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I am working on a project that works like this:

My site is brand.com. I sell some products on this site and in order to promote it I allow webmasters to signup for an affiliate program. So they can advertise my product on their websites(s) using a link with their specific tracking code.

So in a nutshell, your classic affiliate program.

I do not know if I should make the tracking links from my domain brand.com or perhaps create a brand new domain for the links that will 302 redirect to my website.

  1. First option would be with links like www.brand.com/trackid-123. This is similar to what Amazon uses. In this way I can also get some backlink juice to my websiste, correct? If they do not use some 302 redirect and they do not use the nofollow attribute of course.

  2. Create a domain brandaffiliates.com and make the affiliate links from this domain, 302 redirect to my website. In this way, the link juice will not pass.

My main concern is that Search engines might penalize my site considering the backlinks "paid links".

I have seen resources that advice both ways. For example this article on SEOmoz https://moz.com/blog/getting-seo-value-from-your-affiliate-links gives you advice on how to get the most out of your affiliate links by using the 1st method.

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I have never seen any penalty in an advertiser site by doing that, but the publisher often gets a penalty when they don't use nofollow while promoting something.

If your site is new, in terms of natural backlinks, then I recommended to tell your publisher to use a nofollow link when promoting. By doing that you will not get a manual penalty from Google, in case one of your competitors reports you for buying links, and when your site earns some natural links, then Google's automatic algorithm (Penguin) will not harm you because there is some portion of natural backlinks.

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