Become Affiliates change their revenue ladder.

Discussion in 'Casino Industry Buzz and Terms Alerts' started by ThePOGG, Feb 12, 2016.

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    ThePOGG

    ThePOGG Affiliate Guard Dog Member

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    Become Affiliates have changed their revenue ladder:

     
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    Frank

    Frank Affiliate Guard Dog Member

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    A lot of programs are going by numbers instead of revenue.. some websites target experienced bettors, so a new $50 free bonus site can get a bigger % than a dedicated pro betting site that hunts out the bigger players.. it's just another way to cream off the top of affiliates backs, if we make money together and i bring you 50,000 this month on 10 players.. why does mr free bonus who brings in 51 players at $100 "$5k" make almost double commission?
     
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    Engineer

    Engineer Super Moderator

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    ThePOGG

    ThePOGG Affiliate Guard Dog Member

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    That is a fair point. But I do understand the other side of the argument as well. When constructing a Revenue Ladder a program is going to construct a program that is applicable to the majority of the market. The reality is that there are likely to be far more affiliates that cater to the low value NDB type players than the lower volume but higher quality players that you're talking about. An advertised revenue ladder has to do the best of 'one size fits all' marketing, where the bespoke deal takes over if you can prove you have higher value traffic.

    Personally I'm not a big fan of the NDP revenue systems as low volume of referrals often comes pretty close to Minimum Activity Quota (i.e. if you send zero or only a few sign-ups in a month your rev share can drop to unsustainable levels). What I don't have so much of a problem with is hybrid systems where your rev share is based on Net Rev, but you can then gain additional bonuses for sending certain numbers of NDPs through. This seems like the best of both worlds to me, paying for higher value traffic whilst still incentivising the affiliate to send new traffic through.

    TP
     
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    WCD Admin

    WCD Admin Affiliate Guard Dog Member

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    Commissions should be based on revenue. In the rest of the world, that's the way it is. Anyone knows if you buy a house, the agent takes a commission. It's based on the value of the property, not how many houses they sold this year. What Frank says is spot on. It's just a technique to keep your revenue lower than it should be.

    Also, the way we do it is when signing up for a program, we immediately negotiate all that stuff. If you're really taking what they offer on the affiliate page you are most likely shooting yourself in the foot.

    However I guess they might not be as willing to negotiate if you are a new affiliate.
     
    Last edited: Feb 18, 2016
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    ThePOGG

    ThePOGG Affiliate Guard Dog Member

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    Have you ever known an agent that gets commission on a house sale every time it sells after they're engaged? Most people from other industries I've spoken to find the 'lifetime commission' idea pretty weird. I'm not saying it's wrong, simply that I understand the frustration of the industry, especially when lifetime commission gets combined with no NCO, resulting in a situation where an operator can end up paying even with an account has ultimately been negative for them.

    Actually, that's exactly how we do things. As we make a point of not 'selling' position, we've little to offer to encourage a better deal. Those programs that offer us an improved deal are the programs that have come to specifically value their partnership with us and make the offer regardless of knowing that it won't improve the traffic they receive. Our business model is different to the majority of the industry, but I'd agree that many small affiliates are unlikely to have the leverage to negotiate better deals that WCD does. The market was a totally different place when WCD would have been in their 'small' stage (was that even a real time lol).

    All the best,

    TP
     
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    Guard Dog

    Guard Dog Guard Dog Staff Member

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    On house sales, lifetime doesn't work. In the sales industry, in general - if you sell to a customer, that customer is YOUR customer. When the customer re-engages and buys soemthing else - you get the commission. It's not only common, it's 'the way it is'. I'm not sure who thinks 'lifetime commission' is weird.. the only way you don't get that in a sales organization is if you jump jobs or companies.
     
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    ThePOGG

    ThePOGG Affiliate Guard Dog Member

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    Don't agree with you on that one GD. When an affiliate refers a customer to Amazon they get commission on the sale of the product, not everything they buy after that. Same with a car garage, the sales person gets commission on the sale of that specific car, not on each car the customer buys from the garage (unless they're all sold at once). When working on the sales team at Sky, I got a bonus on the product that the customer bought, not on each product they bought after that. The industries that would offer 'lifetime of the customer' are the exception rather than the rule.
     
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    Guard Dog

    Guard Dog Guard Dog Staff Member

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    You are talking affiliate commissions, not sales commissions. I'm talking: advertising (paper, magazine, television), software (manufacturing, accounting, ...), machinery... and much more. Big business sales. And trust me... I'm right on this. I work for an engineering sales company with lots of salesman. And I talk to companies as large as GE whose sales team also gets revenue moving forward after each sale. That stuff way out weighs what you are talking about. :)
     
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    ThePOGG

    ThePOGG Affiliate Guard Dog Member

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    When you WORK for a company and take over the management of an account that works out. You're responsible for the management of the account and you continue to go back to the customer and re-engage them.

    Affiliate marketing is significantly different. You're not in the employ of the company and all effort after the initial sale is generally done by an internal team.
     
    Last edited: Feb 18, 2016
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    Guard Dog

    Guard Dog Guard Dog Staff Member

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    lol. ok. My first point is fine. I'm not here to argue about it as I deal with sales everyday of my life and that is enough for me. I was just giving a different point of view where sales guys do look at commissions as lifetime - and it's prevalent. that's all.
     
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    ThePOGG

    ThePOGG Affiliate Guard Dog Member

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    Apologies if that came across as snarky - dipping in and out of this quickly as I write a fairly protracted email to the UKGC so I'm not paying as much attention to tone as I should :)
     
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    Guard Dog

    Guard Dog Guard Dog Staff Member

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    ha. no worries.. I felt the same way with my comments. that's why I added the last 2 sentences... because I was trying to make sure it didn't sound snarky either. Funny we both thought the same - apologies here too if it came across that way. Anyway, have a good day bud.
     
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    Frank

    Frank Affiliate Guard Dog Member

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    You are comparing tangible products to non tangible, most of us would also be happy managing our clients but most of the industry does not allow it.. Amazon may pay you just once on the product but most internet sales affiliate programs pay you on repeat business.. I used to have a largely sold product via affiliates many years ago and re orders were always given to the original sales person, why? because he would be more inclined to promote my product.. it would be worth his while and if i didn't he would find someone else that will in this day and age of capitalism, same with casinos there is always a program that fits in and that's who i promote.. I don't mind sliding scale if it's based on earnings, but earnings on players sent I am not a fan as I tend to target the higher end of bettors, a lot of pro bettors which are happy to layout 6-8k daily on bets.. that's how this business is run..

    Really it should just be one set rate for everyone % of what you bring in and what's generated in profit.. you sell more you make more I would much rather have two regular whales than 100 $50 one time players
     
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    ThePOGG

    ThePOGG Affiliate Guard Dog Member

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    Okay, there's a lot of things to say in response to that, but firstly I'd ask Admin to split this thread off. None of what's been posted so far is directly relevant to the Become Affiliates term change.

    Where a person manages clients they generally work directly for the business. They may receive some sales based performance incentive, but at the end of the day they can be sacked and the clients can be given to another representative. That type of client managing isn't possible within the affiliate market where external bodies provide the clients. If I managed my players and got 'sacked', it'd be very difficult to prevent me taking my client database with me. This is a problem that the sales based market you're talking about struggles with as it is. When database management is dealt with 'out of house' the problem amplify to the unworkable. As we're not employees taking the position that we should be incentivised in a similar manner to businesses that run on this model ignores some fundamental truths.

    (And none of the above addresses the Data Protection implications of allowing affiliates to manage operators player databases)

    This statement confuses incentives. Because I'm only paid for one product by Amazon do I stop advertising with Amazon? No, it's the additional sales that motivates me to sell not the repeat custom. I know many affiliates that are doing better via Amazon that ThePOGG does month on month.

    I accept that repeat custom can be a motivating factor but it doesn't always work like that and suggesting that the entire industry should function on a model that works for you doesn't make sense when you freely admit that your business strategy - that of low quantity/high quality - isn't representative of the majority of the market.

    Having spoken with many programs about this topic there are two big issues with the Net Revenue model:

    1) Affiliates who can refer a small number of players and work in collusion with them. This is generally set up as a profit sharing exercise between the players and the affiliate and legally is pretty close to fraud. The player's get the full payout when they win and get a % of losses back when they lose. I'm aware of one group that was doing that in the states up until UIGEA came into play that I've heard were netting over $500k/month across all the operators they were working with. It's a serious issue and creates guaranteed losses for the program. This is becoming less prevalent, but is still an issue. Even if I know one high roller, setting up an aff account, referring them and doing noting else isn't the type of activity that affiliate programs are looking to encourage.

    2) Affiliates that stop promoting the operator all together. Some die, some move on to other business, some decide to work with other programs. To my mind this isn't a big deal - you've made an agreement so you stick to it - but in terms of motivation when this is happening it's clear that the Net Revenue only model doesn't always incentivise affiliates to continue promotion. In fact there's no incentive what-so-ever to keep you promoting when you're going to earn the same amount from the players you've already sent through regardless of whether you continue promoting or not.

    You're clearly a special case. The low volume you send through is more than made up for by the high quality that you send and you should have no problem making that point and arranging a better deal with any half smart program. For all the other affiliates a program has to work with a more balanced approach has to be taken.

    I'm no advocate of Minimum Activity Quotas, any program carrying one is immediately 'Not Recommended'. In fact I've only recently published an article on why these terms are bad for players and taken the decision to exclude any program running one of these from receiving significant placement on our player facing site as well. Nor do I advocate NDP based rev share over Net Revenue based rev share - NDP based programs can very quickly become a Min Activity Quota by any other name. That said I do understand why the industry is trying to find a model that actively incentivises affiliates to continue promotion.

    Hybrid programs that combine Net Revenue and NDPs to establish revenue share allow a foundation based on Net Revenue (quality of player) and add additional incentives for sending through extra players (incentive to continue promotion). While I understand that this isn't ideal for your specific model, you should have no problem getting special consideration for your circumstance and these models allow a compromise for the rest of the market where they are primarily rewarded based on the quality of their traffic, but still have some additional incentive to continue trying to get more players through the door.

    TP
     
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    Frank

    Frank Affiliate Guard Dog Member

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    I can't say for casino just yet as that side is fairly new, but with regards to sports "USA" this is what suits me best, most programs do have a negative carry over so that does not come in as a factor, and just as a player can bet big he can also double his winnings in a night punishing my account, sliding up and down scales would never work, sign up wise we probably do well over the top end of those stats.. just not all at one program it's spread across, either way the Casino Brands I currently promote are set % irrelevant if i send 10 or 100 players, and that's how I would keep it, also another factor would be conversion ratio 1 in 15 or 1 in 100? if they set % by sign up numbers then they need a proven conversion ratio in place to make it fair right? won't happen .. so many scenarios. anyhow Casino is a competitive industry and dozens seem to pop up every month there is always something for someone to promote.

    btw: I see they have the same sliding scale with sports.. will be great for the bonus bet websites but technical websites will stay away
     

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