Q: Please advise regarding online Affiliate Marketing programs: Affiliate marketing is a type of performance-based marketing in which a business (the merchant) rewards an “affiliate” (marketer/advertiser) for each customer he brings to the business by his own marketing efforts. Company Z (the merchant) sells only kitchen appliances online. They run an affiliate-marketing program where ‘Umar (the affiliate) can advertise the merchants website on his own website, or other places on the internet – all for a monetary remuneration. ‘Umar puts up an advertisement for Company Z on his own website. The following options are available for ‘Umar, please advise on their permissibility:
(1) Pay-per-sale (also called cost-per-sale): In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something from the merchants website (in this instance – kitchen appliances). Some merchant Web sites pay the affiliate a percentage of the sale and others pay a fixed amount per sale. [Is this permissible?]
(2) Pay-per-click (cost-per-click): In these programs, the merchant site pays the affiliate based on the number of visitors who click on the link to come to the merchant’s site. They don’t have to buy anything, and it doesn’t matter to the affiliate what a visitor does once he gets to the merchant’s site. [Is this permissible?] This is a variation on these basic payment plans:
(3) Two-tier programs: These affiliate programs have a structure similar to multilevel marketing organizations (also known as “network marketing”) such as Amway or Avon, which profit through commission sales and sales recruitment. In addition to receiving commissions based on sales, clicks or leads stemming from their own site, affiliates in these programs also receive a commission based on the activity of affiliate sites they refer to the merchant site. [Is this permissible?]
(4) Questions 1 to 3 above is in the instance of a merchant selling only permissible items i.e. kitchen appliances. Other merchants, like Amazon.com for example, sell a wide range of products, like furniture, electronics, clothing, books, TVs and movies etc. The difference with such merchants (those that sell both halaal and haraam products) is that irrespective of what the affiliate may have advertised (i.e. something halaal), if a customer is to purchase anything else on account of the affiliates link that got him/her onto the merchants site, the affiliate will still receive a commission on the sale of such non-affiliate advertised, haraam, products. For example, ‘Umar advertises only plumbing equipment for Amazon.com with an affiliate link on his website. A person follows this link, purchases the plumbing equipment, but also continues browsing the website and, of all the halaal things also on offer, he happens to purchase a haraam video game. ‘Umar now earns a commission on this despite the inadvertent advertising. Thus, his total payout is partly based on the commission from the haraam video game and the commission from the permissible plumbing equipment. ‘Umar is supplied with a detailed breakdown (‘earnings report’) of this total commission from the merchant. He thus knows that, for example, of his $10 total commission earned, $7 is from the direct link to the plumbing equipment and $3 is from the unintended/indirect sale of the videogame commission. By advertising the plumbing equipment, and accordingly bringing the customer to the merchant’s website, ‘Umar did not aid or support the purchase of haraam in anyway. It was solely the discretion of the customer in purchasing the haraam. [Is all this money, the $10, permissible?]
(5) If the answer to Question 4 is impermissible: ‘Umar accepts the total $10 commission and has it deposited in his bank account. However, once he has possession of the money, knowing that $3 of the total $10 is because of the haraam videogame (as seen in earnings report given by the merchant); he gives this $3 to charity without the intention of reward. ‘Umar thus keeps the remaining $7 earned from the plumbing equipment. In this manner, ‘Umar continues advertising as an affiliate for permissible products; in the odd chance of a customer purchasing any haraam products, he discards this fraction of the income in charity without the intention of reward. [Is the permissible?]
[In all instances, the actual advertisements of the affiliate will not have any animate objects, music etc. or anything impermissible associated with it at all.]
1. You rather confirm an amount.
2. This should be avoided.
3. In our understanding a commission based on this principle does not seem to be right, as the second site had introduced the client and the first person had no way introduced the client. Hence, when he in no way has introduced the client he is not entitled to any commission.
4. Since he had only advertised for a halaal product he is entitled for a commission as per his halaal advertisement.
And Allah Ta’ala (الله تعالى) knows best.
(1) Some merchants pay the affiliate a predetermined percentage based on the type of product sold. Is this, the predetermined percentage that varies per the fixed product categories permissible?
More information on this setup:
The advertising fee percentage rates (i.e. the commission payout) you may earn will vary depending on the category of Products that are shipped, streamed, or
downloaded (as applicable) in a given calendar month that constitute Qualifying Purchases. We will determine the classification of Products in each category set forth in Table 1.
TABLE 1 – Fixed Advertising Fee Rates for Specific Product Categories
(2) Where a product may not fit in the above categories (Table 1), it falls under the ‘General Products’ classification. For General Products, a predetermined percentage based on the volume (not type) of sold products is applied. From this, the commission payout for the affiliate is calculated. [Is this permissible?]
More information on this setup:
The Performance Fee Structure allows you to earn higher advertising referral fees on General Products as you increase the number of shipped items generated through your links. General Products include those products that Amazon does not pay a fixed advertising rate for and are shipped by Amazon, select subsidiaries (such as Amazonsupply.com) and third-party sellers.
TABLE 2 – Volume-Based Advertising Fee Rates for General Products
The following is a general example for this entire percentage-based payout operation given by the Merchant in light of both above questions:
“The following example demonstrates how advertising fee rate calculations work under Tables 1 and 2. If, in a given month, 6 General Products (e.g., 3 books, 1 pair of shoes, and 2 Kindle tablets), 9 Amazon Instant Video Products, 14 Electronics Products, and 2 gift card Products redeemable on the Amazon Site were shipped or
downloaded (as applicable) as a result of orders placed by customers during Sessions initiated through Special Links on your site (the affiliate), then the total number of Products would be 31. The volume-based advertising fee rate for a monthly volume of 7-30 Products would be used to determine your advertising fee rate for General Products because the 2 gift card Product units are not included in calculating the applicable advertising fee tier in Table 2. In this example, an advertising fee rate of 6.00% would apply to Qualifying Revenues from the 6 General Products, an advertising fee rate of 5.00% would apply to Qualifying Revenues from the 9 Amazon Instant Video Products, an advertising fee rate of 4.00% would apply to Qualifying Revenues from the 14 Electronics Products, and an advertising fee rate of 6.00% would apply to Qualifying Revenues from the 2 gift card Products (redeemable on the Amazon site). In this manner, your total commission payout is thus calculated.”
A: When the percentage is determined and acceptable to both parties it is permissible.
And Allah Ta’ala (الله تعالى) knows best.