Merchant affiliate programs are arrangements where an advertiser offers credits and other benefits to a publisher who agrees to host advertisements, product placements, and other materials on his website. It is usually free to participate, with merchants paying a fee or percentage for sales made through the affiliate. Some may reward their affiliates for sales leads, not just actual sales, providing an incentive to get readers to sign up for newsletters or submit other expressions of interest.
Online publishers can enter a merchant affiliate program in a number of ways. Some have open enrollment, allowing anyone to sign up as long as they agree to the terms of service. The terms usually require prominently displaying badges and links, and in some regions, affiliates also have a legal obligation to disclose their professional relationship so users are aware. These affiliate programs may offer a percentage of each sale made through the site. Someone like a book blogger might, for example, join merchant affiliate programs featuring booksellers, encouraging readers to buy books through the website to generate income for the blogger.
Other programs are application or invitation only. These merchant affiliate programs tend to offer better terms, and merchants are more choosy about who they partner with. They typically seek out sites with high traffic and documented demographic statistics with the goal of reaching the right target audience; a company making baby clothes, for example, could work with a parenting blogger on product and ad placement. This type of merchant affiliate program may also come with more requirements for the affiliate, like needing to abide by content standards.
Affiliates can earn varying amounts of money through the program, depending on the terms and the number of impressions. A heavily trafficked site where numerous users click through to make purchases, save items to wish lists, or sign up for more information can generate substantial income, especially if the publisher works with several merchants to reach a wide variety of readers. In other cases, merchant affiliate programs may bring in minimal income.
Members of merchant affiliate programs will receive annual statements, and these must be declared on tax returns, as they are a form of income. The affiliate should receive formal tax documentation to include with tax statements. If this information is not received, she is still under an obligation to declare the income, estimating the amount earned in the previous tax year and reporting this, with a note indicating that the merchant did not send the paperwork.