Revenue share models

[CityGuard]

An affiliate program let me know they were interested in feedback about the preferred revenue share model but wanted to make sure the feedback was based on overall preferences rather than impacted by other information about the program. To make sure the program is not identifiable, I've posted the message on their behalf:

We are thinking about changing our revenue share system (not retroactively of course). Looking at similar programs, there are three different main systems in use:

• Variable revenue share (for instance between 25% - 45%) based on number of new players every month.
• Variable revenue share (again, for instance between 25% - 45%) based on the monthly net revenue generated by the affiliate.
• Variable revenue share (45% first two months, 40% second month, 35% after that) based on length of partnership.
• Fixed commission (let’s say 30%), regardless of new players or revenue.

[FONT="]We would like to know, what you affiliates think is the best system. What do you think it’s fair? Our goal is to offer a transparent and competitive system, so your input would be greatly appreciated. And if there is an even better system which was not mentioned in this post, please enlighten us. [/FONT]

[Christoff]

Good topic - I think it depends on the affiliate.

If you are a more experienced performing affiliate, you can command a fixed fee or a high revenue share deal that doesn't worry.

It all depends on what the affiliate wants and whether the affiliate program will pay. Most are quite flexible in order to be competitive too

[Nandakishore]

I have not voted because I do not prefer any of them as is. As I see, #1 is actually CPA, #2 is the classic method, #3 is confusing because if you get 35% constantly after 3 months, then it has nothing to do with the length of the partnership.

I would prefer a combination of all 3 like this.

Start with a low percentage (20%-25%), then raise it by splitting the commission between number of new players recruited, irrespective of whether they deposit or not, and the net revenue generated, and bring the long term partnership in form of a bonus for each additional year or month of partnership.

[universal4]

I personally like the Variable share based on net revenue.

Using this method gives the affiliate the most incentive to keep the revenue growing.

On the operator side, those that do the best with retention etc will likely see the most growth from affiliates also.

Rick
Universal4

[Chips]

I am more in favor of a variable share on revs too.

[casinobonusguy]

I voted fixed revenue share ,it is easy for us to get large numbers of players for casinos so we usually do our agreements before we start promoting a group.

[LiveCasinoPartners]

I've always been a fan of variable share based on revenue. I've done retrospective studies and every single time the revenue share model (variable) always generates more revenue.

[matted]

I voted for a fixed rev share.

Rev share based on net revenue is what we are used to, but I dont like it. And in most cases, folks who cross the lowest tier have negotiated a better rate in the first place.

i do agree that each affiliate has a "cost" so by earning more money for the casino your cost is covered so you can earn more... but I always have felt the ~40%+ the big dogs can earn come at the expense of the average webmaster.

[baldidiot]

I'm relatively new to the affiliate world so fixed revenue would be in my best interest right now.

[best.hands]

I personally like the Variable share based on net revenue.

Using this method gives the affiliate the most incentive to keep the revenue growing.

On the operator side, those that do the best with retention etc will likely see the most growth from affiliates also.

Rick
Universal4

Agreed and voted for Variable share based on net revenue as well. One reason, it is the most attractive, if I am the affiliate who's looking for a good affiliate program to stick with. As the affiliate program provider, I would really enjoy the retention of affiliates, thus a stable and progressive income for me.

[Christoff]

Revenue share only works if both the operator and affiliate work in partnership.

However, it would be naive to assume (from an operator's point of view) that all affiliates will push your brands the hardest.

Trust and player bases need to be built up over time and for this, revenue share is the best commission plan for all parties.

Alternatively, many affiliates are now demanding up front fees which is understood as they don't want to jeopardise a fixed revenue stream from an existing partnership for a new and unproven relationship.

If the operators are committed long-term, revenue share models are the way forward.

I have seen and heard of situations whereby an affiliate agrees a fixed revenue share deal for a certain placement/level of exposure. Then, the revenues are not proportionate to the original fixed revenue share deal for a number of reasons (i.e. conversion).

As affiliates, what would you think would be the appropriate action? I would assume most AMs on here have encountered this problem before.

[casinobonusguy]

I have never encountered what you are stating .For us we have a minimum rev share we will accept ,if the program wants to attach a bunch of terms to it then we move on.

I was on a 35% Revshare with a MGS casino ,we hooked a big whale and then they asked us for more exposure or they were going to drop us down to 25% .Every month they did in fact drop us and then the aff manager would put us back to 35%That 10% was a big chunk for us but the program was not worthy of our top positions IMO.

My whale got locked last month and because of the way we got treated in past we are pulling them.To me that behavior is not a partnership ,that is putting a gun to my head and not giving me a choice.

Ironically my best performers have never asked us for anything ,they have earned their positions based on how they care for the players and convert for us.

[LiveCasinoPartners]

Ironically my best performers have never asked us for anything ,they have earned their positions based on how they care for the players and convert for us.

I'd say the same for affiliates and programs. I remember long ago, when my role was an affiliate my favorite program who performed the best for me did not contact me for a year! There was no need. They worked hard and their performance did their talking.

[TheGooner]

Fascinated to see the responses here. And quite surprised.

Especially interested to see that variable revenue share based on total net revenue is such a popular option ... particularly when I contrast that positive feedback with the negative pilloring the Bodog is getting for doing much the same thing.

Alright - I understand Bodog's low value down to 10% - but the principle is the same - a variable revenue share based on value and/or new players acquired effectively penalises small affiliates. How come it's suddenly so popular here?

I voted for a simple fixed revenue contract. Like CasinoBonusGuy we have a level of return that we deem an acceptable market rate - and will not work below that level.

When we join a program we negotiate a rate with the program that we are BOTH happy with and then get on with the job - hopefully never having to discuss the amounts again.

[PokerSpnsor2-0]

Maybe different affiliates prefer different methods to revenue but imho I would say that fixed rate is the fairest and that's what I would personally pick, but like I said different affs prefer different rev share.

[AussieDave]

Hi All,

All of the programs I take on board these days I work out a deal and go for it.

One of those I have going is a hybrid where any player (no matter when they join) as soon as they make a min deposit of $20 I get a bounty on top of an agreed rev share.

I think it really depends on the places your promoting, I don't think one size fits all in the game. Well it hasn't for me.

---------

One things that does bother me is the involvement in this thread. 26 votes including myself and the Polls been going since mid August 2010.
Do my peers not find that disturbing?

Without blowing smoke up anyone's backside, here's a program asking for feedback on a topic that gets hammered but when the chips are down and a program throws up some questions sweet FA affiliates put in their 2 cents.

However as Gooner responded, look at the BoDog thread...I sometimes wonder if most affiliates are more happy bitching and moaning than actually doing something about their grievances. This Poll would certainly indicate the later.



Cheers



Dave

[Christian-IA]

As many have mentioned above, I am also in favor of the variable revenue share, as in choice number 2, based on the monthly net revenue generated by the affiliates.



Operators are usually looking to have a long-term relationship with the affiliates and usually affiliates should be looking for the same. By using the variable rev share, it keeps the affiliates motivated on keeping the revenue growing. The higher the revenues are, the better the affiliates’ share will be. It’s a win-win situation for both affiliates and operators.


Some operators offer their affiliates variable revenue share, but they start at a bit higher percentage.


- Christian

[wagerjunction]

Very interesting thread.

This type of information will not only benefit the program who asked for it but give to other programs an insight on what affiliates prefer.

Thanks guys.