Dubai: Amid the coronavirus pandemic and the resulting economic impact on individuals, people are constantly looking to increase their income. The process of earning income has been disrupted by Millennials or Generation Y, and even more so by Generation Z – and the focus has shifted from monthly salaries to wealth creation and development.
Especially for Generation Z, born between 1996 and 2006, making money and having no debt is their number one priority, while Millennials prioritize work-life balance over earnings. A graph from Rave Reviews provided by Weforum revealed that the average age of Generation Z for financial planning research is 13 years. Other studies show that Generation Z is more financially focused than Millennials. This means an upward trend of finding new income streams, both active and passive.
One of the popular income methods is affiliate marketing. This type of affiliate marketing has been around for decades now, but many young people are starting to engage with this niche form of marketing. While it’s not as easy to start minting from affiliate marketing as it was when it first started in the ’90s, niche strategies help people find a new stream of passive income.
Affiliate marketing spending in the US alone is expected to reach $8.2 billion by 2022, more than three times what it was 10 years ago.
But first, what is this?
Affiliate marketing involves being affiliated with another retailer or advertiser and earning a commission by promoting a product or service offered by that company. The commission can be for the sale, either for the associated product or the sale of any other product on the retailer’s website. It could be for clicks, downloads, trial users, or even leads.
Therefore, you, as the marketer, links to affiliates, encourage the audience of your content to head to the seller’s website, in which case you earn money depending on the desired action. Bloggers, content creators, and social media influencers are now the main category of affiliate marketers.
A food blogger may, for example, include purchase links for ingredients, cooking equipment, or any other food-related service provided by a third party. As the blog reader handles the content, they may click to purchase the item or try the service depending on the situation. Depending on the partnership agreement, the blogger makes a commission based on the reader’s actions.
For example, Amazon’s popular affiliate program – called the Amazon Affiliate Program – offers different commission rates based on the type of products or services purchased, or actions taken by new or existing customers coming in through affiliate marketers. It can be either a fixed percentage of the sale in a product category, or a fixed “bonus” rate – you can get $2.50 for a free trial subscription to Amazon’s streaming service.
How do I start?
As expected, you need an audience – people who value your input and referral to a product or service. The power of affiliate marketing is the ability to gain ‘influence’ on purchasing decisions and this comes through confidence in your specialist expertise.
So getting started is not easy and requires an investment of time and research. However, if you have a specific experience, passion, or discipline that you think could interest like-minded people, you can start by creating content. This can be through a blog, YouTube channel, or other social media channels.
Once you choose your right content and start building your audience, you will have a plethora of options to monetize your reach through affiliate links. In everything from books and technology to gardening equipment and golf clubs, money can be made depending on your major and related affiliate programs.
After you have a decent audience and a reliable content stream with affiliate links, it can be a steady source of passive income. This is the main draw of affiliate marketing, that once you build an audience, it can continue to give you income through the automated trial.
Residents working full time
Those working under full-time employment contracts in the UAE need a No Objection Certificate (NOC) from the sponsor, i.e. the employer to obtain a work permit. There are also free zones that do not require an NOC. However, depending on the activity and your profession, go to a certified legal advisor to ensure that you are protected in case of disputes and that you will not start anything against the law. The employer can refuse the NOC application at its own discretion.
Is it legal in the UAE?
Yes, affiliate marketing can be a legal way to earn income if the affiliate marketer has the proper license and adheres to the laws of the UAE. While some countries may not require a license for this activity, if you reside in the UAE and/or plan to do business in the UAE, you must have one.
Since affiliate marketing is an activity conducted for financial gain, it falls under the scope of a commercial license and is also subject to the Advertising Law of the United Arab Emirates.
We asked an expert in the field for further clarification on the legal aspect. Hassan Saeed Abraaj, Managing Partner and Head of Arbitration, Artificial Intelligence, Robotics and Blockchain – International Legal Counsel 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 promulgated by Federal Law No. (18) of 1993, any activity that results in profit is considered a business that must comply with the legal requirements and obligations in accordance with the relevant laws at the federal and Emirates level.
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 persuading consumers, affiliate marketing is classified as advertising and therefore must comply with relevant advertising regulations.
Advertising in the UAE is regulated by several laws such as the Consumer Protection Law, the Press and Publications Law, the National Media Council regulations, the cybercrime law, anti-competitive practices and illegal monopolies.
– Hassan Saeed Abraaj, Managing Partner and Head of Arbitration, Artificial Intelligence, Robotics and Blockchain – International Legal Counsel Office (ICLO)
Can Full Time Residents Use Affiliate Marketing to Earn a Secondary Income? What are the rules and does the employee need a no-objection certificate from the employer?
To start a business in the UAE, you need either a business license or a freelance work permit. An individual marketer must operate through the appropriate commercial license. If the individual marketer is also influential on social media, he must obtain an electronic media license from the National Media Council.
For people with a sponsored visa (spouse or child), is this a legal way to try to make money? What is the required license, if any?
Sponsored relatives who wish to start an affiliate marketing business can start a business in the UAE with a business license or freelance work permit as per the requirements of applicable laws.
If relatives want to work for a licensed company that acts as an affiliate marketer, they must apply to the Ministry of Human Resources and Emiratisation to obtain a work permit.
If influencers use or promote affiliate links, does the UAE influencer license (social media) cover this activity?
Any Influencer that conducts any form of paid or unpaid promotional work will need to obtain a license from NMC.
This includes the situation in which an influencer receives items, services, and experiences that are obtained for free from brands, marketers, or companies. Influencers who will not commit to their blog or channels will be closed.
What is the extent of the legal responsibility to promote affiliated products in the UAE, in case there are problems with the customer or defects in the product?
An Influencer who promotes affiliated products or services with the Brand may agree to own the commercial rights to the Content posted through their social media accounts or may agree with the Brand to act as a commercial agent. In such a case, the laws of the United Arab Emirates applicable to the commercial agency shall prevail.
The contract between an influencer and an influencer’s brand can protect the influencer from standard consumer liability. The Influencer and the Brand may also agree on a maximum limit of liability and the Influencer can go against the Brand for damages and damages if any.
In the absence of a signed contract with the trademarks, liability based on damage will be applied.
Steps to Starting an Affiliate Marketing Business
- Build an audience via blogging or social media platforms
- Obtain a relevant independent business license or permit before starting business activities
- Get a pass for social media promotion if needed
- Find the most suitable partners and subscribe to their affiliate programs
- Create content, promote affiliates in licensed activities
- Get money in your bank account
The cost of the National Media Council license is 15,000 dirhams. Depending on the mainland or free zone options, you may be able to find affordable or suitable licenses depending on your specific business idea or activity, required visas and other criteria – and can start at Dh8000 or so for a year, or even less with Promotional discounts for some free zones. Always check with the relevant licensing authority before paying for a license to make sure the activity covers your way of working or you could be subject to heavy fines.
In addition, if the licensee is using social media to market the product and use the influence to push ads and promotions, he will also have to obtain the NMC Social Media Influencer License which costs Dhs2775.