Software Marketing Resource Articles: Understanding Affiliate Programs

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

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.


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