The formation of an industry requires the development of a group identity. Often that development is neglected because group members are focused on growing their business. Over the last year the affiliate industry has been experiencing growing pains in the form of legal challenges brought about by such things as the so-called New York Amazon Tax. In the aftermath of that tax being ratified a group of New York affiliates pulled together to provide guidelines to those impacted by the tax. Melanie Seery was part of that group and found herself drawn into the role of advocate on behalf of the affiliate industry. As part of that advocacy effort she recently launched new industry organization Affiliate Voice.
Almost a year after the New York Amazon Tax was passed I sat down with Melanie Seery to discuss her involvement in the affiliate industry, her quick learning curve with political advocacy, and how she sees the tax issues evolving.
How did you get started in affiliate marketing?
I got involved in affiliate marketing about five years ago. Before affiliate marketing I had a business writing employee how-to manuals, which is really, really boring work. I would go into a business, take each and every position and write down step by step everything that employee had to do in the course of the day. Not fascinating and not interesting from a creative perspective. After that I got into multilevel marketing. What I liked about MLM was that I was selling vitamins and health food products. I really enjoyed that aspect of helping people be healthy. But when I started I didn’t realize how big a component recruitment was to MLM. Ultimately it kind of discouraged me. That’s when someone told me about affiliate marketing and sent me off to Commission Junction. After some exploring I found an interesting coffee merchant and that was the beginning of it.
Why is being self-employed and working at home important to you?
I am independent by nature and have been self-employed for the past 12 years. It’s real important for me to be home with my children and my family. My children have neurofibromatosis, so do I. Neurofibromatosis is a neurological disorder that can cause tumors to grow on nerve endings. There are lots of challenges to maintaining health with such a disorder, as you can imagine. I have to keep constantly on top of it with my family. Being self-employed allows me to maintain that balance.
At what point did you feel affiliate marketing was the right business for you?
It was two or three months down the line and all of a sudden I started getting some really good sales. I created sites around my interests. It wasn’t just things I liked to drink like coffee, tea and accessories. After the birth of my children I began reaching out to parents whose children had similar disorders. I would post topics like, “How do I get my child to sleep all the way through the night?” I found myself connecting with other parents and sharing information. The process of creating a support group of sorts became another website. Before you know it I had several websites going and 10 more ideas.
Affiliate marketing seemed to pull the best of all worlds together for me because I could use my writing to educate while sharing my creativity and connecting to other people. It was like talking with my friends and community; only in this case I’m being creative and making a website. It’s amazing being able to grow a business out of that sharing. It’s very exciting for me.
Everybody seems to start with Commission Junction. At what point did you realize that there were other networks?
Through places like ABestWeb I found networks like ShareASale. The discovery of ShareASale was a major point turning point for me. It was a combination of finding a network that had smaller niche merchants and allowed for real personal contact with the network and with the merchants in the network.
I sort of came out of my shell and found myself becoming part of the industry when I received my first invitation to a ShareASale Think Tank. It was funny but I thought to myself, “They must have me confused with somebody else”. Because even though I was doing well I still didn’t think I was doing as well as everybody else out there. I had never met anyone in the industry prior to that or even spoken with anyone on the phone. The Think Tank showed me the importance of being an affiliate in direct touch with the merchant. It’s all about relationships in this industry.
When did you first hear about the Amazon Tax and how did it affect you?
We had heard rumblings prior to April. But we also heard from New York lawmakers that it would never pass. Suddenly when April came around we learned that Governor Patterson had signed it into law. It took us by surprise because of our “it could never happen here” attitude. I don’t think we ever truly realized how much it would impact our businesses.
Now I see the same process happening in other states like California, Minnesota and, Connecticut. It’s phenomenal how quickly things change. It’s great to see the industry is actually being proactive and stepping forward to fight these bills before they become law. It’s a lot easier to fix things before they’re broken.
When the New York law took effect many merchants removed affiliates from their programs. This destroyed a lot of businesses. But what was worse was the lack of communication between merchants, networks and affiliates. There were a lot of behind the scenes activities with program managers and their CEOs about that never brought the affiliates into the loop. That did a lot of damage. We would get terminations with little or no notice. Once they passed the law we started to receive sudden terminations in the mail. Even retroactive terminations-it would be June 15 and you’d get this email from a merchant that told you were deactivated as of May 30.
Affiliates were kind of steamrolled and quickly our incomes and businesses were gone.
A group of us got together and said this isn’t right. We felt there had to be a solution we could work out. That’s when Kevin Webster and I started talking about holding a meeting among New York affiliates. When we announced it a lot of people stepped up to help, providing us resources so we could find a good corporate lawyer.
At the time I had set up a personal blog that I put together to help keep people up to date about what was going on. It was called New York Affiliate Voice, which is what many people think the name of the group is, but it’s really the Albany Group because that’s where we first met. We managed to set a course of action and put together a plan for how New York affiliates and any remaining merchants who wanted to work with us could go from here. In many cases it still wasn’t enough because merchants were still terminating affiliates rather than attempting to comply with the new law.
My income was down 72% last year because of the knee jerk reaction of many businesses. From the affiliates I talk to that’s pretty average.
Were you frustrated with the fact that the industry was slow to respond to this threat?
At the time we were all frustrated because all we saw was a lack of action for New York affiliates. There was a sense of hopelessness or resignation in everybody. At the time when we were going through the horrible effects of this law upon our businesses, I kept thinking why doesn’t anybody care about us?
I think the whole industry was in a state of disbelief. I remember two things were said to me after the New York Affiliate session at Affiliate Summit. They were: 1) We didn’t understand how deeply this would impact your, meaning affiliates, business and livelihoods. People sometimes forget that for many of us this isn’t just a hobby. It is the income that we rely on to pay a mortgage, to pay our bills, to take care of our children and our families and, 2) everybody felt they “didn’t know what to do”.
I think it had to be the affiliates who took control the situation in New York because that was the group directly affected. It empowered affiliates to take a course of action and pull together. It let everyone know this was a serious challenge to our industry. I am proud of the things the Albany Group put together.
Was that your first involvement with political advocacy?
Yes. (laugh) I learned a lot over this last year. I learned an incredible amount about the legislative process, not only in New York but in other states as well. I found myself thinking, I don’t remember learning the ins and outs of how this works back in school. I think people take so many things for granted, including how their local government works.
At the beginning of this year you won several awards including the Affiliate Summit Pinnacle Award for Affiliate Advocate of the Year. How did that impact you?
One thing it showed me was that we made a difference last year. And by “we”, I mean there wasn’t just me, there was a whole group of us that pulled this together. What the recognition also did was start me thinking about advocacy in general because I knew it was important. Basically, the work on the New York Tax Law took over the whole last 10 or 11 months of my life. Over time it became a larger part of my day whether it was answering emails from affiliates or phone call questions from a merchant. I realized that I had to make a choice of whether I wanted to be an advocate or an affiliate. I came to the conclusion that the advocacy needed to continue and I couldn’t give it up.
How did Affiliate Voice come about?
When I made the choice to focus on advocacy I was simply going to change New York Affiliate Voice into a type of advocacy group. When people found out about my idea they kept asking why just New York? I ended up speaking to Haiko de Poel Jr. and Rhea Tannenbaum and they encouraged me to form a larger organization and call it Affiliate Voice to open it up to everybody. So I took the ball and ran with it so to speak.
After the beginning of the year there seemed to be a lull then suddenly there was a domino effect of new legislation that came out. How have you perceived the recent changes?
Well, that’s a good way to describe it. There was that little lull and I was just beginning to think that I could go back to focusing on my business. Then legislators in my area that I had gotten close to working with the Albany Group, pointed me towards pending legislation in several states, including California. It seemed to spring up one after another. Equally scary is legislation on the books in some states that includes sales representatives, solicitors and other representatives in the definition of “nexus”. It is so open to interpretation and in my mind it could easily encompass affiliates as well.
What’s the biggest misunderstanding that legislators have about the affiliate industry?
I think it is important to understand both sides of the issue. See the states are faced with incredible economic challenges right now. They have to find new revenue resources. In the Quill Corp. v. North Dakota case it was ruled that in order for an interstate transaction to have sales tax applied to it, as opposed to a use tax, there has to be a substantial presence on behalf of the business providing the goods.
What’s happening is these tax bills you are seeing are not new taxes. The only thing that is changing is the method which the states are using to collecting the tax. That’s a not just something legislators are saying to make it sound better to consumers. That is in fact what is going on.
If you look at how quickly internet shopping and affiliate marketing have grown over the last couple of years it is easy to see why states want to collect this tax. It’s an incredible amount of revenue they’re losing out on.
But by the same token those states that are trying to enact these anti-affiliate laws have to understand how uneven this makes the playing field for affiliates and publishers in their state. In their current form these laws will prompt many merchants to simply avoid paying the tax by cutting loose all their affiliates or moving to a different advertising model. For those reasons it won’t bring the kind of revenues states are hoping for.
Also legislators have to understand the complexity involved for a merchant trying to deal with the more than 7,500 different US tax jurisdictions regarding interstate transactions. It’s not just a matter of installing some software and remitting sales-tax. Each of these 7,500 different tax jurisdictions has a different set of guidelines a merchant must comply with. Can you imagine 7,500 different filings every quarter? What business has those resources?
How do you see this playing out long-term?
I believe it will come down to some kind of federal involvement, maybe through the Streamlined Sales Tax Project, which is still gaining momentum. The Streamlined Sales Tax Project is a destination-based sales-tax which allows each state to designate one flat rate. All states that have sales and use tax will have to charge tax on the same items. Because right now items that are taxable in New York may not be taxable in California or vice versa. So the Streamlined Sales Tax Project wants to unify and streamline the process by designating which items are taxable in every state and allow each state to have one flat rate with the tax being paid by the receiving State. That’s the ideal situation. The governors in general are pressing for such a process but to enact it nationwide will be a slow process and require changes to multiple state laws.
Recently Scott Jangro wrote an excellent article posing the question of whether the affiliate industry needs two associations? Are you worried about an us-versus-them mentality creating a split in the industry?
I think having two organizations actually strengthens the industry. I don’t look at the Performance Marketing Alliance and Affiliate Voice as competing. I look at us as two slightly different entities but with the same relative goal which is to help change the direction of our industry, to help spur new growth, and not leave our destinies in the hands of legislators who have no clue what we are all about as a professional industry.
Prior to launching Affiliate Voice I reached out to the PMA to let them know we wanted to work together and complement one another’s strengths. I think Affiliate Voice is well suited to advocate for an Affiliate Bill of Rights and help affiliates maintain their business should these anti-affiliate taxes or other similar legislations be ratified. The PMA can do more with lobbying and organizing challenges to legislation. They are very well equipped to do this.
I have no interest in wasting energy or time in petty politics or some kind of nonproductive competition. Every industry has multiple organizations and the affiliate industry shouldn’t be any different.
What are the goals for Affiliate Voice in 2009?
We are working on establishing an industry Code of Ethics. We also want to formulate and ratify an Affiliate Bill of Rights to help improve relationships between all parties in the affiliate industry. In terms of keeping up with all the legislative efforts in various states, well, that will be an ongoing challenge throughout the whole year.
Since affiliates by nature seem to be fiercely independent and private. Do you feel they will join an organization, any organization?
As people get used to the idea that you can be part of an organization without having to open your business model to scrutiny attitudes will change. Especially if we can demonstrate how organizations can achieve good things. Perceptions won’t change overnight but I think people will come to realize that they need organization.
Right now I feel the affiliate industry is a bit demoralized but, as people see two groups out there fighting for change they will become more encouraged at the efforts being taken. Personally I am encouraged with all the effort I’ve seen over the last couple of months with people rallying and stepping up, including the networks, to take a public stance against this type of legislation. I have seen merchants reaching out to their affiliates to help provide advice. All this effort is such a fabulous change compared to what happened in New York. It shows we have learned as an industry. I think this could be a rough year while we battle this legislation but ultimately we’re going to be able to adjust this industry and be all right.
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and headed to the exhibit hall. Did the same thing, caught up with people, met up with friends, had lunch, blah blah.
“Create ‘lunch and learn’ sessions with management to show them social networking tools, and show how people are talking about your products online already,” says Decker who cut his social marketing teeth at Dell Inc.
