Affiliate marketing is used by many as a passive source of income
Dubai: Amid the coronavirus pandemic and resultant economic impact on individuals, people are constantly on the lookout to supplement their income. The income-earning process has been disrupted by the millennials or Gen Y, and even more by Gen Z – and the focus has shifted from monthly salaries to creating and growing wealth.
In particular for Gen Z, born between 1996 and 2006, making money and being debt-free is their first priority, while millennials prioritise work-life balance over earnings. An infographic from Rave Reviews featured by Weforum revealed that for 13 is the average age for Gen Z to research financial planning. Other studies show that the Gen Z is more financially focused than millennials. This means a rising trend of finding new streams of income, both active and passive.
One such popular income method is affiliate marketing. This type of commission-based marketing has been around for decades now but many youngsters have started taking to this specialized form of marketing. While it is not as easy to start minting money from affiliate marketing as it was when it first started in the 90s, specialized strategies are helping people find a new stream of passive income.
Affiliate marketing involves being an affiliate to another retailer or advertiser and earning a commission by promoting a product or service made by that firm. The commission could be for a sale, either of the product linked to or sale of any other product on the retailer’s website. It could be for clicks, downloads, users for a trial or even customer leads.
So, basically you, the marketer, links to affiliates, encouraging the audience of your content to head to the seller’s website, in which case you earn money depending on the action required. Bloggers, content creators, and social media influencers are now the major category of affiliate marketers.
A food blogger, for instance, may include purchase links for the ingredients, cooking equipment or another food-related service offered by a third-party. As the blog reader engages with the content, he or she may click to purchase the item or trial the service as the case may be. Depending on the affiliate agreement, the blogger makes a commission based on the actions of the reader.
As an example, Amazon’s popular affiliate program – called Amazon Associates Program – offers various commission rates based on the kind of products or services purchased, or actions taken by new or existing customers coming through affiliate marketers. It could either be a fixed percentage of a sale in a product category, or a flat ‘bounty’ rate – you could get $2.50 for a free trial sign-up to Amazon’s Prime streaming service.
As expected, you do need an audience – people who value your input and your referral to a product or service. The strength of affiliate marketing lies in being able to garner ‘influence’ on purchase decisions and that comes through trust in your niche expertise.
So getting started is not a piece of cake and requires the investment of time and research. However, if you have a specific expertise, passion or a niche that you believe can interest like-minded people, you can start by creating content. This can be through a blog, a YouTube channel, or other social media channels.
Once you choose your niche content and start building your audience, you will have a plethora of options to monetize your reach through affiliate links. On everything from books and tech to gardening equipment and golf clubs, money can be earned depending on your niche and relevant affiliate programs.
After you have a decent-sized audience and a reliable stream of content with affiliate links, it can be a consistent source of passive income. This is the major draw of affiliate marketing, that once you build an audience, it can continue to give you income on auto-pilot.
Yes, affiliate marketing can be a legal way to earn income if the marketer has the relevant licence and abides by UAE’s laws. While some countries may not require a licence for this activity, if you are a resident in the UAE and/or plan to conduct business in the UAE, you must have a licence.
Since affiliate marketing is an activity performed for financial gain, it comes under the purview of a business licence, and also comes under UAE’s advertising law.
We asked an expert in the field for more clarification on the legal aspect. Hassan Saeed Abaragh, Managing Partner and Head of Arbitration, AI, Robotics & Blockchain – International Consultant Law Office (ICLO) answered our questions regarding the legal implications of starting an affiliate marketing business.
Is affiliate marketing a legal way to earn income in the UAE?
Under the UAE Commercial Transactions Law issued by Federal Law No. (18) of 1993, any activity resulting in a profit is considered a business activity that must comply with the legal requirements and liabilities subject to relevant laws on federal and Emirates levels.
Given that affiliate marketing is a digital advertising model in which a company pays others to advertise their products and services and generate sales by convincing consumers, the affiliate marketing is then categorized as an advertisement and must consequently comply with the relevant advertising regulations.
Can full-time employed residents use affiliate marketing to earn secondary income? What are the rules, and does the employee need an NOC from the employer?
To start up a business in the UAE, you need either a trade license or a freelancer permit. An individual affiliate marketer should operate through the appropriate trade licence. If the individual affiliate marketer is also a social media influencer, he or she has to obtain an e-media License from the National Media Council.
For people who are on sponsored visa (spouse or child), is this a legal way to try and earn money? What is the licence required, if any?
Sponsored relatives wishing to start an affiliate marketing business can start up a business in the UAE via a trade license or a freelancer permit as per the requirements of the laws in force.
If the relatives would like to work for a licensed company operating as an affiliate marketer, they have to apply to the Ministry of Human Resources and Emiratisation (MoHRE) for a work permit.
If influencers use or promote affiliate links, does the UAE influencer licence (social media) cover the activity?
Any influencer that takes on any forms of paid or unpaid promotional work need will need to be licenced by NMC.
This includes the case in which an influencer receives items, services and experiences obtained for free from brands, marketers or companies. For influencers that will fail to comply their blog or channels will be shut down.
What is the extent of legal liability of promoting affiliate products in UAE, in case of customer issues or product defects?
The influencer promoting affiliate products or services may agree with the brand to own the commercial rights related to the content diffused through his or her social media accounts or may agree with the brand to act as a commercial agent. In such case UAE laws applicable to commercial agency will prevail.
The contract between the influencer and the brand can protect the influencer from standard liability to the consumer. Influencer and brand may also agree on a liability cap and the influencer can go back against the brand for compensation and damages if any.
In case of no contract signed with the brands, tort-based liability will apply.
The National Media Council license will cost Dh15,000. Depending on mainland or free zone options, you may be able to find affordable or suitable licences depending on your specific business idea or activity, visas required and other parameters – and these could start at or around Dh8,000 for a year, or even lower with promotional discounts of some free zones. Always double-check with the relevant licensing authority before paying for a licence to make sure the activity covers your mode of business or you could be liable to hefty fines.
In addition to this, if the licensee uses social media to market the product and use influence to drive ads and promotions, he or she will also have to take up NMC’s social media influencer licence which costs Dh2,775.
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