General information, not legal advice. This chapter summarises published regulator guidance in plain language. For a decision that matters, read the cited documents and talk to a qualified adviser.
The parties involved
Affiliate marketing is a way of paying for promotion after the event. Instead of paying a publisher a fixed fee to run an advert, a business pays a share of the value that the publisher's audience goes on to create, usually a commission on a sale or a fee for a sign-up. The arrangement is common on review sites, comparison pages, deal and voucher sites, newsletters, video channels and social media accounts.
Four kinds of party usually appear in the arrangement:
- The merchant (sometimes called the advertiser or brand) sells the product or service and pays the commission.
- The publisher (sometimes called the affiliate, creator or partner) writes or records content that mentions the product and includes a special link.
- The network or platform, where there is one, sits in between. It supplies the tracking links, records sales, collects money from merchants and pays publishers. Some merchants run their own programmes without a network.
- The reader or viewer sees the content, may click the link and may buy. They are the person the disclosure rules are written to protect.
The reader is the only party who is not part of the business arrangement, and is often the only one who does not know it exists. That gap is the reason disclosure rules matter.
How the money moves
Programmes pay in different ways. The most common models are:
| Model | The publisher is paid when |
|---|---|
| Cost per sale (commission) | A reader buys something after following the link, usually as a percentage of the order value. |
| Cost per lead or action | A reader completes a defined action, such as registering, requesting a quote or starting a trial. |
| Cost per click | A reader follows the link, whether or not they buy. Less common in affiliate programmes than in display advertising. |
| Hybrid or flat fee | A fixed placement fee is paid as well as, or instead of, commission. |
Payment is not always money. Publishers are often given free products to review, early access, discount codes for their audience, trips, or entry into prize draws. As the next sections show, regulators look at all of these, not only cash.
How a sale is tracked
An affiliate link contains an identifier for the publisher. When a reader follows it, the merchant or network records the visit, typically through a parameter in the web address, a redirect through the network's own server, a cookie or a similar record. If the reader then buys within the period the programme allows, the sale is attributed to the publisher and commission becomes due.
Two practical consequences follow. First, the link itself often looks ordinary. A reader usually cannot tell from the visible link text, or even from the address, that a click may earn the publisher money. Second, the publisher's income depends on readers clicking and buying, which gives the publisher an interest in how a product is presented. Neither point makes affiliate marketing wrong. Both are reasons regulators say readers should be told.
Why disclosure matters
Readers weigh a recommendation differently when they know the person making it is paid if they buy. That is the core idea behind the disclosure rules in both the United States and the United Kingdom.
In the United States, the Federal Trade Commission's Endorsement Guides (published in the Code of Federal Regulations as 16 CFR Part 255) say that when there is a connection between an endorser and the seller that could affect the weight or credibility readers give to the endorsement, and readers would not expect it, the connection should be disclosed clearly. The FTC calls this a "material connection". Its answers to frequently asked questions say that a website or blog that links to a retailer and earns a commission on purchases has such a connection and should disclose it.
In the United Kingdom, the starting point is the CAP Code, the advertising rulebook written by the Committee of Advertising Practice and enforced by the Advertising Standards Authority. Its section on recognising marketing says marketing must be obviously identifiable as marketing. CAP's advice on affiliate marketing says that content where the publisher is paid through affiliate links can be marketing that the Code covers, and so needs to be recognisable as such.
Both systems put the reader's understanding first. The question is not "did I mention it somewhere?" but "would an ordinary reader know, before acting, that I benefit if they buy?"
What counts as a connection
A connection is wider than a commission. The FTC's guidance gives examples that include a business or family relationship, payment, free or discounted products, and other benefits. In practice, situations that are likely to need a disclosure include:
- Earning commission when readers buy through a link.
- Being paid a fee to feature, mention or review a product.
- Receiving the product free, at a discount or on loan.
- Being an employee, owner, investor or relative of the business.
- Being entered into a competition or given a reward for posting.
The UK picture is similar. The Competition and Markets Authority's guidance for content creators asks them to be open about any payment, gift, loan or other incentive they receive in connection with what they post.
Example (invented)
A hobby blogger writes about camping stoves. One stove was sent free by the maker; another is linked through an affiliate programme that pays a commission; a third was bought with the blogger's own money and carries no link. The first two involve a connection that readers would not assume and should be told about. The third does not, though saying so can help readers trust the comparison.
The merchant side
Disclosure is not only the publisher's job. The FTC's Endorsement Guides say that advertisers can be responsible for misleading statements made by their endorsers and for an endorser's failure to disclose a connection. The Guides expect advertisers to give endorsers guidance on their obligations, to monitor what is published and to act when they find problems. In the UK, CAP's advice on affiliate marketing treats affiliate content as marketing covered by the CAP Code, so merchants running programmes have good reason to take an interest in how their affiliates label it.
For a merchant running a programme, that suggests a few habits: explain disclosure expectations in the programme terms, avoid briefs that ask publishers to hide the relationship, check a sample of affiliate content, and follow up when a disclosure is missing.
Common misunderstandings
- "Everyone knows blogs use affiliate links." The regulators' test is what an ordinary reader understands, not what people in the industry assume. Many readers cannot tell an affiliate link from a plain one.
- "I only link to things I genuinely like." Honest opinions are required anyway. Liking a product does not remove the need to tell readers you earn from it.
- "The commission is tiny." The FTC's guidance does not set a minimum amount below which a connection stops mattering. The question is whether the connection could affect how readers weigh the recommendation.
- "I am not in the US or UK." The FTC's guidance for social media creators says US law can apply when it is reasonably foreseeable that a post will affect US consumers. Other countries have their own rules, which this handbook does not cover.
The next two chapters look at the US and UK rules in more detail. Chapter 04 then turns them into practical placement advice.