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What is an affiliate agreement? It is a written collaboration between an advertiser and an affiliate (partner) stating that the affiliate brings visitors or customers to the advertiser via their own channels—website, newsletter, social media—in exchange for a commission per sale, lead, or click. The agreement specifies how those referrals are measured (tracking), when and how much is paid, the duration of the collaboration, and who is liable for what. Furthermore, the rules of the GDPR apply to the processing of customer or visitor data.
The short answer
- What: A contract in which an affiliate brings in customers and receives a commission for doing so.
- Parties: advertiser (merchant) and affiliate (publisher/partner).
- Core: commission model, tracking, payment, term, and liability.
- Measurement: referrals are tracked via cookies, links, or an affiliate network.
- GDPR: as soon as personal data is processed, processor agreements and the duty to inform apply.
- Format: Written is recommended, even though a verbal agreement is valid in principle.
How does an affiliate agreement work?
The advertiser wants more sales or leads and only pays for this if the affiliate actually delivers results. The affiliate places a unique link or banner on their channel. If a visitor clicks on it and makes a purchase, that sale is attributed to the affiliate and they receive a commission.
Attribution is done via tracking: a cookie or a unique tracking link records which affiliate brought in the visitor. Many advertisers arrange this through an affiliate network (such as Awin, Daisycon, or TradeTracker), which facilitates the measurement and payment. Those who arrange this internally must contractually secure the tracking and settlement themselves.
Commission and fee
The revenue model is the heart of the agreement. Common variants:
- Pay-per-sale (CPS): a percentage of revenue or a fixed amount per sale. The most widely used model.
- Pay-per-lead (CPL): compensation per lead generated, for example a completed form or registration.
- Pay-per-click (CPC): compensation per click, regardless of whether a purchase follows. Less common due to susceptibility to fraud.
Specify: the percentage or amount, whether it concerns gross or net turnover, whether returns and cancellations are adjusted, and whether a minimum threshold applies before payment is made.
Tracking and attribution
Tracking determines to whom a sale is attributed. Important points to record:
- Cookie duration (attribution window): how long after the click a purchase is still counted — often 30 days, sometimes 7 or 60.
- Last-click or first-click: which affiliate receives the commission if a customer comes in via multiple partners?
- Measurement method: cookies, tracking links or server-side tracking.
- Cookieless tracking: due to stricter cookie regulations and browser restrictions, server-side measurement is becoming increasingly important.
Without clear agreements on this matter, discussions quickly arise about whose sale is whose.
Payment and term
Specify when and how payment is made: monthly, quarterly, or only after a sale is finalized (after the return period has expired). State whether the affiliate issues invoices or if the advertiser uses a credit note system, and whether VAT is charged on the commission.
Two variants are common for the duration: an agreement for a fixed term or for an indefinite term with a notice period (for example, one month). Also specify what happens to sales that still fall within the attribution window after termination.
Liability and GDPR
Liability often concerns the way the affiliate advertises. The advertiser wants to protect itself against misleading advertising, spam, or trademark infringement by the affiliate. A common feature is a clause obligating the affiliate to comply with laws and regulations, with an indemnification if the affiliate violates them.
As soon as personal data is processed — and this virtually always happens with tracking — the GDPR applies. Determine who is the controller and who is the processor, and whether a data processing agreement is required. Furthermore, for tracking via cookies, the cookie rules apply: visitors must be informed and give consent for non-essential cookies.
Practical example
An online shop specializing in outdoor clothing enters into an affiliate agreement with a hiking blog. The blogger posts reviews containing affiliate links. The terms of the agreement are: an 8% commission per sale, a 30-day cookie duration, monthly payment after deduction of returns, and a one-month notice period. The webshop remains responsible for customer data; the blogger only sees aggregated statistics. This ensures both parties know exactly where they stand.
Honest recommendation
If you work through an established affiliate network, the network's standard terms and conditions are often sufficient, and you usually do not need a separate lawyer. Having your own agreement drafted is particularly worthwhile if you work directly with partners, deal with high commissions or exclusivity, or if sensitive customer data is exchanged. In that case, it pays to properly document tracking, payment, duration, liability, and GDPR agreements before money and data start flowing.
Want to know more? View the affiliate agreement, read how to draft an affiliate agreement or when to have an affiliate agreement drafted.
Frequently Asked Questions
A contract between an advertiser and an affiliate stating that the affiliate brings in customers or leads through their own channels and receives a commission for doing so. The agreement governs the commission model, tracking, payment, duration, liability, and GDPR compliance regarding data processing.
In practice, both terms are used interchangeably for the compensation an affiliate receives per sale, lead, or click. More important than the term is specifying what you are calculating (gross or net revenue), the percentage or amount, and whether returns are adjusted.
A cookie or unique tracking link records which affiliate brought in a visitor. If that visitor makes a purchase within the agreed attribution window (for example, 30 days), the sale counts towards the affiliate. Many advertisers manage this via an affiliate network or server-side tracking.
No, a verbal agreement is valid in principle. However, a written agreement is highly recommended, as commission, tracking, and payment can otherwise quickly lead to disputes. Documentation is particularly wise for higher amounts or sensitive data.
Yes, as soon as personal data is processed — and that happens almost always with tracking. Determine who the data controller is and whether a data processing agreement is required. Furthermore, the cookie rules apply to tracking via cookies: informing and consent for non-essential cookies.
As a rule, the affiliate itself is liable, provided the agreement obligates it to comply with laws and regulations and contains an indemnity in the event of a violation. Without such agreements, the advertiser can still be held liable for advertising distributed via its brand.
That is up to you: for a fixed term or for an indefinite period with a notice period (often one month). Also specify what happens to sales that still fall within the cookie window after termination, so that no disagreement arises about this afterwards.
