Apple’s Affiliate Monopoly for Apps

Affiliate programs are a popular way for many software companies (cloud, packaged, subscription) to drive customers to their product or service.  With an affiliate program, the company pays a commission to affiliates that generate leads and sales though reviews, blogging and other online marketing activities, tracking transactions by placing a tracking cookie that is then read by a pixel in the merchant’s shopping cart. It’s a very popular and cost effective way to get new customers, given its performance- based nature.

The arrangement described above has been the standard in the affiliate industry for many years. However, in the same way that it is disrupting numerous other industries, Apple is starting to be disruptive in the affiliate space as well. This is because the only shopping cart you can purchase an Apple application (app) from is Apple’s iTunes store cart. As more companies choose to develop and market apps for iTunes rather than conventional software, they lose the ability to offer an affiliate program, as they would have in the past, and also lose the accompanying valuable conversion data that would be required for other online marketing channels such as display, PPC, retargeting etc, since Apple controls all of the iTunes platform performance data and cart. Not only does this affect the company itself, but it affects affiliates who would normally want to be in its program, as they lose that opportunity and are forced to try to be an affiliate of Apple directly, who would then pay the commission from their revenue share. However, Apple is extremely selective about its affiliates, leaving many who want a piece of the action out in the cold, some of whom were past affiliates on a different platform version of the product that is now an app. As a result, companies choosing to develop and sell apps through iTunes are potentially alienating past successful marketing channels for all of their products and foregoing valuable data for future efforts, often without realizing the full effects of this decision.

It’s important to remember that when you sell an app, you are really turning over your marketing program to Apple, even if it doesn’t make sense to do so. This will likely become a bigger and bigger issue as more companies choose to sell apps, and may even get big enough that Apple is pressured to somehow let app developers include some piece of their own tracking code in the transaction process to better measure their own marketing efforts or even pay on their own for these channels that drive customers to the iTunes store in the first place.  It will be interesting to see how this develops and if Apple is willing to share the marketing burden with its app developers as competition increases. If not, many productive software affiliates are going to feel the squeeze.

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