With online advertising forecast to grow by 30% this year, the 
affiliate marketing segment is expected to grow in line with 
this estimate. Merchants are expected to either add affiliate 
marketing to their existing online sales channels or upgrade 
their platforms to expand their existing programmes even further.

A key part of running a successful affiliate program is being 
able to manage your affiliates efficiently and cost-effectively. 
Thankfully, there are software products to help you do this. The 
trouble is, with dozens of different affiliate software suppliers 
offering a wide range of features, functionality and pricing, how 
do you choose the right one?

There are six main types of affiliate software, each with its 
strengths and weaknesses. Once you choose and implement a 
particular solution, it can be complicated and expensive to 
switch. Be sure to do your research beforehand and choose a 
program that meets your needs both now and for the future.


1. Stand-alone Software

You pay a one-time fee to own the software. You install it on 
your web server where it integrates with your other systems, such 
as your e-commerce and CRM components. 

Pros:  Typically has extensive features and functionality. 
Ongoing fees are minimal and do not change with the size of your 
affiliate program. Affiliate links show your domain address 
because the software is hosted on your server. As more affiliates 
create more inbound links to your site, it can have a positive 
effect on your search engine rankings.

Cons: Requires installation, which you will need to pay for if 
you cannot do it yourself. Having the software on your server may 
require a bigger web hosting package, resulting in higher hosting 
charges.


2. Hosted (ASP) Software

The software is provided as a service by a third party. They host 
it on their server and you pay to access it.

Pros: Upgrades are typically included and are rolled out as 
soon as they are available. Requires no technical skill as 
installation and hosting is handled by the vendor. Upfront 
costs are lower.

Cons: Ongoing monthly fees are usually based on volume of 
transactions. As your affiliate program grows, your costs may 
grow as well. Some vendors may not allow links that go first to 
your domain - reducing the added benefit of inbound affiliate 
links and search engine positioning.


3. Affiliate Networks

Again, the software is hosted and provided by a third party. You 
also gain access to an established community of people who are 
actively looking for affiliate opportunities.

Pros: No technical skill or maintenance required. Instant 
access to a large pool of potential affiliates, which can help 
build your program quickly. Usually the network handles the 
administration of the entire program, including affiliate payouts 
and reporting. You do nothing but upload your affiliate offers to 
the network site. 

Cons: The network takes a relatively high transaction fee on each 
affiliate sale. Minimal options for customizing the program to 
your specific needs.


4. MLM Software

Multi-level marketing (MLM) is often considered the "black 
sheep" of the affiliate marketing concept. However, there is 
significant overlap between MLM and affiliate marketing. MLM 
talks about a "downline" whereas affiliate marketers refer to 
their sub-affiliates. Same concept, different name. Since there 
are software packages to manage an MLM business, you should not 
overlook this possibility for running your affiliate program.

Pros: Excellent for managing an affiliate program with multiple 
tiers.

Cons: There's a certain stigma attached to MLM. Potential 
affiliates may be scared away if they discover you are using 
MLM software.


5. Shopping Carts

Shopping cart software allows customers on an e-commerce site 
to select items they wish to purchase and store them in their 
virtual shopping basket, before paying for their purchase in one 
electronic transaction. Many e-commerce shopping carts include 
affiliate management features as either a standard or add-on 
module.

Pros:  E-commerce and affiliate management functions are 
integrated into one program, making maintenance easier and less 
expensive. The affiliate module is not typically based on volume 
so fees remain the same as your program grows.

Cons: Affiliate management is not the vendor's primary focus so 
the software may have less functionality than other software 
options.


6. Web Site Builder Systems

These all-in-one packages usually bundle web site building tools, 
web hosting, e-commerce and affiliate functionality.

Pros: Can help you launch a complete e-commerce site from scratch 
very quickly. Little technical expertise required. 

Cons: Paying for many different services as one lump sum means 
you may be overpaying if you only want one or two pieces. Again, 
affiliate management is not the vendor's primary focus so 
functionality may be limited.


Whether it is the effectiveness of cookie tracking, the booming 
popularity off RSS and datafeeds, or companies using the latest 
tools in fraud and parasite detection, it's critical when 
choosing an affiliate provider to work with a company that is 
going to adjust to the market. The affiliate software solution 
that works best for you will depend on your affiliate strategy 
and requirements. Think about your needs, do your research, and 
choose wisely. 

Peter Koning is the founder of www.Affiliate-Software-Review.com.
He has been active in the international IT, telecom, and Internet 
industries for over 20 years.

Merchants can compare affiliate software products side-by-side, 
see examples of products in the categories mentioned, and 
instantly create free feature comparison charts by visiting 
http://www.affiliate-software-review.com