Affiliate Marketing for Software Companies

Affiliate Marketing
for Software Companies
Andrei Link
4 February 2014

Quiz
Q. Affiliate marketing was invented by Amazon’s
Jeff Bezos after a conversation at a cocktail party
(a) Right
(b) Wrong

A. (b) - wrong. CDNow, PC Flowers & Gifts, and
Cybererotica are generally considered to have
invented affiliate marketing around 1994, two years
before Amazon (but AMZN has the patent!)
Affiliate Marketing for Software Companies – Andrei Link – 4 Feb 2014

What is Affiliate Marketing Anyway?


for Today
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Why you need to consider affiliate marketing
What it is and how it works
Networks specialising in software / digital goods
Affiliate marketing for SaaS / subscriptions
How B2B and B2C affiliate marketing are different
Attribution, legal, technical and other challenges
Microsoft and InfusionSoft case studies
How to get started
Any affiliate marketers in the room?


A Quick Intro
• 1991: Moved from the Ukraine
• 1991 – 2012: Trimble
– Application Programmer, Project Leader,
Corporate E-Business Manager, Marketing
Manager, Product Manager

• Since 2012: Xtend-Life
– Product Manager, Channel & Product
Development Manager (affiliate and
reseller programs + NPD)

Why You Should Consider Affiliate Marketing
• Possibly, one of the best customer acquisition
tools with a high ROI
• Relatively easy to set up and scale up
• Can be outsourced
• Used by many successful software and online
services companies, B2B and B2C


Network Programs and In-House Programs
• A network-based affiliate program:
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Uses an affiliate network linking many merchants with many affiliates
Advanced software platform
Tracking, reporting, payments, matchmaking, education
Three “must know” networks for software businesses:

• An in-house affiliate program
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–
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Has only one merchant – you!
Uses shopping cart plugins, off-the shelf software, SaaS
Direct relationship, increased control & flexibility
You don’t need to pay the network fees
Not an easy option for a young business: affiliates prefer to deal with
trusted and established networks


• A sophisticated platform for selling software
online including SaaS and Cloud solutions: “Any
Channel, Any Model, Any Market”
• A 40,000+ strong software focused affiliate
network.
• 1,617 vendors as of last week
• Automatic integration with any eCommerce
platform (claimed)
• Outsourced Program Management offered (3
levels of service)
• www.avangate.com/products/affiliate-network/
www.avangate.com/affiliates/

• A sales and marketing platform
• A network with 100,000 affiliates
• “30,000 transactions a day across more than
190 countries” (claimed)
• Marketplace search for “software” last week:
– 1800 hits for one-time billing
– 482 hits for recurring billing

• www.clickbank.com

• Over the years, has absorbed Regnow, ShareIt,
Swreg, other software ecommerce companies
• Some of acquired / integrated companies have
come with their own affiliate networks
• Claims to have partnerships with leading
affiliate networks globally
• Offers outsourced program management
• www.digitalriver.com
www.mycommerce.com
www.onenetworkdirect.com

Quiz
Q. “Affiliate RAP” refers to:
(a) Music popular with many affiliates
(b) Affiliate Program Managers’ activities
(c) The “Rapid Action Profits” sales solution for affiliates

A. (b). Affiliate RAP is an abbreviation for Affiliate
Recruitment, Activation and Policing

Managing an Affiliate Program


Outsourced Program Management
• Pros
– Experience
– Connections
– No AM training reqd

• Cons
– Can be difficult to get the payment model right
(usually, retainer + performance bonus)
– Product / service training required
– Continuity uncertain

Affiliate Marketing

B2C

B2B

Prevalent payment models

Pay per sale

Pay per lead, pay per sale

3rd party network importance

High

Low

Long-term relationship with affiliates

Depends

Required

Affiliate support requirements

Low to medium

Medium to high

Outsourced program management

Feasible

Questionable

Integration with offline marketing

Low importance

Medium to high importance


Affiliate Marketing for SaaS / Subscriptions
• Key issue: aligning commission with revenues
• Metaio on Avangate

• Other possible payment models: higher commission rates on high
value sales; residual commissions after the first sale, rewards for
customer upgrades, paying for both leads and sales, etc
• Adobe: 100% of 1st mth of Adobe Creative Cloud
iContact: $5 / lead (free trial) + $125 / sale (paid account)

Quiz
Q. In affiliate marketing, “attribution” refers to:
(a) assigning a value to a
marketing activity based on desired
outcome

(b) processes by which individuals
explain the causes of
behavior and events
(c) a Pirate Bay affiliates’ saying
“give attribution to avoid retribution”

A. (a). But (c) is pretty close too…

What is Attribution and Why It’s Important
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First Click Wins
Last Click Wins
Multi-channel
attribution
The model you want
to use is a key
selection criterion for
a public affiliate
network (CJ vs
ShareASale) or private
network software
(Post Affiliate Pro)
Click-stream and
referral data analysis
tools: TagMan,
AvantMetrics

Brand Protection and Reputation Management
• Brand protection
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Domains
Trademarks
Messaging
Product claims
Passing off

• Reputation management
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Affiliates’ sites
Affiliate forums and events
Social media
Spam
“Scams, warnings and truths”

• Robust agreement (incl. social media policy, affiliate content and
promotion rules) and enforcement, tools (BrandVerity)


Quiz
Q. “Affiliate Nexus” refers to:
(a) Software for process integration often used by
affiliate marketers
(b) A line of Google-branded mobile devices popular
with affiliate marketers and affiliates
(c) A tax law concerned with local tax collection by
out-of-state retailers

A. (c). Affiliate nexus, a.k.a. click-through nexus,
is a hot legal issue affecting many affiliate
marketers and tens of thousands of affiliates

The Affiliate Nexus Battleground

Source: Commission Junction, Dec. 2013

Legal and Technical Issues
• Legal
– Affiliate nexus
– Affiliate disclosure

• Technical
– Cookie-related
– Tracking integration
– Linking initial and repeat purchases to affiliate
referrals
– Identifying affiliate sites and sources of traffic

Case Study
• Microsoft Store Affiliate Program
– Hardware (PCs, tablets, consoles, accessories) and Software (games,
Windows 8, Office, Visual Studio, Streets & Trips)
– Two affiliate networks: LinkShare, oneNetworkDirect (Digital River)
– Up to 10% commission

• Skype Affiliate Program
– Skype Credit, Skype Subscriptions, Skype Premium, Online Number
– 25% commission
– Three affiliate networks: Commission Junction (worldwide), Affiliate
Window (US & CA), TradeDoubler (UK & RU)

• MS Home Use Program
– Office Pro, Visio Premium, MS Project Pro
– CJ, flat USD $1.50 commission

• MS Windows Azure
– CJ: USD $15 / lead (90 day trial signup)

Case Study
• A marketing automation and sales SaaS solution
for SMBs with 19,000 customers / 67,000 users
• Three tier commission structure:
Silver, Gold, Platinum (up to $1,500 per sale).
• Commissions are NOT paid on subscriptions, only
on the KickStart training package sale
• In addition to banners, other digital
assets, affiliates have a mechanism to log leads
coming from offline sources
• In-house program, possibly run on the
InfusionSoft’s affiliate module

How to Get Started (as a Vendor, not Affiliate)
• Do a readiness check:
1.
2.
3.
4.

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Can you sell beyond early adopters?
Can your site “close the sale”?
Is your mission-critical IP protected?
Can you estimate your conversion rates,
customer acquisition costs and lifetime values
by source / channel?

Clarify your business goals and constraints
Get a mentor
Join several networks as an affiliate
Explore the attribution model issue
Check if the nexus issue is relevant


How to Get Started - 2
• Short-list and evaluate relevant networks
(Avangate, ClickBank, Digital River, other)
• Evaluate program options and make the choice
Affiliate Network Program
In-house Program Management
Affiliate Network Program

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In-house Program
In-house Program Management
In-house Program

Design payment model and commission structure
Prepare program policies and legal agreements
Develop creative assets
Develop the program launch & promotion plan
Launch it, then inspect and adapt 


Summary
• Affiliate marketing, despite its challenges, can be a very
powerful marketing strategy for your software business
• If you have not already done so, take out some time of
your busy schedule to consider it
• Feel free to ask
questions now or
later


Affiliate Marketing for Software Companies

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