Editor's Choices among Affiliate Management Software

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When you look at the Affiliate Management Software available for merchants today, there's quite a variety. Applications used by merchants who completed our user survey break down into five main groups.

1. Commission-based ASPs
2. Fee-based ASPs
3. CGI Programs
4. E-Commerce Programs with an Integrated Affiliate Program
5. Custom Programming

ASP stands for Application Service Provider, and refers to service bureaus where the software is hosted primarily on the vendor's site rather than the merchant's site (though some of these have certain programs hosted on the merchant's server, too). A different category, CGI programs, are based entirely on the merchant's site, and thus don't usually require any on-going fees beyond the initial purchase of the software license. The better e-commerce programs (sometimes called "shopping cart" or "store-building" programs) are beginning to integrate affiliate management into the program. Our list is suggestive rather than exhaustive. Let's look at the leading programs in each category.

1. Commission-based ASPs (Application Service Providers)

Be Free, LinkShare, Commission Junction, PlugInGo, ClickTrade, and others all charge the merchant a set-up fee plus a commission based on sales revenue.

Pricing Plans

Though there's some variety of pricing plans, Commission Junction's plan is typical. Merchants pay a one-time $1,295 set-up charge, and then 20% (30% after 7/1/01) of the commissions paid out to affiliates, subject to a $250 per month minimum. Let's say you decide to pay your affiliates a 10% commission. When your customer purchases a $100 golf club, your affiliate would receive a $10 sales commission (10%) and Commission Junction would receive 20% of that $10, or $2. Thus your pay-out for the $100 purchase is $12 -- $10 to your affiliate and $2 to Commission Junction. However, in any given month Commission Junction's minimum fee is $250. At this rate you'd have to sell 125 golf clubs a month ($12,500) to keep above the minimum fee.

Charges vary from one vendor to another. At this writing these were the fees:

Recently Commission Junction angered a number of their smallest merchants by instituting a monthly minimum of $250, and you'll see that reflected in our user feedback. Even though I was one of the merchants displaced by the change, I think Commission Junction was wise. What they've done is to cut off the many merchants that are taking resources but earning Commission Junction little, and then turn their focus to larger merchants -- as painful as that was. In this economy companies are forced to make a profit or they won't serve anyone very long. While smaller merchants lose the affiliates they've accumulated over the year or two they'd been with Commission Junction, they can move to PlugInGo for a similar price to Commission Junction's old pricing structure. Others are moving to a different model such as Kowabunga's My Affiliate Program.

Built-in Affiliate Networks

A typical feature of commission-based ASPs is the pool of hundreds of thousands of affiliates that they have signed up. Many affiliates are quite interested in signing up for multiple programs and look through a vendor's list of merchants to select likely programs. To a merchant, having a pool of eager affiliates to draw from seems pretty attractive. The truth is, however, that only 3% or so of these affiliates have sites with much traffic, and only a few are making any significant income from affiliate programs. The rest are mainly wannabees that will join a program but not contribute any sales because they have miniscule traffic.

Most of these commission-based ASPs write a contract with their pool of affiliates; the merchant has no direct relationship with the affiliates -- only through the vendor. There's usually no direct way to contact affiliates who have signed up with your program. Yes, some vendors have an internal mail system with boxes for both affiliates and vendors that they are supposed to check when they log on. But if they're anything like me, they're not very inclined to look at messages more than once to see a lot of impersonal "join my program" e-mail. One exception here is Be Free. Yes, Be Free has a pool of affiliates with whom they have a "marketing relationship," but the contract is signed between the merchant and the affiliate. In this way the merchant "owns" the affiliates -- and that's important when your affiliate channel brings in 30% to 50% of the income to your online store.

Of the Commission-based ASPs mentioned, only one has an incentive program to keep affiliates active. PlugInGo.com offers Points That Pay that affiliates can accumulate and use to purchase various products. This definitely meets a need!

Who Owns the Affiliates?

Since I'm moving from Commission Junction to another vendor, I asked Commission Junction if I could take my affiliates with me. The answer was that they would e-mail each of them to let them know how to sign up for my new program -- and not just through the internal message system, but real e-mail -- though I doubt that I'll get the list of e-mail addresses for "my" affiliates. Commission Junction feels they have an obligation to protect the privacy of "their" affiliates. Affiliate "ownership" is a very important issue when considering the model you'll choose.

All the commission-based ASPs listed here have a wide variety of reports that merchants can run to analyze affiliate sales, and some vendors allow you to export them into a spreadsheet for offline analysis.

Pros and Cons

Commission-based ASPs take a great deal of the administrative trivia out of managing an affiliate program. They help you acquire affiliates, they serve your banners, they provide continuously improved, feature-rich software, and, for larger merchants, provide staff assistance to help develop an excellent affiliate program. On the downside, they take a percentage cut of the "action" and may end up "owning" the affiliate relationship, making it difficult to change vendors if you desire to.

Editor's Choice

I'm hard-pressed to select the "best" vendors of this type. Each company listed has its own niche and does a good job. But I'm selecting Be Free and Commission Junction for my Editor's Choices. Be Free has been a leader in affiliate service for large companies that need a great deal of customization. Commission Junction has been the fastest growing vendor in this category, and using their back-office reports, merchants can drill down to find out exactly what you need to know about affiliate sales. I don't see Commission Junction's price rise as a negative; it's just a move to define their niche as online stores with a minimum of $10,000 to $15,000 in monthly sales. Smaller merchants should look closely at PlugInGo as a lower-priced alternative.

Increasingly, we're seeing commission-based ASP affiliate networks spring up in Europe and Asia. The UK, for example, has UKAffiliates.com, AffilateWindow.com, DVision.com, and TradeDoubler.com. Some of these are powered by software provided by fee-based ASP vendor Kowabunga! 

2. Fee-based ASPs (Application Service Providers)

While Commission-based ASPs may be the most visible model and the easiest one to implement, a number of merchants are selecting an alternate approach that gives them substantially more control over their program while capping their costs with a monthly service free rather than a per transaction fee. I call them fee-based Application Service Providers. The following programs received one or more responses from our readers:

Set-up fees varied from $75 to $800, with monthly service fees ranging from $25 to $50 per month. Don't shop for price but for the features you need. The affiliate program you select should be a long-term decision, so don't let initial cost be the decisive factor.

The downside of fee-based ASPs, however, is that merchants must secure their own affiliates. Some fee-based ASPs include advertising clients' affiliate programs via Affiliate-Announce.com, which is a good start, but these vendors don't come with a pool of affiliates to draw upon. Nor do most of these fee-based ASPs write checks for their merchants. Think of these only as service-bureau to handle the actual recording and accounting of sales. Like CGI programs, fee-based ASPs are for companies that want to handle much of their affiliate program in-house and only outsource what they need to.

One of the advantages of ASPs is the online software gets better and more feature-rich without the merchant constantly having to make updates to his own server. Two questions I suggest you ask of fee-based ASPs: How long ago did you do a major upgrade to your software? When is the next major upgrade scheduled? If the answers are nebulous, it may mean that the programmers have moved on to another project and are no longer supporting the program with aggressive improvements.

Among the fee-based ASPs, I was particularly impressed with Kowabunga! Technology's My Affiliate Program (www.myaffiliateprogram.com). Despite slightly higher pricing, they offer many more features than competitors and are fast developing a large number of clients whom they take pride in serving. My Editor's Choice for the fee-based ASPs is My Affiliate Program, which I consider to be the Cadillac of its category.

3. CGI Affiliate Software

A third option for merchants is CGI affiliate software that is hosted on their own server, represented by two programs: The Ultimate Affiliate Package (Groundbreak.com) and the Little Salesmen Affiliate System (CGIToobox.com, Blaylock Enterprises). The advantages of CGI programs are low cost (both available programs cost $200 with no commissions or monthly fees) and the ability to fully control the program. Since these programs are written in Perl, a merchant's programmer could make custom modifications to fit a particular business's peculiarities. Since the programs are hosted on your server, the affiliate URLs will be for your domain rather than your affiliate provider's domain. I think this is valuable for branding purposes.

The Ultimate Affiliate Package by Steve Miles of Groundbreak.com is the surviving pioneer among pure CGI affiliate programs. (Some that began as CGI programs have become fee-based ASPs.) Recently The Ultimate Affiliate Package has been written to use a relational MySQL database rather than flat file databases, so the program is fast and efficient. Both the merchant and affiliate Web interfaces are easy to use and provide lots of information. Support is available via e-mail, telephone, and forum, and installation is offered for an extra $100. The Little Salesmen Affiliate System uses a flat file database, but allows each affiliate unlimited "tracker IDs" to help identify a particular offer or ad. No installation or support is offered. The Ultimate Affiliate Package is my Editor's Choice among CGI affiliate software programs.

4. E-Commerce Programs

Programs in the fourth category have more than just affiliate tracking functions -- they provide a full sales platform on which to conduct business. I see this as a trend among store-building programs. Unlike most store-building programs which are designed primarily for the sale of hard goods, the programs that our readers referred us to offer platforms for the sales of specific types of soft products and information.

Merchants seeking to sell information products such as e-books can get started with very little investment using ClickBank, though it includes no download area -- just the affiliate tracking and payment system. No merchant credit card account is required. The Plug 'n Pay affiliate system is just one component of several e-commerce tools that include shopping carts, payment gateways, and merchant credit card accounts; price is not given on the website. While ShopSite Pro SC offers an affiliate system, it is very rudimentary, and hasn't been updated since it was first introduced two years ago (though ShopSite Pro is an excellent shopping cart system for hard goods and is widely used -- I use it.) Verotel specializes in enabling merchants to sell "tickets" that allow customers to gain access to password-protected areas on the merchant's website. This requires using the hosted sales and affiliate portion on Verotel's site, as well as installing a CGI program on the merchant's site to control access.

I need to give special mention to Paul Galloway's Synergyx. It is matches a full-featured 2-tier affiliate program with an e-commerce platform that can sell and deliver electronic goods. It provides customers with a unique URL for downloads that disappears after a merchant-specified time. This prevents the customer from giving the URL to friends to download software. It can also generate a unique username and password for a "member's only" site. Users praise Galloway's attention to his customers' special needs. Synergyx is my Editor's Choice for an affiliate program integrated into an e-commerce solution.

5. Custom Programming

Finally, 13% of our respondents chose to program an affiliate management system from scratch that would meet their companies' special needs. As you read feedback from those who did so, several themes emerge. First, while some are quite happy with their results, as a group, 6.42 out of a possible 10 ranks them lower than nearly all other leading categories or vendors. Build-it-yourself does not always achieve the happiest users. Second, I see a naiveté with regard to the real costs of in-house programming. The cost surely exceeds the set-up fees of nearly all the vendors. Be Free at $5,000 and LinkShare at $10,000 might be in the cost ballpark, but I'm guessing that the feature-set available in most in-house programmed solutions isn't as great as the best of the ASPs.

Overall, I see the two dozen programs represented by our users as representing a maturing class of application software. Weigh the pros and cons of each category and then look for the vendor within that category that meets your special needs. I'm pretty sure you'll find some Affiliate Management Software application that will work for you.