footballaffiliate
Affiliate Guard Dog Member
- Joined
- Jan 10, 2013
- Messages
- 404
- Reaction score
- 149
I’ve worked on both the operator and affiliate side of the industry. Here are my ramblings
Over the past two decades I’ve seen thousands of affiliates being robbed, ripped off and frankly defrauded by betting operators. Forums like this still see daily posts of people being shut down, not paid, skimmed and shaved, but why are we still here? Here’s my humble view on how we got here and where we go from here
Back in the early days affiliate competition was lower, operator competition was lower, and regulations barely existed. Operators would go to conferences offering all sorts of incentives to get affiliates, and traffic coming to them. It was like the wild west. People made fortunes.
As the web matured we had bigger affiliates enter the market and consolidation. We had the buying boom a few years ago where companies like Catena just bought everything in sight, Better Collective just kept leveraging funds to buy more and more. Some of these companies frankly failed, others may fail in the future by running cost heavy operations and small profit margins. The gambling industry is fragile. Tomorrow you can lose a large percentage of your revenue through new laws, taxes, or just affiliate programs disappearing. The point is though, super affiliates started leveraging their power on operators.
With these larger affiliate companies evolving we got operators wanting more and more FTDs. No longer were they that interested in one-man-band affiliate generating 10 good FTDs per month. The industry is driven on volume, not value. It should be a healthy mix of both.
So, we found that in order to supply volume, affiliates became more spammy in promoting however they could, and the big affiliates asked for unsustainable deals like $2000 CPAs in the USA and massive fixed fees for advertising space during big events. The industry started to implode at this point. All of a sudden operators started getting fined for bad practice, SkyBet used this as an excuse to shut down their program, and other programs implemented tough rules on marketing.
At this point some operators decided that having many small affiliates was just a liability – many people who could break advertising rules, and many people to manage (some programs have 200,000 affiliates!). Operators found reason to close affiliates off, some stopped taking on new affiliates, and terms and conditions got more strict, and applied on people (minimum quotas etc).
Moving to post-COVID – the world economy is now struggling. The betting industry is struggling. The USA hasn’t turned out to be what it was meant to be. European markets have become highlight regulated and profit margins have died. South America is being regulated, which will come with more taxes.
Operators and big affiliates are now finding that they may be overweight in terms of costs. Kindred pulled out of the USA recently, now laying off staff. 888’s share price has lost 75% from its peak, Entain is a third of it’s 2021 value, Better Collective’s share price lost 20% in a day when they said that US revenues had stuttered. Some of these companies are trading on 20x P/E ratios, when we’re told that smaller affiliates are bought out for just 6x earnings (max). The industry is very bloated (and new markets overhyped), profits are drying up in multiple markets, and there are strong headwinds ahead.
This scenario has amplified each operator’s need for customers. Affiliate programs are desperately shutting down smaller affiliates to “save” (steal) on costs. Betsson, Kindred, you name it. They’re desperately turning to media buyers to deliver them tens of thousands of customers per month, but finding that these media buyers are now charging them so much that there is no business case for buying such bulk, trash value players delivered by media buyers. I know of many operator colleagues who have sunk tens of thousands of dollars into media deals, to get very little in return. In one example, and operator spent $30,000 in fixed fee and got just 3 FTDs! (yet they rip off the small affiliates for not delivering a minimum quota)
The future? There will be more operator consolidation. Playtech are looking at buying 888 for a start. Entain is going to struggle, as are many others. Those operators that sunk way too much money into the US market may start to wind it down as they realise the US market is now dominated by a handful of key players who got a foothold in the market.
What comes out of this bloodbath may well be fewer, stronger companies. They are already getting wiser on throwing big bucks at media companies like Clever Advertising, who can deliver poor customer value at times. Question is, will some operators return to valuing REAL affiliates who run real websites and produce high quality organic traffic. Those operators that have a healthy mix of media buying and organic affiliates are likely to do better than those that are desperately spending money on volume advertising in the hope they can keep their heads above water
Final thoughts - the industry is at a turning point for affiliates and operators. It could go a number of ways. Hopefully the smaller affiliate side is still valued in the future. Perhaps the industry will go the way of the travel, money, or dating industries - small affiliates extinct, and just a few mega affiliates delivering the traffic. Those operators who have run out of ideas now, will struggle. Those who have retreated from emerging markets to save on costs, and retreated to their "safe" regulated European markets will likely have to shrink to accomodate lower margins going forward. Those affiliates and operators who take a chance on emerging markets will succeed.
Over the past two decades I’ve seen thousands of affiliates being robbed, ripped off and frankly defrauded by betting operators. Forums like this still see daily posts of people being shut down, not paid, skimmed and shaved, but why are we still here? Here’s my humble view on how we got here and where we go from here
Back in the early days affiliate competition was lower, operator competition was lower, and regulations barely existed. Operators would go to conferences offering all sorts of incentives to get affiliates, and traffic coming to them. It was like the wild west. People made fortunes.
As the web matured we had bigger affiliates enter the market and consolidation. We had the buying boom a few years ago where companies like Catena just bought everything in sight, Better Collective just kept leveraging funds to buy more and more. Some of these companies frankly failed, others may fail in the future by running cost heavy operations and small profit margins. The gambling industry is fragile. Tomorrow you can lose a large percentage of your revenue through new laws, taxes, or just affiliate programs disappearing. The point is though, super affiliates started leveraging their power on operators.
With these larger affiliate companies evolving we got operators wanting more and more FTDs. No longer were they that interested in one-man-band affiliate generating 10 good FTDs per month. The industry is driven on volume, not value. It should be a healthy mix of both.
So, we found that in order to supply volume, affiliates became more spammy in promoting however they could, and the big affiliates asked for unsustainable deals like $2000 CPAs in the USA and massive fixed fees for advertising space during big events. The industry started to implode at this point. All of a sudden operators started getting fined for bad practice, SkyBet used this as an excuse to shut down their program, and other programs implemented tough rules on marketing.
At this point some operators decided that having many small affiliates was just a liability – many people who could break advertising rules, and many people to manage (some programs have 200,000 affiliates!). Operators found reason to close affiliates off, some stopped taking on new affiliates, and terms and conditions got more strict, and applied on people (minimum quotas etc).
Moving to post-COVID – the world economy is now struggling. The betting industry is struggling. The USA hasn’t turned out to be what it was meant to be. European markets have become highlight regulated and profit margins have died. South America is being regulated, which will come with more taxes.
Operators and big affiliates are now finding that they may be overweight in terms of costs. Kindred pulled out of the USA recently, now laying off staff. 888’s share price has lost 75% from its peak, Entain is a third of it’s 2021 value, Better Collective’s share price lost 20% in a day when they said that US revenues had stuttered. Some of these companies are trading on 20x P/E ratios, when we’re told that smaller affiliates are bought out for just 6x earnings (max). The industry is very bloated (and new markets overhyped), profits are drying up in multiple markets, and there are strong headwinds ahead.
This scenario has amplified each operator’s need for customers. Affiliate programs are desperately shutting down smaller affiliates to “save” (steal) on costs. Betsson, Kindred, you name it. They’re desperately turning to media buyers to deliver them tens of thousands of customers per month, but finding that these media buyers are now charging them so much that there is no business case for buying such bulk, trash value players delivered by media buyers. I know of many operator colleagues who have sunk tens of thousands of dollars into media deals, to get very little in return. In one example, and operator spent $30,000 in fixed fee and got just 3 FTDs! (yet they rip off the small affiliates for not delivering a minimum quota)
The future? There will be more operator consolidation. Playtech are looking at buying 888 for a start. Entain is going to struggle, as are many others. Those operators that sunk way too much money into the US market may start to wind it down as they realise the US market is now dominated by a handful of key players who got a foothold in the market.
What comes out of this bloodbath may well be fewer, stronger companies. They are already getting wiser on throwing big bucks at media companies like Clever Advertising, who can deliver poor customer value at times. Question is, will some operators return to valuing REAL affiliates who run real websites and produce high quality organic traffic. Those operators that have a healthy mix of media buying and organic affiliates are likely to do better than those that are desperately spending money on volume advertising in the hope they can keep their heads above water
Final thoughts - the industry is at a turning point for affiliates and operators. It could go a number of ways. Hopefully the smaller affiliate side is still valued in the future. Perhaps the industry will go the way of the travel, money, or dating industries - small affiliates extinct, and just a few mega affiliates delivering the traffic. Those operators who have run out of ideas now, will struggle. Those who have retreated from emerging markets to save on costs, and retreated to their "safe" regulated European markets will likely have to shrink to accomodate lower margins going forward. Those affiliates and operators who take a chance on emerging markets will succeed.
