13 July, 2021

The US view: Affiliates in iGaming

Stephen A Crystal, Founder of SCCG Management, talks us through the uses of affiliates in the US iGaming market

IGaming operators in the US cannot directly advertise their gambling content through digital advertising platforms such as Google and Facebook. However, there are many other ways to get in front of a broad online audience, likely interested in your iGaming operation. Creating value for content and traffic sources, such as affiliate marketing companies, who are willing to recommend your product to their existing audience, is one way to quickly extend your reach without investing organisational focus in building that capability yourself.
The same prohibitions that affect iGaming operators also affect affiliate marketers. These entities use high-value web content, which they have developed over long periods, to attract segments of online traffic who would be receptive to iGaming offers.
Once there, the affiliate marketers use a variety of methods to direct user attention to iGaming content. Viewers of mobile content often see these calls to action for iGaming content through banner displays, pop-under
s, page redirects and push notifications, all of which have a varied level ofacceptance by users. Push notifications are only possible where there is an opt-in relationship between the content provider and the viewer, but over time, these relationships are achievable and theoretically valuable to both partners.
In brick and mortar gaming, we create these business entities and relationships directly. We add established VIP hosts with loyal customers and lists to player development programs, develop junket programs, host bus programs all collaborations that bring new player traffic to ourcasino floors, supported by a third-party partner.

However, in this new digital world, the brick and mortar businesses dont have the geographic reach to be everywhere regulations permit, hence, we outsource to affiliate marketers. To be fair, even affiliate marketers outsource their traffic where necessary or financially beneficial, to other content providers who, for a fee, advertise the affiliate marketers content, drawing a wider web for highly qualified viewers. In each of these relationships, there is a different type of value provided to the partner and customer. Typically, the affiliate would get a bonus or commission based on performance the casino can measure, and the customer receives a promotional offer for participating. These are the same kinds of value models that online affiliate marketers and their traffic expect.

Affiliates get a commission for driving traffic to your online operation under specific conditions. The individual consumers typically react to a promotion provided by the affiliate program (you) as presented to the customer by the affiliate marketer. In most cases, the specific metrics for payment are based on a cost per action (CPA) model, where, for example, an iGaming site pays the affiliate a fixed dollar value for every first-time enrollment of a customer who also deposits a minimum amount in their online wallet, or makes more than a predetermined threshold of bets on the platform.

Less well known are affiliate payment models who reactivate customers who have disappeared for a meaningful period of time. When the affiliate is able to reactivate these customers who have lapsed visits, they are again paid again, usually on a CPA model similar to the first-time depositor (FTD) model. One of the largest challenges to established affiliate marketing companies in the US is the technological inability to provide near real-time reporting affiliates have been used to in established iGaming markets. This happens most frequently when traditional brick and mortar operators have been given license to operate online casinos or sports wagering operations. These iGaming entities are often managed by legacy casino management systems that have not had time to adapt to affiliate marketing partnerships and adopt the kinds of reporting portals they have become accustomed to. This is a non-trivial issue, as affiliate marketing companies often have to make significant expenses in advertising and promotion to drive traffic. Not being able to frequently validate the effectiveness of the advertising channels they use means they often see losses, which wouldve been avoidable had the marketing teams been able to change their campaigns earlier.

However, from the operators perspective, one assumes the CPA deals they make with the affiliates are purely pay for performance and protect them from significant harm.
A strong relationship between the operator and the affiliate must exist if you must exchange visibility for trust. Operators need to feel secure in the steadiness of their customer acquisition funnel. Affiliates need to feel secure that they can continue to drive highly qualified traffic, profitably. The stakes are high. In mature iGaming markets, affiliate traffic is 40-60% of all the iGaming operators traffic. In healthy relationships, this is a symbiotic partnership. When trust is low, these relationships can become parasitic, and fail quickly. Beyond the trust and transparency issue, there are complexities all operators need to consider.

Not every partner shares the same ethics around how they achieve their goals There are a lot of ways that unethical marketers can drive traffic to your site. We met with one affiliate marketing expert this week that told us some firms use distributed malware, which redirects customers who visit one URL to one of their affiliate partners sites, right in their browser. For example, you type in the URL for Crate and Barrel in your browser and end up on a competing vendors site with whom the affiliate marketer has a relationship. Sure, many customers will be upset about the misdirection, but a lot of folks will notice a promotion or similar product on the site they were hijacked from and go ahead and make a purchase. Another issue is just lying about the source of the traffic. Some companies will show you in-depth documentation about their traffic gathering footprint. Instead, they will seed those results with an internal list of product-specific customers who follow the affiliate marketers high-value promotions. This deception skews the conversion rates indicated by the trial, and when you try toscale up the spend, the conversion rates plummet. You find yourself with a lot more promotional and advertising spend and dramatically lower return on marketing investment.

Luckily, there are tools available to iGaming operators, which allow for risk management over time. For example, these systems can detect potentially fraudulent accounts by tracking a unique fingerprint created by the hardware being used to reach the iGaming site. This unique fingerprint can determine when a particular tracked account is suspiciously logging on from all around the world, from dozens or hundreds of different computers. Conversely, they can detect when many users are all accessing the site from a handful of devices and one location, for example. This is a tremendous risk, as unscrupulous affiliate traffic could be merely an army of scripted bots who create accounts and satisfy the CPA contracts terms, just to collect the affiliates bonus. These tools, however, need to be managed and used by aware operators to be effective.

Understand who owns your customers Are you establishing loyalty with the new customers? Is the affiliate marketer acting as a middle man in the transaction, or do they have the ability to redirect these customers (and their revenue) to whoever is paying the highest bounty this month?
Diversifying your affiliate partners and having an effective strategy for disintermediating the affiliate from prospective customers is essential to maintaining a balance of power. Affiliate marketers are there to drive new traffic, not controlthe behavior of your existing customers. There is a constant balancing act to be made with affiliate marketing partnerships. Constant communication, practical measurement tools and continually refining performance measurements - and the promotional and commission spend associated with them - are essential.

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