Software Marketing Resource Articles: June 2004

You wrote the code, now how do you sell it?

Monday, June 28, 2004

Digital River Takes Over

No one is shocked any longer to hear that Digital River has added to their impressive collection of acquisitions. This time, only the size of the acquisition was surprising. On April 19, 2004 Digital River announced that they added ShareIt / Element5 to their collection of registration services for a paltry sum of 120 million dollars. Realizing that I had taken an interest and written about their past acquisitions Brant Pallazza, Vice President of Shareware at Digital River contacted me and welcomed the opportunity to answer any questions that I had. I seized the opportunity, believing that any insight into the acquisitions would help developers make an informed choice about their online ordering service.

***************************** interview *****************************

1.) There is a deep seeded fear amongst developers, though no one will come right out and say it, that DR will consume all of the registration services and then increase rates. At that point developers will be so vested in DR there won't be any other options. Is there any guarantee that this won't happen? Is there anything that you can say to reassure developers who have this fear?

This question has two parts: First, regarding rate increases...we have made many acquisitions in the past and have never raised our ecommerce rates. Instead, we have added features, functionality and stability. In some cases, we have even lowered rates. Our #1 goal is to help our clients grow their revenues through better marketing, sales and distribution opportunities - they win and we win. We can have a much larger impact on both our businesses through this strategy than through simply raising rates.

Second, there are ALWAYS options. We know that our clients have choices. The acquisition of e5 will not lessen that fact that there continue to exist a number of other extremely competitive services out there. We intend to continue to deliver solutions of strength and value that fit our clients requirements.

2.) Why does DR keep acquiring registration services, when they have not yet fully integrated or leveraged the services of the properties they currently own?

With every acquisition, our intention has been to integrate the back end services that make sense (accounting, customer service, hardware, etc.) while retaining the features, functionality and "personality" of the original platform. Believe me, it would have been much easier for Digital River to acquire a platform, integrate the technology into Digital River's core ecommerce platform, and migrate the clients to this new platform. But we know that this is not what the clients want. They want to retain their existing interface and process while benefiting from the elements that Digital River has to offer (i.e. the network).

3.) At some point DR has to realize they are re-purchasing many of their existing customers, I'm not sure how this translates into growth, can you elaborate on any of the thought process?

Following an acquisition, we often times find ourselves reacquainted with previous clients. But we understand that the client was simply looking for an ecommerce solution that best fits their needs.

Hopefully, despite the acquisition, the client is satisfied with their current solution and will continue the relationship despite the acquisition. In fact, they often realize the immediate benefits of being a part of a larger network.

4.) Are there any other directions that DR intends to grow? While the acquisition of ShareIt surprised me, I thought it likely that DR would purchase another download site. In fact with the shake-up at Tucows I thought that might have been on your radar. Can you tell me if the business focus is on registration services or if you intend to grow into other segments? I honestly think developers will be more understanding if they understand both short and long term goals and intentions.

The objective of the acquisition of registration services has been to grow the size of the Digital River's aggregate client product catalog. With a large catalog of titles at our disposal, we will continue our focus on the development of effective channels of distribution for our clients. The more titles we can bring to table, the stronger position we have in getting distribution for our clients in both traditional (online retailers and download sites) and non-traditional (content sites and portals) online channels, which in turn helps us further drive client growth on a global basis.

Creation of our trialware network is just the beginning of several exciting opportunities currently being developed at Digital River. It has been no secret that Digital River has always been very successful and very interested in merchandising, permission-based email marketing, and Web analytics. I see these as continued opportunities for all our clients that will be aggressively pursued in 2004.

5.) Digital River has always taken a hands off approach to their acquisitions letting clients adjust, with as few changes as possible. However, there have been recent key leadership changes at RegSoft and RegNow that no one is talking about. While these acquisitions happened quite some time ago, it appears that they are becoming much more integrated into the DR "machine", is that what will happen with all the properties over time?

It is interesting that you describe Digital River's approach to the acquisition of registration services as "hands-off". That is exactly how we wish the transition to be perceived. But the fact is, many back end processes undergo immediate integration. These changes provide greater security, enhanced redundancy or more depending upon the circumstances.

The fact is that we acquire only very well run organizations with superior solutions and excellent management teams. Obviously element 5 fits this mold. RegNow and RegSoft, two acquisitions referenced by you also fit this mold extremely well. It was several years after having been acquired and being managed by Digital River that the day to day business owner of RegSoft decided to move on. The original development team, however, continues to enhance the platform even today.

As for RegNow, the day to day business managers and support staff continue support the platform today. Although some key roles have been expanded to touch all Digital River's shareware properties. With every acquisition, our objective is to retain the personnel and the "personality" that makes it a great registration service. We then try to maximize the opportunities associated with being part of a larger network.

***************************** my impressions *****************************

I still believe that this will be a defining year for registration services. I was caught off guard by the acquisition, as I was under the impression DR would further integrate their existing properties into a common system, leveraging the benefit of having such a large network before further expansion. Being that Element5 is in Europe and targets European developers, it brings with it, a number of cultural nuances that the other acquisitions did not. This move is slightly out of step with DR's previous purchases and will likely be more difficult to integrate.

I commend Digital River's intention to provide their clients opportunities to further market their software via permission-based email, but I wonder if Digital River is missing the mark. Many savvy web surfers are opting out, of opting in, and simply selecting RSS feeds that contain content of interest.

As for the future, eSellerate has made it very clear that they will not sell to Digital River for any price. They are positioned well and will likely be "the" other industry player. For all the developer rumblings regarding the DR acquisitions, few grumble with their feet and most will likely stay with their existing processor unless they incur some sort of financial loss as a result of the new conglomerate. Of course I don't have a crystal ball, and Plimus, the new kid on the block might surprise us all.

The challenge stands --- eSellerate, SWREG and Plimus improve your services to a level that will compete with Digital River's network. Offer a personal and individual approach, do not treat us, the client's, as a number. Digital River, attempt to reach your potential, strive to combine technology and leverage the power of your network while not losing sight of the small business feel that developers desire.

About the Author:
Sharon Housley manages marketing for NotePage, Inc.
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Thursday, June 24, 2004

Affiliate Alternative; Google AdSense

The Rise and Fall of Affiliate Programs
Affiliate programs were once a great source of online revenue, a savvy webmaster with an eye for marketing could easily parley a site into a money making machine with a little luck and effort. However, the evolution and growth of the Internet has hampered the growth of fortune making affiliate programs. Constant search engine algorithm changes, along with the search engine's clear distaste for sites participating in affiliate programs; have made it a little more difficult to earn a healthy affiliate revenue. An influx in the use of software programs that terminate cookie tracking and privacy programs that prevent webmasters from tracking referrers, have also hindered the affiliate sales channel. While it is still possible to make money through affiliate marketing, other alternatives ought to be considered.

A Healthy Alternative or Supplement
Google's Adsense program allows approved websites to dynamically serve Google's pay-per-click Adword results. This has become a popular alternative and an effective revenue sharing program for webmasters. Google's spider parses the adserving website and serves ads that relate to the website's content. While the Google's Adsense program still has some issues, they are making efforts to improve it.

The website maintenance related to Adsense is very easy and requires very little effort. Webmasters need only to insert javascript into the webpage or website template. The javascript calls the ad from Google and will ensure that ads are served each time a visitor goes to the webpage. If the visitor clicks one of the Adsense ads served to the website, the website owner is credited for the referral.

The implementation, while simple, has its drawbacks. Google dictates the format of the ads. Webmasters can select from a handful of preformatted text boxes that lack creativity. A recent improvement allows webmasters to modify the ad boxes to resemble the website's color scheme. Still, a far cry from some of the creative ads webmasters are accustom to.

The example below reflects how the color scheme can be modified to match the look of the website, but the ads physically don't fit well into the overall website design.

sample modified to match sites color scheme: (scroll to the bottom)

Google determines the content of the ads that are shown/ Sometimes the ads are poorly targeted, and of no interest to the website visitors.

sample of poorly targeted ads:

Adwords can be a great addition to a website, and when well matched to the content the revenue stream from Google is consistent and effortless.

sample of effective Adsense program: (scroll to the bottom) (scroll to the bottom)

Not that the Google Adsense program is not without its problems, as the reporting provided by Google is lacking. Google has only recently implemented channels as a way to track multiple sites that serve ads. The general reporting simply shows the number of ads served, the percentage of clicks received, and the revenue earned each day. Google does not disclose the amount of the revenue they share, what percentage of the revenue they earn and what someone can expect to receive for each click. Webmasters with multiple sites will have difficulty determining which websites are producing the money in the Adsense program.

With affiliate programs many webmasters implement a new browser launch with each click off the site, Adsense removes the visitor from the website and there is not currently an option to launch the visitor into another browser.

Early on Google implemented a filtering system that allowed webmasters to prevent a specific domain's ads from being served on the website. Ad blocking meant that webmasters could prevent their competitors ads from being dynamically served on their website.

Overall, adwords are great supplements to websites where affiliate programs are either not performing or when affiliate programs don't exist that target the sites content.

Give it a Try
Implementing and maintaing Google Adsense program on a content site requires very little effort and can often bring a steady stream of additional revenue for webmasters. Consider supplementing content and see what happens.
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Friday, June 18, 2004

Affiliate Communication

Communication is Key!
When building an affiliate network communicating with affiliates is important for merchants to maintain a good relationship. An affiliate's web site targets visitors, who may not necessarily view a merchant's web site, and therefore expands a merchants market. An affiliate may not be able to actively keep up with the merchants product, it is important for a merchant to keep affiliate's informed about new product information, sales, new releases, links, graphics, promotions and special offers.

Keep in mind, not all affiliates are going to produce a high volume of traffic, and importantly, visitors who want to purchase a merchant's products or services. The occasional gem makes the time taken well worth your effort. Talk with successful affiliates, find out what they are doing to effectively promote your software, and use that information to assist those affiliates who are not as successful.

Assist affiliates in understanding your product; no one knows your products like you do. For affiliates to drive traffic that will convert to sales, they need to understand the benefits of the product they are marketing. Once an affiliate knows the product, they will be better able to act as an extended sales force. In order for the affiliate to make the effort, you simply must support them!

Make Communication Easy
Many 3rd party affiliate-tracking programs notify both the affiliate and merchant of a sale. This can often be automated and will create positive communication between merchants and affiliates. Making an affiliate's role easier will help them increase earnings and further promote a merchants site.

Provide affiliates with great looking graphics and sample text. Graphics that work best are those that highlight your web site, yet fit the look of an affiliate's web site.

Newsletters are another great way to get information to affiliates. Include tips and specific for affiliates, along with general marketing advice that helps with site promotion. If you are looking for software to manage newsletters, I highly recommend Group Mail -.

Affiliate Taboos
An affiliate generates a sale for a product and the merchant promptly decreases the commission. This sends a very negative message to the affiliate, in many cases they've taken a lot of time to place links, promote products and because they've driven effective traffic their commission is decreased. If its necessary to decrease a commission for whatever reason, be sure to include a personal note detailing the reason and letting the affiliate know that you still support their efforts.

A Cheat?
An affiliate sale occurs, you go to their website and don't find any links you decide they must be cheating you! This conclusion is simply a based on poor communication and reporting. Many, many affiliates have multiple sites, very few affiliate tracking programs allow affiliates to list multiple sites, and in many cases the number of sites listed do not accurately reflect the number of sites owned and managed by the affiliate. Additionally many affiliates manage opt-in newsletters that may result in sales, but links are not visible on a website. An example of a popular ezine often promoting affiliates is Lockergnome!

Links, Links, Links
Keep your links valid! If you update a section of the site or remove an offer provide a redirect or retain the link saying that such and such offer has expired and a new one has replaced it. It seems a waste to discard targeted traffic because a special has expired. Be sure to communicate with your affiliates, and if a link will only be good for a specified length of time tell them up front. When an offer expires notify affiliates a week prior to the expiration with a reminder. This will give them ample time to make any needed updates.

Added Incentives!
Affiliates love added bonuses for reaching goals or specified levels of sales. Many of the 3rd party affiliate vendors run contests and provide large incentives for their top performing ones. Reward and praise successful affiliates.

Affiliates tend to be experts in other areas, which relate to a merchants business; therefore, by communicating useful information, and helping affiliates increase their earnings, they will give added exposure and increase your sales. Communicating with affiliates will ultimately benefit visitors of both sites. A little effort in the beginning can mean big rewards in the long run.
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Friday, June 11, 2004

Understanding Affiliate Programs

In order to determine what program will likely work best for your website you must start by understanding what works with affiliate programs and what doesn't. With a little information a webmaster can make an educated decision regarding the various affiliate alternatives available.

Recently webmasters have been asking me questions about the various affiliate programs available, so I decided to answer some of those questions. Please bear in mind that the following observations are my opinions and perceptions about some of the programs that I've worked with, they are not meant to be conclusive statements regarding the services of those providers mentioned.

For clarification purposes I'll define an affiliate to be any "referrer" or website that promotes a product in an effort to earn revenue. A merchant is defined as someone who owns a product and is sharing revenues with an affiliate based on the affiliate's performance. There are 3 types of affiliate programs available, though only one is common to software. I've defined all three but for simplification purposes I've focussed on the one that is most common to software, Pay per Sale.

Pay Per Click - this is when an affiliate is compensated for sending traffic to the merchant.

Pay Per Lead - this is when the merchant agrees to pay for a qualified (or sometimes unqualified lead)

Pay Per Sale - this is when the affiliate is compensated by the merchant if the referral generates a sale or purchase.

In order to develop a successful affiliate network,developers must realize that affiliates are partners, many times spending ad dollars on site, or product promotion. If the affiliate is not compensated fairly they will not remain in the merchants network. Commonly traffic to merchant sites is measured and affiliates can clearly see conversion rates. Meaning, they track the percentage of people they are referring, and how much of it results in earned revenue. If the affiliate finds a very low conversion, they will find a better way to monetize that traffic, quite possibly with a competing merchant product.

In order to be a succesful affiliate, the affiliate site needs to to either have tons of traffic or target a specific audience (frequently one untapped by the merchant). It has been my experience, the closer the affiliate site content resembles the merchant products, the higher the likelihood of a good conversion rate.

Once you are committed to the idea of affiliates the next step is to determine the kind of tracking system you are going to use. Again there are a number of different kinds, I'm going to focus on those commonly used with software applications and within that group I'll talk about those that I'm most familiar with. Please bear in mind there are others out there but these are the ones in the forefront.

3rd Party Software Affiliate Programs
Some of the players are RegNow, ShareIt, Esellerate, and Emetrix. The benefits in working with these type companies to manage your affiliate program is that they obviously understand the software industry (as it is what they do). The downside is they don't have large networks of affiliates that are looking for your products, so you will need to do the bulk of the recruiting and the reporting is generally not that good. All of the companies above handle affiliates differently.

Once upon a time RegNow had the best affiliate tracking system and network. RegNow manages affiliates through cookie tracking and they have a large searchable database of software programs. RegNow ranks their affiliates and merchants based upon performance. The downside to RegNow's systems is that they are one of the more expensive registration services and inorder to generate any affiliate revenue the more successful vendors use RegNow as their primary registration service. Affiliates are given a RegNow url which passes them to the merchant site lodging a cookie on the surfers computer. If the surfer downloads, and returns later to purchase the affiliate is credited for the referral. The downside to RegNow's system is that "cookie" killer programs. RegNow has attempted to overcome this by implementing a wrapper type system with the newly acquired system. The implemenation is more cumbersone and not all merchants provide a "wrapped" version for affiliates.

Cons to RegNow - their reporting is really substandard, you are unable to see the number of customers referred (from an affiliate perspective) so you can not determine if there is a good conversion. You must check order links to be certain that the merchant uses RegNow as an order service.

ShareIt's system is fairly new and but their database is huge. You can find just about any type software listed. ShareIt provides an url on ShareIts site that provides a brief description of the software along with a "try" and "buy" button. In some cases the merchant customizes the web page. The customer really doesn't have any options to find more information about the software unless the page is highly customized. I've found the conversion is significantly lower if the page is generic and not customized. We've had a lot more success if the landing page is actually on the merchants site, unfortunately this opens tracking issues.

Cons to ShareIt - their reporting is substandard, excel spreadsheets are sent to affiliates upon request. The spreadsheets just show sales or attempted sales made, there is no link tracking. Merchants all pay 15% commissions, as far as I know they do not have the option of accepting or rejecting any affiliates.
url example:
standard -
custom -

ESellerate's system is brand new (launched around October 1st). Its very similar to ShareIts with a specific landing page on Esellerate's system. While they don't have many software listings in their library, their system has much more flexibility than ShareIt's. Merchants can approve or reject affiliates and they have a good searchable database for affiliates to find programs. eSellerate has conquered the cookie issue by providing a "wrapper" based technology, the software....

Downside - database is still comparitvely small and often the landing pages contain minimal data.

Cons to Esellerate - the conversion on pages that don't pass through to the merchants site just does not convert as well.
url example:

Emetrix doesn't have an affiliate system but they bear mentioning because they have made an effort to integrate a number of the popular 3rd party affiliate systems into their network. They have told developers in their network that integration for other 3rd parties is available upon request should the developer sign up with them. Having recently signed up with ShareASale and using Emetrix for ordering I found the integration to be far easier than I expected. I simply checked a box in the Emetrix control panel and the integration worked fine.

Cons to Emetrix - they don't have an affiliate program ;-)
url example - depends on the 3rd party system used.

3rd Party Affiliate programs
Many merchants use established 3rd party affiliate programs to manage and recruit affiliates. The 3rd party affiliate programs have large affiliate bases and making it easier to recruit affiliates. Their focus is affiliates and they traditionally can track the number of visitors referred by affiliates and the number of sales, so conversion can easily be obtained. All allow you to optionally auto approve affiliates or manually aprove or reject affiliates. Affiliate commissions can typically be adjusted for top producing affiliates and overall their systems tend to be a little more flexible. Nearly all use cookies to track the referrals passing the customer to the merchants site for the purchase.

Commission Junction
Commission Junction's tracking is excellent but their network is so large its easy for a small merchant to be lost. Its also likely that smaller developers will not have the highest ranking as its based on volume. The initial sign up fee for CJ is also likely to be out of reach for the majority of small merchants (I believe $ 5,000). CJ Cons - intitial expense and sheer size of network (both pro and con)
CJ url example -

ClixGalore's network attracts a number of smaller companies, and while their system is adequate I found something that could affect merchants abilities to attract affiliates. When its time to pay an affiliate ClixGalore will only pay via PayPal, yet during the sign-up affiliates are not told this. PayPal is not supported in all countries and this could affect an affiliates ability to be paid. Its likely they are unable to support a network of ClixGalore - site is difficult to navigate and payment options minimize ability to attract international affiliates. ClixGalore url example
url example -
More info on ClixGalore

ShareASale has a growing network and while their site navigation isn't intuitive, it has improved slightly since I've joined their network. They also offer a number of incentives for affiliates to promote programs (they are currently running a contest).
url example -

Home Grown
A number of developers have decided to do what they do best, and create home grown affiliate programs, the obvious pros are that the system can be modified to meet a developers need, reporting can be changed based on requests and the merchants have complete control. The downside is the affiliate program would be independent of any network and the recruiting burden falls to the merchant. In addition sometimes affiliates are hesitant to trust a home grown system where the merchant is responsible for the accounting. I've had mixed luck with home grown affiliates some are great some are not.

Wednesday, June 2, 2004

Pay-As-You-Go or WebWare

I recently read an article that gave accolades to software developers who have moved to the pay-as-you-go model also known as webware. While webware might work in some very specific situations it has significant drawbacks, ones that consumers do not fail to see. When a customer either a consumer or business utilizes software on a rental or subscription basis they

So using your service is going to cut down on viruses and worms? How is that possible?

Doesn't being connected to the internet all the time *increase* the odds of getting a virus or a worm?

Are your users tired of Window' instability? Do they have to switch operating systems to use your software? You solution doesn't seem to alter anyone's need to have a stable Windows platform, unless you want them to also change operating systems? So your solution is that they have to invisibly upgrade and pay for those upgrades every month? You can continue to believe that shareware is forever. You are once again confusing a simple marketing method with a type of product. If you look at how shareware (a marketing method) worked 10 years ago and compare that to now, you will clearly see there is virtually no relationship between how that marketing method worked then compared to now. That's because the shareware marketing method has changed over time. All "shareware marketing" does is sell software. If you believe that no one will be selling software shortly, let me know.
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