Drs Foster and Smith Closes Affiliate Program Due to Advertising Tax #noadtax

[Linda Buquet]

This just popped up on my feedreader. In an unprecedented move, Drs Foster and Smith is dropping their affiliate program and all affiliates in all states due to "the moving target of the ever-growing patchwork quilt of state legislatures that are considering nexus legislation relative to affiliate marketing and sales tax."

This is very discouraging and I hope other affiliate programs do not follow suit!

If you are an affiliate marketer who is active in fighting against these unfair sales tax (advertising tax) bills, please use the following letter from Drs Foster and Smith to help show legislators that these laws will NOT increase state coffers, but will result in lower income for small Internet businesses (affiliates).

<strong><a href="http://www.sagefieldpost.com/2010/02/drs-foster-and-smith-drops-internet.html">Drs Foster and Smith Drops Internet Affiliate Marketing Due to States Targeting Nexus Legislation Relative to Online Sales Tax</a></strong>

<strong>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 today, February 22, 2010...

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.</strong>

 

[Linda Buquet]

David Lewis wrote a power-packed post about this too. It's a must read!

<a href="http://davidlew.is/the-real-effect-of-the-advertising-tax/">The Real Effect of the Advertising Tax</a>

I predict that next year Affiliate Summit West will be in Vancouver and Affiliate Summit East will be in London. There won?t be a reason to have a US-based conference. There won?t be any US-based affiliates if this continues.

Performance marketing offers many different types of sites for merchants to advertise on. The value of our sites won?t go away. The value will simply be picked up by foreign entities.

 

[Laura61]

One of my students is becoming discouraged by this issue. She is in North Carolina and has a pet-related site. She found out as she was starting her site that Amazon was dropping affiliates in NC, so that was bad enough, but it was only the beginning. She gave me permission to repost her thoughts from our private student forum about more such problems.

"Well, this week brought more unfortunate news for me personally regarding this and the state I live in (NC).

After being denied by several online vendors because of the issue above, I was able to find a few pet related that would accept me as an affiliate. However, this week one of the larger ones I had hoped would be a good one (1-800-PetMeds) after initially approving me and me placing their ads on my site - notified me that they were pulling out of any affiliate relationships for people in states where these tax laws are either in place or being considered. This now makes 4 big name vendors that have denied me because of the tax issue.

I'll admit to being somewhat bummed about this because it's going to mean that any affiliates I do get to take me on board may at any point now decide to change their policies because of this issue.

It seems the bigger name vendors are the ones adopting the more harsh reactions and dropping affiliates instead of dealing with the states. I guess their volume allows them to do so without hurting their bottom line too much.

The one good thing about the larger vendors is the name recognition and people are more comfortable buying from places they've heard of before---so I'll just have to hope that my visitors will give some smaller vendors a try and not be leery."

I feel bad for her and am not sure how to help. Does anyone have any suggestions on what she can do?

 

[Linda Buquet]

I feel bad for her too Laura. Thanks so much for sharing that!

It must be so discouraging. Give her a virtual hug for me.

All I can say is that affiliates who are in problem states or states that appear to be looking at legislation like this, need to research and have ready a list of alternate merchants in case one of their main merchants drops them.

 

[Linda Buquet]

She may want to check with PetsWarehouse. I heard they aren't dropping affiliates due to tax issues.

Also look for merchants that have stores in the state and therefore won't be affected by this.

 

[Melanie10]

I am more than happy to give advice or support as she tries to recover. I was a NY Affiliate and was hit pretty hard when the law passed here but, I did recover as did thousands of other NY Affiliates. It takes work but at the same time you build a stronger business that will never be as susceptible.

One of the things I suggest is to make sure she keeps standards. There may be a tendancy to settle for less because "I can't find anything better". Tell her don't settle for less just because she lives in NC. And when she finds one merchant to fill a void she should then find a second one and a third just so there are always choices in the ready.

There really on thousands of merchants that will welcome NC Affiliates. As Linda said, in the pet niche, PetsWarehouse, it is a good program.

If she needs to talk to someone who has been through it I am more than happy to talk.

 

[Laura61]

Thank you so much, guys, for your input. I will definitely point her to this thread. I really appreciate your pointers!

 

[WordWaves]

Anyone know if there's a database somewhere with state-by-state affiliate tax laws?

 

[Linda Buquet]

No database and things are changing almost daily. Best places to stay up to date are Affiliate Advocacy and the Performance Marketing Association. They both have forums here with all their updates as new state bills come up.