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  1. #101
    LukeC is offline Non-sponsor Affiliate Program
    Join Date
    October 2012
    Birmingham, UK
    Thanked 122 Times in 49 Posts


    His phrasing aside, I think we should be careful not to be too harsh on Alex (I'm giving him the benefit of the doubt that the company he works for does not do anything unscrupulous). He has raised his head with an honest "view from the other side" and whilst I don't agree with his view on how operators view affiliates, it raises what I think is a valid point that there will be change in how deals work in the industry. The only thing that isn't yet clear is what kind of commercial agreements that will result in and who dictates the terms when that eventually happens (and it most definitely isn't going to be a clear cut "operator vs affiliate"). I hope & anticipate that before that happens, affiliates as a collective will show that operators who "play fair" will prosper - which whilst there is a slow shift that way, I don't think is necessarily the case in the market at the moment.

    It is a difficult time for newer operators who want to treat affiliates fairly - with none of the bullshit that we all know goes on. The reason it is difficult is because of all of the bad actors - affiliates are rightly sceptical. It is much easier to just join them.

    The first issue that new, legitimate operators face is that because affiliates are sceptical, they demand the same terms for all potential business partners off the bat. This is natural. There is no reason to trust new brand X, which has the same product as everyone else. So new brand X has to pay y% rev share with no negative carryover if they want any affiliates to promote them. But brand X isn't pulling [insert unscrupulous tactic] that the other brands are, so they run the numbers and theoretically it either doesn't stack up or there is just too much risk. Particularly in casino, in order for a new brand to be considered by the affiliate, it has to look like it has a good product anyway - it doesn't actually make affiliates promote it at a good scale on worse deals.

    Linked to this - obviously affiliates want the best deals for their business - as is natural and the correct way to operate. The second issue is that almost all affiliates don't actually know how to compare those deals - because there is so much smoke and mirrors around 1) gross to net deductions 2) the other shady stuff that sometimes goes on. For every affiliate that actually has figured out their epc from each brand, there are 10 that only care about the rev share % or the CPA. Even some brilliant affiliates don't necessarily understand that (or perhaps they do but choose to play dumb). This makes it difficult to run a strategy that is based on transparency and fair commercial agreements. Even doing this and advertising the deductions, there are plenty of affiliates who do believe that various costs shouldn't be their problem in getting from a gross rev to what they think is a fair net rev.

    This leads to issue 3: as an affiliate manager, you can't directly criticise other brands. So even if you're aware that the affiliate is pushing brand B who is going to screw them over (let's say they are rogue here, or have public deductions that are ridiculous, or you know they screwed over another affiliate), you can't just call them out. It's not the done thing. You can only try and educate affiliates in other less direct ways - but this makes it harder to run the "fair" strategy.

    This ties in to issue 4: because there are a lot of snake-oil salesmen that tell you that their new brand has "brilliant conversion and LTV" despite only having been live for a month, it is very difficult for affiliate managers to gain credibility with affiliates (especially newer AMs). In almost all cases, the affiliate's default stance is to be very sceptical. Hopefully experienced affiliate managers can overcome this, but this is difficult for newer brands in particular, because they will struggle to hire a good AM, and even good AMs will struggle to push brands that aren't special but will treat affiliates fairly.

    It's hard to know if there is any solution. Affiliates continue to push brands that are proven to screw over affiliates. It obviously makes commercial sense to do so. At the same time, it makes it difficult to justify a strategy which is based on transparency & fairness. Fortunately, at the moment I am working on a sports betting client who have chosen to go down that route - but it would be much easier to justify to an operator why they should just follow the same screw everyone over strategy that others have done.

    Also as an aside, no negative carryover in itself is not a fair term on operators. They can lose money whilst the affiliate makes money: your interests as an affiliate and the interests of the operator are not aligned - it's better for the affiliate that their customers win loads month 1, lose it all back month 2. This isn't an issue though as legitimate affiliates cannot control it (if operators suffer from fraud that's their fault for not hiring competent affiliate managers). Personally, I don't have an issue with no negative carryover, as essentially the operator is just shifting where the risk occurs. The risk doesn't occur on the up front cost, like with any other form of media. There is a slight issue in that the affiliate shares all of the up-side and none of the down side. Whereas if it is on a CPA or a media buy, the operator owns all of it. Also, I'm aware obviously affiliates have risk in that it costs money to generate their traffic & it could be sent elsewhere. It is just that their risk is limited to the traffic cost / the opportunity cost of sending it to another operator. In the market nowadays though, you have to offer it, as so many other brands do, and regardless, if the affiliate goes negative, they'll just remove the brand.
    Head of Affiliates at Digital Fuel

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