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.