The rise of affiliate corporatisation

It’s been a busy month, but we can probably all say that most of the time. If you follow me on any of my social channels, you will have seen I had a bit of a mini-break in Miami (Yes, I really did ride a pink flamingo at the hotel pool party!).

I’ve since come back to the real world and the regular swing of work routines and have seen that the iGaming affiliate forums have been abuzz with two discussions which I thought I’d cover in this issue’s Insight piece: affiliate corporatisation, and why Paysafe, the company I work for, recently acquired Income Access, a leading affiliate technology platform, the latter being the subject of a rather long forum thread I followed silently.

Why does combining the businesses make sense?
The answers are really quite simple. Firstly, there is a great synergy between our payment services and the eco system of money movement that takes place in the operator and affiliate remuneration model, which is where Income Access sits at the nucleus.

Secondly, our own Neteller and Skrill affiliate programmes have seen substantial growth over the past five years. They’re now part of a multi-million-dollar global operation which drives a significant amount of business for our group. We’ve had a fast ride, we’ve won awards, we’ve grown significantly.

Affiliates we work with have contributed to this growth and that of our merchant partners, who have understood the fundamentals of why it’s important to ensure customers can convert, especially in regions where traditional payment methods are more limiting.

Thirdly, we’ve had a long standing relationship with Income Access (me personally for over 14 years across multiple businesses that I’ve worked in). It’s an extremely good technology product and a fundamental partner to many in the iGaming industry. We understand the symbiotic relationship they have with our merchants (and clients) so it made sense to bring this business closer to ours.

The acquisition embeds our relationship with both our merchants and customers (some of whom are also affiliates) as a preferred payment provider and allows us to drive collaborative marketing efforts for increasing acquisition. Therefore, it made good business sense for our businesses to more closely collaborate, continue to drive revenue growth and focus on further technological and product developments to improve and advance these symbiotic affiliate relationships.

Affiliates are no longer home-based, part-time workers. They are now limited companies, with sophisticated tax structures and independent finance, HR, marketing, and advanced data insight and analytics teams

Affiliate corporatisation
Moving on to the second, related topic, lately I’ve found myself being asked a lot about the apparent corporatisation of affiliates and whether I feel that this movement will continue to shape the industry as it continues to grow.

Personally, I think it will. There is no denying that affiliate businesses are growing into medium-sized organisations with their own corporate structure and culture. So, why is this happening? I believe it’s for several reasons:

• Market maturity

The affiliate industry (not just iGaming) continues to grow. Forrester’s recent 2015 affiliate survey shows the US market is growing at a compound annual growth rate (CAGR) of 10% year-on-year and estimates that by 2020 it could reach more than $6.8 billion in sales. This means that affiliate marketing is a major part of the brand acquisition and digital marketing tool set. Affiliates are no longer homebased, part-time workers. They are now limited companies, with sophisticated tax structures and independent finance, HR, marketing, and advanced data insight and analytics teams.

They employ multiple people to run their sites (brands) and therefore they are by nature becoming more corporate in the way they structure and service operators (or their clientele). Affiliates are some of the savviest business people I know.

Having spent much time over the past two years looking at digital marketing mentorship and engaging affiliates to grow their business, I have seen this first hand. Being an affiliate not longer just about driving traffic from a network of sites; it’s about running a business, planning growth strategies and understanding value – from partnerships and from the websites that they create and maintain.

• Technology and data

Affiliate marketing and the evolution of the digital technologies that are used to support this channel lend themselves to allowing affiliates to obtain better insight into their traffic sources and where and how their customers behave online after being transferred to a marketing partner. This means they have a better understanding of customer profiling and consumer behaviour after the point of sale, and not just at the acquisition point of the customer journey or consumer funnel.

Therefore I believe we are now in a time of the evolution cycle where affiliates are finally becoming a more important part of a brand’s digital marketing strategy in that they can help to break through the “noise” and not only bring new business (the summary of an affiliate’s original intended purpose) but stimulate the retention and marketing activity of their partners too. Think about the role of DSP and retargeting platforms and how we now understand cookie tracking and, more aptly, device tracking, to analyse audience profiling. Affiliates play a key part in this chain and can help to influence it too.

As content marketing and SEO specialists, affiliates are helping brands drive intrinsic value to reduce marketing costs – when they are being embraced and channelled into the wider digital acquisition strategy. Affiliates still provide brand exposure and can help influence brand content that is commonly referred to as hygiene activity. They offer this service free – until a conversion takes place.

The fact remains that brands need this exposure to help cement their offer as a preferred consumer choice over their competition (marketing costs would significantly increase if you didn’t use affiliates to promote your brand and secure internet real estate as unpaid).

Operators will feel more comfortable partnering and associating their brands with affiliates whom they know understand the same best-practice industry standards they themselves have to adhere to

Many people have said with the onslaught of Google’s algorithm updates that the death of affiliation could be upon us, as it is harder to gain influence and drive traffic via search. But the truth is that over all the time I’ve been involved in this business, I’ve only ever seen affiliates adapt, evolve and continue to grow their businesses, despite each release and regulation change that gets thrust upon them.

• Ongoing regulation

Affiliates have to adhere to a number of advertising and regional requirements to market and promote their sites in accordance with local regulation. This means they have to be more professional in the way they set up their business framework and ensure revenue longevity from marketing activities.

They also need to understand how regulation in a grey market could impact their budget lines. So many are seeking legal advice and paying close attention to how Europe and the rest of the world handle gaming regulation. I’ve been to many events where regulation is discussed and affiliates are in the front row paying close attention.

Data protection and privacy policies are another area that highly impacts this channel and affiliates are thrown right into the thick of it by the very nature of the sites they create. Operators carry a bigger risk and responsibility in this regard to ensure their affiliate partners are professional enough to understand the laws of advertising in each area and to associate themselves with an established brand (or affiliate program).

Therefore the selection criteria for affiliates who gain access to the “golden circle” of trust to obtain unique content and the best marketing offers, also defines the need for the corporatisation and professionalism of their business structures.

Conclusion
There is no denying that the affiliate channel will continue to grow, and that affiliates who focus on corporatising their businesses will win favour in the end. Operators will feel more comfortable partnering and associating their brands with affiliates whom they know understand the same best practice industry standards they themselves have to adhere to.

For operators, it’s time to get serious about the role that affiliates play in your business, and maybe start looking at how you can improve your own digital strategy, insights and cross channel data to help you increase your market share via a more symbiotic relationship.

For affiliates, it’s time to get more serious about your business, and look outside of just the core skill set you have which drives revenue on a daily basis. Consider the future state of play and understand your rightful place within the broader digital ecosystem and the responsibility (as a formal business partner) that this relationship brings.