For affiliate programs... How to update terms

OK, I understand that the casino side of the business is tough. It's ultra-competitive and margins are under attack from all sides. Everyone gets a piece of the pie it seems, from payment processors to affiliates.

So, what can you do if you find that the current terms you are offering affiliates are too generous, and you need to scale back to remain viable?

There are a lot of different ways you can reduce affiliate commissions, and we affiliates, we've seem them all. Here are a few:

1) Reduce the program percentages overall.
2) Increase the requirements for the higher tier levels.
3) Institute negative balance carry over.
4) Put in a quota system, requiring new player signups to achieve the highest commissions.
5) Change the commission formula, putting more expenses into the equation.

Of course there are plenty of unethical ways to reduce affiliate commissions, but we're going to assume your program is completely above board and wouldn't consider cheating.

The problem of course as you have seen, is that affiliates don't like any of these reductions. Hey, any way you look at it, it's a pay cut.

Now we get to the controversial part of this post...

I can accept any of these under the right circumstances. Just follow these line items, and I'll consider quietly accepting a pay cut, and continue to send you my best traffic:

• DON'T make the change in terms affect my existing players. I sent those players in good faith under one arrangement, and that needs to be honored. I know your terms probably have a section that says you can change whatever, whenever. But this is about mutual respect and integrity. Don't do it.
• Publicize the changes. Don't just slip the change into your website with no announcement. Mention it in your emails, post it on the forums. Let us know, so we can make a valid decision of how your revised program compares to your competitors.
• Make it clear that new player traffic will be subject to the new terms. No wishy-washy claims like: "We know that term sounds bad, but we'll never use it." If you need to institute a restriction, do it. We affiliates want to know exactly how you'll behave, even if we don't like the changes.

Yes, it's technically difficult to have multiple sets of terms affecting an affiliate's slate of players. But it's just the right thing to do.

Be honest and straightforward about your needs, and you'll find that most affiliates are willing to work with you in a way that is sustainable.

I agree with what you say here ,they should create new channels with the new rules , maybe many of us will see it as incentive to drive more traffic to you guys who honor the past contracts.I believe it should be enough that affiliates are trying to send players to programs ,when you introduce quotas you create fear that goals won't be met and the affiliates tend to abandon ship which is probably the opposite the owners are trying to accomplish.

I think clarity of communication is vital. Not just when wanting to make a change, but when setting up a deal as well. So many times I have seen deals agreed to where the affiliate thinks it's X% for life and the operator thinks it's X% for as long as the deal is profitable to do so, and neither states their assumptions clearly when the deal is made. I think signing a proper IO with the commission terms completely clear is a huge step for legitimizing affiliate relationships. I encourage affiliates to do this when setting up important deals.

In regards to making terms changes, I wrote an article a few years back which discusses some of these same points:
http://blog.incomeaccess.com/7842/20...hanges-part-1/
http://blog.incomeaccess.com/7845/20...hanges-part-2/

Excellent post, BlackjackInfo. Post of the year.

I also think, from the standpoint of an intermediary, that it's great to see an affiliate acknowledge that operators have it difficult as well.

The market forces of affiliate marketing are such that commissions will always bid their way up to the limit of a gambling operator's operating margin. We need to recognize that iGaming affiliate marketing is a mature industry and as such, advertisers are naturally going to be paying the limit of what their margins allow. When new costs come into play, operators are going to need to reduce commissions or lose money. Affiliates are never going to like getting a pay cut, but if we can clearly define what is acceptable and what is not, we can help make this industry function better.

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So many times I have seen deals agreed to where the affiliate thinks it's X% for life and the operator thinks it's X% for as long as the deal is profitable to do so, and neither states their assumptions clearly when the deal is made.

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Part of the problem with this thinking is that many times the terms of service as well as the home pages and marketing material of the affiliate programs will have the words LIFETIME COMMISSIONS blasted all over them and when this is the case there is no question as to the assumed length of the "deal"

Any kind of private deals made with affiliates should not be made without the "term" CLEARLY defined.

Also, any kind of changes after the fact (retroactive) is NEVER acceptable.

Thank you Louis for being willing to enter into such conversations intelligently and for helping affiliate gain some insight into the other side.

Rick
Universal4

You were right about this!!!!

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Originally Posted by universal4

Thank you Louis for being willing to enter into such conversations intelligently and for helping affiliate gain some insight into the other side.

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Thanks Rick. I feel this is the definitive problem of our industry and those who want this industry to flourish need to find a way to build a set of standards that both affiliates and operators can agree on, that will work in the long term.

Very much on topic, I would like to ask affiliates and operators how they think operators can effectively prevent affiliate rakeback schemes, specifically where a player (or group of players) sign(s) up as affiliates in order to earn rev-share on their losses, while not actually generating any significant promotion for the brand.

I know this is one of the principal concerns of brands that try to implement quotas, as this scenario represents cannibalization of revenues and a potentially large loss of the revenue from a player that was truly acquired through other marketing expenditures. At Income Access, we strongly encourage our clients not to implement quotas, however, this issue does need to be addressed.

One solution to this is to be extremely diligent in the affiliate application review process, and not let in affiliates unless they have legitimate traffic. However, it can be difficult to truly evaluate an affiliate before working with them, so most brands tend to want to let affiliates into the program to see what they can do. Thus this is not an ideal solution.

Any thoughts on the best way to handle this?

Inmyopinion, having any kind of quota is NOT affiliate friendly.

If a program doesn't want affiliates to participate in rakeback schemes that they do not control, then have terms stating affiliates lose their accounts and commissions if they do participate.

In most cases, I would think that non-rakeback affiliates would be happy to notify programs of any affiliates that do participate. Once an affiliate is reported, they could be given the ultimatum, stop or lose the account.

You made some good points about the review process, and I think those are good things to do also, but if it isn't spelled out in the terms, and if it isn't enforced, affiliates will assume it's ok and the problem will only get worse.

Rick
Universal4