiliate marketing”.

The lack of transparency build into the sub-affiliate model should be neither an inherent excuse nor a mechanism to hide behind when it comes to ensuring fraudulent activities do not tarnish and stain our whole industry. It’s not like we are talking about an affiliate who is capable of generating only a limited number of ad views.  If a network cannot monitor traffic from an affiliate at that level, then they probably shouldn’t be a network.  CPA Networks must become more active in establishing acceptable marketing practices, monitoring their programs and taking action on offenses within the industry and as an industry, we must be clear to those outside of our industry, including consumers, that these types of fraudulent marketing practices are unacceptable.

These types of incidents impact our industry as a whole and how we function and navigate within it.  Please stay tuned for Part Two of the post.

I wish that I could say “the end” but it’s not the end of story.  That’s will Part 2 of this post.

“Our customers are our greatest marketers,” said Go Daddy CEO and Founder Bob Parsons. “They use our products, know the quality of Go Daddy’s customer service and can speak to the experience firsthand.”

The new affiliate program will run in tandem with their long standing (since 2005) affiliate program with Commission Junction. The CJ program, which has a five bar out of five bar rating on the network, will continue to cater to professional affiliate marketers. According to Yong Lee, Vice President Business Development & Reseller Group for Go Daddy, “Go Daddy has a great relationship with Commission Junction and currently has no plans to change this.”

The new in-house affiliate program will cater specifically to Go Daddy customers, a bit like a referral system focusing on ease of use. “Go Daddy is looking to serve people who already use Go Daddy services and want to make a commission for recommending our products and services,” said Yong. “We setup our new Affiliate Program to be easy-to-use and approachable allowing customers to suggest Go Daddy products and services to site visitors, friends and family with almost no effort.”

The program is free to join and offers a 20 percent commission a 45-day cookie. Considering it is the largest ICANN-accredited registrar in the world, if the program can leverage its user base like Amazon did with its associate the upside for Go Daddy could be huge.

The ubiquity of Go Daddy’s services, which have become an easy one-stop shop for new web users, should make this program spread fairly quickly, especially among affiliate newcomers.  For users who have had a good experience with Go Daddy, it should be no-brainer – the endorsement of Web site services on your Web site? Naturally.

For Go Daddy, it’s the latest advertising push. After its annual titillating Super Bowl ad, Go Daddy has also recently announced a social media driven ad campaign. The affiliate program should continue to spread a bigger footprint for the raucous domain register online.

The reason stated was not that Drs. Foster & Smith didn’t want to collect sales and use tax for these states, as onerous as that may be.  Rather the reason was that Drs. Foster & Smith has been advised that it may be subject to state income tax. So rather than attempt to comply with a moving and often nebulous target they have simply decided to shut down their affiliate program.

The e-mail we received is below. I wrote more detail of the implications of this and suggestions for state legislators on my blog (italics and bold added by me for emphasis).

It is with great regret that we have to inform you that we are shutting down affiliate marketing at Drs. Foster and Smith effective immediately  February 22, 2010.  This closure is across the board in all states with all affiliates and is not related to you only as one of our affiliates.

We regret having to do this for a variety of reasons, not the least of which is that so many of you have done a great job for Drs. Foster and Smith and will be adversely affected by the loss of revenue from Drs. Foster and Smith sales.  Thank you for all you have done to promote our company on your web sites.  We apologize for the hardship and inconvenience that this creates for you.

The single reason for the decision at this time is the moving target of the ever-growing patchwork quilt of state legislatures that are considering nexus legislation relative to affiliate marketing and sales tax. It has become increasingly difficult to determine who is considering such laws, where they are in the process and what the ramifications are in each state.  What affiliates may not be aware of is that such nexus situations do not only relate to sales tax collection, but potentially state income tax for a corporation as well.

We wish there was clarity on this issue from state to state and nationally, but there isn’t.  So until this matter is cleared up nationally, we are shutting down all affiliate marketing.  We apologize for any hardships this brings to you and your team.  We have greatly appreciated the work that you have done on our behalf.  The sudden nature of the move by California to reintroduce legislation late last week and to push for a quick vote, emphasized the ever-changing nature of this issue and our need to be ahead of such votes and decisions.

With our appreciation for your contribution to our company,

Sincerely,

Drs. Foster and Smith Affiliate Marketing Team

The company raises a legitimate concern. Even as a retired certified public accountant I hadn’t thought of the impact of nexus on filing corporate state tax returns. I can see how that would be a concern to any CFO. Killing the entire program seems a bit extreme. Why not leave it in the 3 states that don’t have sales tax and as an international program?

What do you think is going to happen to affiliate marketing this year?