Young Affiliates & Upfront Payments

[tomgalanis]

I am in the business of developing new and existing affiliate programs for a variety of casino and gaming operations. This naturally involves plenty of affiliate recruitment and management, where I'm increasingly met with unqualified demands of upfront advertising fees by affiliates who evidently don't have the traffic to make it worth my while.

I am not against justifiable and qualified upfront payments or minimum revenue guarantees to affiliates who warrant it - either through traffic volume/quality, ability to convert or as a means of obtaining a fruitful position on their site. If an affiliate is happy to provide a solid business case, showing me how (a large proportion of) the money will be used to actively build our partnership, and it fits with what I wish to achieve then great.

I'm keen to find out what more senior affiliates feel about this growing money grabbing trend. Many of you would have had to fight for 25% revenue shares back in the day - nowadays new affiliates are chasing thousands of dollars to catch up (or perhaps to just go on holiday with - ever the cynic), and there are plenty of programs/marketing departments who'll go for this - for some reason...

Do you feel threatened by this? Is this what 'affiliate marketing' should be or become? If you were starting out now, what route would you rather take? Rev Share or Tenancy/Fixed Fee? Who is to blame for this rising trend - the individual, the affiliate community or the operator community?

[TheGooner]

It's called a free market. I don't begrudge anyone their successes!


If programs want to pay tenancies to fresh affiliate sites, that's obviously been written off as a marketting cost by the porgram in order to get traffic/attention. And I guess it's a bit of a gamble.

I think this is also moving the online market onto a par with mainstream media such as newspapers, magazines and TV advertising, and so should not be such a surprise.

We typically negotiate contracts/fees with all our partners - and if we can get a good rev-share at a quality program then I'm not bothered about looking much else. Rev-share at a great program will outpay any monthly fees by factors as much as 50-1 !

But some programs have fixed rev-share limits - or want an intensive amount of work on site - and so then we might negotiate rev-share + monthly fee to cover the work that might be outsourced.

[AmCan]

Nearly everytime i hear an affiliate manager complain about a prepaid deal, they gave thousands to some site that doesn't rank for any decent keywords, usually isn't a very impressive site and should have clearly been seen as place where $2500 might payoff in a year, but nothing better. In short, if you can't accurately guess if a site will deliver, don't send the money.

Just because someone says their site is worth a big prepay doesn't mean you have to be on their site. This only threatens people are who are too insecure to walk away from a negotiation without a deal.

[MichaelCorfman]

I checked off the following answers to this poll question:

I am not threatened by this trend
The only reason for such a demand is because an affiliate plans to rip off an operator or because an affiliate does not trust an operator. Either way, not a very good foundation for a strong business relationship. Casino City used to require modest upfront payments for advertisers when we did not have a history with them, but these days that is unusual for us because we avoid working with folks where we think payments to players or affiliates might become an issue. Today when we do have pre-paid arrangements it is because it is part of a standing business arrangement where we value the cash-flow benefits and treat our advertiser accordingly.

I DON'T believe this is what affiliate marketing SHOULD become
Personally, I don't think affiliates should make unreasonable demands. But when they do I think affiliate managers should politely say no thank you. Maybe a few deals will be lost in the process, but if a deal was going to be based on an unreasonable demand then I view it as a good thing for there to be no deal at all.

If I was starting out now, I would prefer the REVENUE SHARE model
A revenue share model represents a partnership. Long and successful business relationships always respect the business needs of both partners.

I blame INDIVIDUAL OPERATORS for this trend
To the extent there is a trend of affiliates getting away with unreasonable demands for upfront payment I view it as the fault of those who agree to make those payments.

Michael

[RayUK]

I am a new (gambling) affiliate, less than a year. I am also in my mid 40's. Do I count as young?

Seriously though I haven't taken part in the poll because I am not a 'senior' affiliate, however I would have thought that such deals are the business of the two parties, in a free market. Caveat emptor, due diligence and common (business) sense ought to head off most problems with any deal. Be that deal a fixed fee banner ad (or whatever) or some percentage revshare for conversions.

As AmCan said if any proposed deal doesn't suit one of the parties, then they should just walk away.

[Muppet]

If you are diligent enough to not fall into the trap of paying unwarranted fees then what is the problem? The market will sort it out. Either the affiliate gets no-one to bite because it obviously isn't worth the cost - so they either lower their price or stop demanding up front fees. Or a program does pay then doesn't renew when they don't deliver the results.

You also have to consider an affiliate's opportunity cost. We are contacted countless times a week by every second unknown operator in the industry who has just opened a white label casino that has nothing that anyone has not seen before asking / begging / demanding to be placed in prime positions on our sites. Of course every single one of you is revolutionising the affiliate industry, you all pay the "highest commissions" of an unbelievable 25-30%, and you are all backed by a team of Einsteins with 30 years of gambling experience.

But if you want to get there you have to prove that you will treat players at least as well and earn as well or better than the ones that are already there. And that to my mind is impossible for you to prove without some time and player feedback, which is why we generally refuse or ignore such offers. But I can see why other affiliates may ask for up front money to compensate. Its a two way street.

[NicolasJohnson]

Hi Everyone,

Good to see this trend being talked about in the open. I'm with Michael on this, here are my reasons:

I am not threatened by this trend
We offer a high quality brand that knows how to maximize conversions and the value of our players. We are in it for the long run. So whether it is today or tomorrow we believe we will end up working with most affiliates just by word of mouth/competitive analysis. Without trying to sound cocky, we are worth it.

I DON'T believe this is what affiliate marketing SHOULD become
Upfront fees are what media buys are all about and they are a different ball game then affiliate marketing. We aren't a media purchasing agency, and we aren't trying to be.

If I was starting out now, I would prefer the REVENUE SHARE model
Pretty much all affiliates who have been in the industry for long enough and that can trust the affiliate programs they promote will find out Revenue Share is where affiliates make the most money.

I blame INDIVIDUAL OPERATORS for this trend
There are 3 types of operators that fall for this:
Overly eager operators - Some affiliate directors may have overly aggressive acquisition quotas to fill and therefore take risks that they know they shouldn't.
Operators with unappealing offerings - If you don't have a good offering, then legitimate affiliates won't promote you. If they don't, then the operator will need to deal with less overly-risky affiliate propositions.
Inexperienced affiliate manager - Some affiliate managers are inexperienced and don't use/know of tools to investigate affiliate sites.

[casinobonusguy]

I am in the business of developing new and existing affiliate programs for a variety of casino and gaming operations. This naturally involves plenty of affiliate recruitment and management, where I'm increasingly met with unqualified demands of upfront advertising fees by affiliates who evidently don't have the traffic to make it worth my while.

I am not against justifiable and qualified upfront payments or minimum revenue guarantees to affiliates who warrant it - either through traffic volume/quality, ability to convert or as a means of obtaining a fruitful position on their site. If an affiliate is happy to provide a solid business case, showing me how (a large proportion of) the money will be used to actively build our partnership, and it fits with what I wish to achieve then great.

I'm keen to find out what more senior affiliates feel about this growing money grabbing trend. Many of you would have had to fight for 25% revenue shares back in the day - nowadays new affiliates are chasing thousands of dollars to catch up (or perhaps to just go on holiday with - ever the cynic), and there are plenty of programs/marketing departments who'll go for this - for some reason...

Do you feel threatened by this? Is this what 'affiliate marketing' should be or become? If you were starting out now, what route would you rather take? Rev Share or Tenancy/Fixed Fee? Who is to blame for this rising trend - the individual, the affiliate community or the operator community?

I think if i were starting out now I would have a mix of tenancy fees and Revenue Share .For new affiliates they have alot of costs and little income so I guess asking for $1000 -$2000 for what essentially is banner sales would be ok.We generally do Revshare but some programs require alot of work so we get a small top up each month from them for content.

[LiveCasinoPartners]

I blame INDIVIDUAL OPERATORS for this trend
I agree to some point. I don't see too many seasoned affiliate programs jumping in on this. Occasionally, I'll see a new program jump in on some up front deals.

In our case, we have to date have not done a prepaid deal. As an affiliate myself, I agree with Gooner. You get a much better deal with revenue share. It's a good model.

[topboss]

As someone mentioned above - this is basically a media buy and should really be treated seperately to the usual affiliate agreement.
Personally I prefer straight revenue share because I believe in every partnership you are in it for the long haul, not to make a quick buck.
Affiliates with new sites and no ranking in the search engines should not be charging excessive upfront fees when they pretty much know they are not going to produce the results, because all this is going to do is give them a once off payment and it is going to leave a bitter taste in the casino affiliate manager's mouth if he/she gets no returns.
I am not against a well established portal charging an upfront fee for placements of new casinos on the home page, even though I personally don't do this.
I generally won't put any new casinos on the home pages until they have proved themselves and I can see that they are able to convert the few players I may send them from the internal pages.
I find time and time again that I get some affiliate managers who continually push for home page positions and big exposure only to find that their retention team fails them miserably.
In cases like this - I would then suggest they rather do a media buy if they want to remain in decent positions.
Bottom line - If the casino can convert the traffic the affiliate sends - revenue share should work for both parties - there would then be no need for upfront fees, media buys etc.

[universal4]

I also am not a real big fan of upfront fees and will usually ONLY ever do revshare with groups.

But, I have an exception to this.

If/when I consider adding a new group to my network, I occassionally ask for a small placement fee up front. Now this is not a pre-paid arrangement and I absolutely refuse to allow the fee to be tied in to any form or performance guarantee.

I would only ever ask for this fee if I felt that I felt the group had a good shot at converting and planned on giving them premier exposure accross the majority of my network.

Although I would not guarantee a certain performance of # of players, I would guarantee a certain amount of exposure such as exposure on a certain number of home pages, exposure on a certain number of sites etc....

Some may say if I thought the group had a good shot at converting why ask for the fee?

Simple, I would be replacing groups on pages that may already be converting (at least to a certasin degree) and I would be replacing them with an untried group (at least the group is untried on my network).

If/when I ever ask for this fee, it is usually a token fee. That amount although not large helps to cover the amount of time that I take away from other things and concentrate on performing what is needed to get the amount of coverage I promised in the time frame that I stated it would be completed.

I do agree though that lesser known affiliates have much more difficulty asking for such a fee.

Rick
Universal4

[Doolally]

This is pretty much a media buy and of course the site owner is going to push for as much as they can get - that's how they live and it's their business.

If an operator enters into any cash up front agreement without doing enough due dilligence to justify it then they can't really complain - they aren't doing what their business needs to ensure profitability.

Media buys are fine but you have to fully check out the source first.

[Nandakishore]

I agree with the majority opininon in this thread that we live in a free market and if any affiliate can get a good upfront, why not accept it. But that will definitely not become the future business mode.

I, for instance, got an offer from a new casino to rent a page with a banner and a review which I had the option to accept or not. It was paid upfront for one year. After that the deal may be extended or changed to a rev share partnership. I have no problem with that as long as I am not publishing anything from a rogue partner.

[universal4]

Doolally, I am not sure if you understood my post, or if you referenced the thought in general.

I do agree with you though, that the operator can and should investigate fully before entering into an agreement.

Rick
Universal4

[Dominique]

If I am giving up a good spot for a new program (totally new or new to me) then I am going to lose money while the new places gets established on the site, since the good spot was previously occupied by a money making program.

So I often charge a guaranteed minimum payment, for at least 3 months, or until the new place pays more in revenue than the fixed amount. At that time I switch to rev share. So far this has always happened in under 3 months, which is why I set it at that time. The price depends on what income that spot generated for me in the past.

I am not threatened by what others do (makes no sense?)

It's a free market place and people can make any deals they wish. If programs want to take a chance on a new affiliate, I see nothing wrong with it. If a senior affiliate wants to take a chance on a new program, I see nothing wrong with that either.

All parties will eventually settle into what works for them.

[Big City Jack]

I think if i were starting out now I would have a mix of tenancy fees and Revenue Share [...] I guess asking for $1000 -$2000 for what essentially is banner sales would be ok [...]

This seems pretty sensible and balanced to me, and I feel the same way. Btw, do you mean $1K - $2K per month, quarter, or year, etc., casinobonusguy?

It is not uncommon for me to get requests about one of my sites. Just recently I was contacted by the affiliate manager of one of the best known programs about it, and he apparently does not know that I already have an affiliate account. However, I have also removed all ads for their program - a great many in fact - because they received many clicks over a long period of time and yet there has been no reported activity beyond a few downloads while traffic has converted elsewhere. Needless to say, I am extremely skeptical about these supposed stats and find them very hard to believe, especially as we are emphasizing the same target market. To put it more succinctly, I have a hard time buying it, and all those clicks and that traffic would have cost their program far more than $0 had it been delivered to them on a Pay Per Click basis rather than all for free through my sites. It's been days since I received this email and I haven't responded yet. Before finding this thread I had been weighing the idea of responding and telling the affiliate manager all this, and then offering that if he wants to pay this or that for a certain period of time then I would consider posting an ad, but revenue share only was completely out of the question anymore in light of the time and traffic I had already spent on them and their supposed "stats."

In fact, until I noticed this thread my original intention was to post about how another of the best known and perhaps even best liked programs has treated me pretty poorly recently concerning payment despite receiving valuable traffic with conversion and profits. I have already removed ~100% of their ads from numerous sites until or unless I wish to terminate with them entirely. Some people just don't seem to care one bit about the valuable traffic and profits, and only about acting badly when they want to instead - it's pretty counter-intuitive and irrational from a business point of view, but reality nonetheless. Right now I feel as if the only way I would even consider restoring any fraction of the previous level of exposure and promotion I was giving them would be on an upfront payment basis, though really I don't want much of anything to do with them any way. And prior to that - trouble with yet another of the best known programs despite continual traffic, coversion, and profits...

So, it definitely seems to me that upfront advertising arrangements not only have their place, serve a valuable purpose, and are people's right to freely engage in, but may even be the only way to merely partially balance out the high risk to affiliates associated with revenue share-only. It's not only the "new" or relatively unknown programs that are risky to affiliates, but in reality also the biggest names and even best liked programs you may have invested months or years in can turn for the worse at any time, and the only stats you receive from them are the ones they choose to report. Upfront fees are also a small price to pay for the valuable traffic and promotion the operators receive often all for free which they might otherwise have to pay thousands of dollars for (and doubtless often do) through PPC services. This is especially so in light of the extremely high risk affiliates have to face all the time, and the extremely imbalanced and lopsided nature of the relationship with respect to data access and certainty of commitments they have practically no ability to ever even enforce.

[universal4]

First of all, welcome to the forum as I see you have made your first post.

In the situation you laid out above, I would not blame you for asking for an upfront fee after having the experience you did with that particular program.

When you state

they received many clicks over a long period of time and yet there has been no reported activity beyond a few downloads while traffic has converted elsewhere.

Believe me when I say we have all seen this same thing hundreds of times over the years.

It's one of those things that make a person go hmmmmm.... It's just one of the things that happens, for some reason some casinos just will not convert on some sites, while they may be the best earners for dozens or even hundreds of other affiliates.

In addition to the fact that the particular creatives you were using may not have been just right for the page etc...but I wouldn't just automatically assume that you can't trust their stats or whatever...but when you run into situations such as you describe it is best to discuss it with your peers.

Rick
Universal4

[casinobonusguy]

This seems pretty sensible and balanced to me, and I feel the same way. Btw, do you mean $1K - $2K per month, quarter, or year, etc., casinobonusguy?

It is not uncommon for me to get requests about one of my sites. Just recently I was contacted by the affiliate manager of one of the best known programs about it, and he apparently does not know that I already have an affiliate account. However, I have also removed all ads for their program - a great many in fact - because they received many clicks over a long period of time and yet there has been no reported activity beyond a few downloads while traffic has converted elsewhere. Needless to say, I am extremely skeptical about these supposed stats and find them very hard to believe, especially as we are emphasizing the same target market. To put it more succinctly, I have a hard time buying it, and all those clicks and that traffic would have cost their program far more than $0 had it been delivered to them on a Pay Per Click basis rather than all for free through my sites. It's been days since I received this email and I haven't responded yet. Before finding this thread I had been weighing the idea of responding and telling the affiliate manager all this, and then offering that if he wants to pay this or that for a certain period of time then I would consider posting an ad, but revenue share only was completely out of the question anymore in light of the time and traffic I had already spent on them and their supposed "stats."

In fact, until I noticed this thread my original intention was to post about how another of the best known and perhaps even best liked programs has treated me pretty poorly recently concerning payment despite receiving valuable traffic with conversion and profits. I have already removed ~100% of their ads from numerous sites until or unless I wish to terminate with them entirely. Some people just don't seem to care one bit about the valuable traffic and profits, and only about acting badly when they want to instead - it's pretty counter-intuitive and irrational from a business point of view, but reality nonetheless. Right now I feel as if the only way I would even consider restoring any fraction of the previous level of exposure and promotion I was giving them would be on an upfront payment basis, though really I don't want much of anything to do with them any way. And prior to that - trouble with yet another of the best known programs despite continual traffic, coversion, and profits...

So, it definitely seems to me that upfront advertising arrangements not only have their place, serve a valuable purpose, and are people's right to freely engage in, but may even be the only way to merely partially balance out the high risk to affiliates associated with revenue share-only. It's not only the "new" or relatively unknown programs that are risky to affiliates, but in reality also the biggest names and even best liked programs you may have invested months or years in can turn for the worse at any time, and the only stats you receive from them are the ones they choose to report. Upfront fees are also a small price to pay for the valuable traffic and promotion the operators receive often all for free which they might otherwise have to pay thousands of dollars for (and doubtless often do) through PPC services. This is especially so in light of the extremely high risk affiliates have to face all the time, and the extremely imbalanced and lopsided nature of the relationship with respect to data access and certainty of commitments they have practically no ability to ever even enforce.

I was thinking A PER YEAR PRICE ,$2000 A MONTH is very good money ,dont think a start up affiliate could get that.

[pgaming]

However, I have also removed all ads for their program - a great many in fact - because they received many clicks over a long period of time and yet there has been no reported activity beyond a few downloads while traffic has converted elsewhere. Needless to say, I am extremely skeptical about these supposed stats and find them very hard to believe, especially as we are emphasizing the same target market.

From my own experience this is very common. A few years back one program greater than 10,000 hits, 200 downloads, earnings for the year zero. I did close the account. Thought it was strange how badly they wanted to continue working with me. After all according to my stats I wasn't exactly earning myself nor them anything. So why was business dealing so important to them? Well I got the drift after a while.

This would a type a program I would charge a upfront fee.

greek39

[casinogod]

I have a list of questions I ask any operator that aproaches us and if they 'fail' on one of those questions we do not promote them (regardless how how much they would pay us) I also check there are no complaints about the casinos on any of the major forums (and if they are we either dont promote them or get to the bottom of the issue before proceeding withany deal).

We charge an advertising fee and now only sign up to new programs when they buy ad space of a certain value.

This has helpped us alot and certainly helps us weed out the 'spammy' type operators that will harass (via email and phone) none stop. But once you tell them they need to pay up they generally shut up and vanish which is nice.

Those that don't vanish and agree a deal with us we know are

1. Good to pay us long term (they are a casino with some cash) and
2. Serious about working with us. So we give them there advertising space (which they benefit from) and then we give them plenty of exposure and see how they do.

Now because we charged that fee we can afford to give them the exsposure without too much risk as we know how long we can give it for before we need to start putting back casinos that we know from experience convert.

This is something we did not do before we had a number of high traffic sites so I do feel that we offer the casinos that are serious and take it up good value and I always ensure I tailor each specific deal to the specific operators requirements to ensure they get a good deal.

For us this is the start of a relationship which we intend to grow and flourish so we want the operator to be happy with the deal.

At the same time we couldnt just give a casino we had never tried before mass exposure and risk it not converting as we would have an opportunity cost so this covers that.

We also use the 'advertising fee' that we charge to create pages that are used to promote the sponsoring casino these are perminent and have long term value.

I actually got to a point where I was getting over 12 phone calls per day (one day was as high as 26 phone calls) all international calls from various affiliate programs wanting us to sign up. I am fairly sure 'New Affiliates' dont have that problem and that is partly a victim of our success (I now have a call filtering system, best money I ever spent).

Longer term we then work on a Rev share basis and I like to agree the % in advance (before we take any advertising fee) as if the program is not competetive I will tell them right there and then as if they are lets say an RTG powered casino and are offerign me 10% less com than any of the other RTG casinos I promote I can be fairly sure they are not going to make me as much commission so they would in turn end up with less prominent positiosn etc. Hence why I ensure I discuss every aspect of the deal.

Now when we where 'new' which was back in 2001 I remember then I would be the one going to the affiliate programs looking for things to join up to, now I have far more come to me than I could promote.

I answered

I am not threatened by this trend - why would this threaten me? As and affiliate I can do the same and as stated above we do and unlike a new affilaite who has little traffic to offer, I can offer the casino real value. The only 'threat' I have is that an operator gets duped by an affiliate that is not offering real value so I would advise any operator considering paying an affiliate an up front advertising or listing fee to make sure the affilaite spells out exactly what they are going to get for their money.

I DON'T believe this is what affiliate marketing SHOULD become - because you are asking in relation to 'new affiliates' most big affiliates will do this already but that is offering value. So maybe the question should be 'should new affilaites aspire to be able to charge affilaite programs a listing fee?' to that the answer would have to be yes. why not good luck to them.

I blame INDIVIDUAL OPERATORS for this trend If we hadnt been harassed so much by affiliate managers of programs that we didnt promote to sign up and promote them me and my business partner would have never had to sit down and think up ways to get our time back. Helpped by the fact that some of these 'persistant' affiliate managers had offered to pay us a fee just to be listed, we figured we would be better off working out some kind of package that would benefit both parties.