The affiliate view 2017

RECENTLY, TOGETHER WITH IGB AFFILIATE, we completed an industry survey to gauge affiliates’ reaction to the upcoming challenges of the industry ahead of AffiliateFEST 2017.

The results were interesting and so I thought I’d share these in my column this month.There’s no doubt it has been a period of flux for the industry and with the everchanging affiliate landscape, it can be tricky to keep up with it all. The following topics are the ones that affiliates reported back to us, giving much-needed insight into our industry and where the mood is headed. 

The regulatory heat is on

In terms of regulation, everyone within the gambling industry seems to have started to tighten their belts. Affiliates are now feeling the heat more than operators, especially when they can often be given conflicting advice from the news, inexperienced affiliate managers and operator programme terms that are subject to change at a moment’s notice. Responses to the survey have shown that the second biggest challenge faced by affiliates, after finding new sources of traffic, was indeed keeping up with regulatory changes (see Figure 1). 

 

Having a clear marketing policy and ensuring better relationship management in affiliate programmes will help to solve this problem in the short term as well as ensure due diligence is brought into better practice.With regulatory bodies and operators constantly moving the goalposts, it’s understandable that affiliates can feel at a loss. With the closure of the Sky Bet affiliate programme and the new one-strike rule for Paddy Power and Betfair affiliates, it’s clear that some operators are distancing themselves from this traffic source prematurely.

The Gambling Commission has made it quite clear that operators are responsible for the actions of their affiliates, which has many running scared unnecessarily.From an operator standpoint, this simply means an increased emphasis on knowing and vetting who you are working with.

For affiliates, this means that one fine or slap on the wrist could essentially make them persona non grata in the world of operators.The affiliate space is maturing. No more the spotty, rebellious teenager to other digital channels — the market has forced the channel to grow up and mature into a diligent source of business.

These actions shouldn’t end in an ‘us and them’ scenario. Instead, it should mean that operators and affiliates work more closely with one another, with an emphasis on clear communication, open collaboration and a desire to continue to do good business together. 

An approval-based system with a more vigilant affiliate management style, including knowing each affiliate before working together, is what seems to be most feasible. This requires a stronger active management style and better monitoring tactics of the tracking tools used for programme management.

Ongoing training and skill development for affiliate managers will be a major part of this change.This will allow the affiliate manager to be much more aware of what their affiliates are doing and, in turn, help the affiliate to stay within the bounds laid out by the gambling and advertising authorities.

This symbiotic relationship is one that affiliates and operators can benefit from. At AffiliateFEST, we explore these relationships and help managers to really understand who they work with. There’s no need to end affiliate programmes, but rather a need to implement effective management and training now becomes increasingly important.

The future of the affiliate channel

The closure of the Sky Bet affiliate programme has caused a flurry of activity from affiliates as they attempt to gauge and prepare for the future changes that may affect their businesses. It almost created panic, but affiliates are assured that they will still be highly valued in the sales and conversion funnel simply because of the nature of this industry and the education chain required to convert a customer online.

This channel is still important for a multitude of operators, because they’ve invested heavily in it and it brings in a high proportion of the acquisition traffic that they see. For most operators, it’s impossible to provide the same kind of content and visibility that they get from their affiliates.

It’s safe to say that the ecosystem for affiliates is changing, but they won’t likely ever become redundant, because operators just can’t work on that same scale. Affiliates have their own audiences that are often much bigger than what one single brand can boast, making them key to attracting new players. The very structure of affiliate marketing is beneficial for the operator, there’s no upfront cost and they offer vast amounts of exposure.

These brands can be global and allow the operator to access a new market, having to pay only when they get those first time deposits.Compare this to other paid advertising models and you will see why this is such a cost-effective solution for these operators.

They could easily spend thousands acquiring new visitors through PPC or paid social campaigns, but there’s no guarantee they’ll deposit and the operator must still pay out.For this reason, affiliate marketing will always be valuable to operators, regardless of their size.

Mergers and acquisitions

The landscape is already changing for affiliates, with a major shift towards mergers and acquisitions that make the big affiliates even bigger. These super affiliates are taking up a larger market share, but there’s still room for the smaller ones. The opportunities that exist for smaller affiliates need to be assessed more thoroughly, because they have to find new ways to succeed in an already crowded market, building not only traffic sources but a brand, community or customer base that takes up a service only they can provide. 

For operators, super affiliates present a bit of a problem, because they can dictate terms. With one company owning so many of the largest channels, they are in a position of power over the operator and enjoy a natural monopoly of traffic. Larger portals don’t always promise the greatest results but they have volume. 

However, this means that smaller affiliates very much still have the ability to take on the big dogs because they can innovate and move quicker than a conglomerate.The ones that succeed are the ones that create their own niche and provide a real service to the consumer to form a valuable place in the sales funnel. 

Many affiliates are now choosing to acquire or launch their own operator brands. This is a natural step for them, because they have traffic and know how to make it work for them. By doing so, they’re getting the full cut of the deposits, without having to skim from the top of an operator brand. Affiliates have a great general knowledge base to build on their own brand, although there are also challenges to be faced here too. 

Buying up brands can be advantageous, but there is caution required too. As we’ve seen with past mergers, new leadership isn’t always good leadership and the market adjusts accordingly. Users come to know a brand for certain properties, such as good content or honest reviews, and if a change of ownership changes this then users will be less engaged.

Changes to the affiliate-manager role

Affiliates are moving into a new sales space in which they don’t just bring in new players but also get more value from existing ones via retention offers. Often, affiliates can be much more effective than an operator with their retention strategy, because they are able to frame the offer in a different way.

They’re able to build their brands and benefit from new traffic sources, not just SEO. With the world of search and web design changing at a dizzying pace, affiliates can create brands and sites that do more and sell more.

Affiliates need to wear many hats and understand web design, advertising, future trends and technology.Digital progression is seeing massive changes to web design on an almost daily basis. Optimising for mobile and voice search and improving the conversion rate are all tasks for the affiliate to be aware of.

UX should be a top priority: in such a saturated market users can go elsewhere with the touch of a button. Simply moving a CTA or changing a button can make a huge difference to the number of users that actually follows through to the partner operator. AI is also a hot button trend for affiliates to be aware of.

This tech is growing at an exponential rate and needs to be considered for future inclusion into the way their businesses and services function. Although AI is not fully realised and integrated yet, those who are early adopters will likely reap the rewards.

Exactly how do affiliates pick operators?

Some of the main metrics that affiliates mentioned they look for when working with a new operator are reputation, quality and professionalism (see Figure 2).

 

 

This is why there’s such a massive need for affiliate management training, because one poor manager can destroy the reputation of the brand. Word travels fast from affiliate to affiliate — a few sharp words from one could undo years of growth on an affiliate programme. Therefore, it’s absolutely essential that each affiliate manager is fully trained in their craft.

Of course, they shouldn’t just roll over and agree to any terms the affiliate desires, but they should have their finger on the pulse at all times. Lifelong learning and education are the friends of the affiliate manager. If they rest on their laurels or don’t treat affiliates well, they can be orchestrating the end of their own programme. 

In conclusion, the market has never been tougher for affiliates, but there are also a lot of opportunities for those who are savvy. The affiliate who effectively manages their SEO, UX and advertising to grow a unique brand can eventually be in a position of power over the operator, or better yet become an operator themselves. 

There are many opportunities out there and igaming affiliates needn’t worry about becoming redundant. For the moment the onus appears to be on affiliate managers and operators to improve their relationships and working practices in order to push themselves further, while educating and innovating to continue growth.