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  1. #1
    Shaun O'neill is offline Former Affiliate Manager
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    Default Net Revenue = What???????

    Hi Guys

    Do you know how much net revenue is?

    As a number of you know I am now setting up an affiliate program and part of that includes what to pay affiliates:

    So my question to you is how do you feel Net Revenue should be calculated????

    Gross rake minus???

    Please post your thoughts.

    Thanks

    Shaun

  2. #2
    thepokerkeep's Avatar
    thepokerkeep is offline Private Member
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    Is this a poker room or casino?

    What I like to see is...
    Gross rake minus;
    - chargebacks
    - a fair share of admin costs such as banking/transaction fees and bonus payouts
    Terry - The Pokerkeep
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  4. #3
    Shaun O'neill is offline Former Affiliate Manager
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    Default

    i am setting up for everything aside from bingo, but let say the affiliate program in genral.

    Shaun

    Quote Originally Posted by thepokerkeep View Post
    Is this a poker room or casino?

    What I like to see is...
    Gross rake minus;
    - chargebacks
    - a fair share of admin costs such as banking/transaction fees and bonus payouts

  5. #4
    TheGooner's Avatar
    TheGooner is offline Private Member
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    Default

    Net revenue is what it says on the label - "Net Revenue".

    It's a convienient tag that allows the program to make deductions from the Gross revenues that are usually easy to calculate.

    These items can be deducted usually without too many discussions :
    - Bonuses
    - fraud chargebacks

    Other items that I sometimes see (depending on jurisdiction) :
    - Payment / withdrawal / banking fees
    - player bonus point fees
    - administration fees
    - local taxes / VAT

    Any or all of these fees can be justified at on time or other, but there needs to be clear and concise documentation and information available on these fees and why they're being charged.

    Nothing is more annoying to an affiliate than seeing that a high Gross revenue being attacked by high fees and costs, and not getting a good handle on why that is - or being suprised by the scale of the fees.

    Eg. Carbon Poker a while back attaching 100% of chargebacks to the affiliate portion - and not being able to provide a breakdown about the detail of thousands of dollars of sudden chargebacks.

    Be clear, be concise but also have available details when attaching large fees to an affiliate account - or make email contact to explain the charges.

    I have a couple of affiliate managers that do that - and the clarity does help to ease the frustration.

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    jarvi is offline Private Member
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    Define it how you wish, just make sure that it is defined in a consistent way. This includes, using the same terminology in the terms and conditions, FAQs and statistics pages. Too many programs have different column headings to those mentioned in the terms and conditions. On purpose? Maybe. Lazy? Definitely.

    If you have different calculations for poker, casino, sports etc then please give us the detailed numbers separately as well. If a number of items go into the calculations then we like to see those individual numbers so we know what is going on. The reasons are twofold. Firstly to check the calculations and secondly so we can see what we need to do to improve things.
    James

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  9. #6
    Shaun O'neill is offline Former Affiliate Manager
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    Hi Guys

    Thank you for your feedback, please continue to give me your comments and feedback.

    Thanks

    Shaun

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    Default

    Gooner hit the nail right on the head with this one... Let's see if I can extract what he said into a simple mathmatical equation. I'll reduce the amount of charges a bit to make it more concise:

    Affiliate Program #1 (Published revshare = 30%):
    Net Revenue = Gross Revenue - (Admin Fees + Chargebacks + Bonuses)

    Affiliate Program #2 (Published revshare = 30%):
    Net Revenue = Gross Revenue - (Admin Fees + Chargebacks + Bonuses + software licensing fees)

    The problem with Net Revenue is simply this:

    Affiliate Program #1 will have a larger revshare than Affiliate Program #2 (considering all fees are equivalent) because of the additional fee of 'software licensing fees' from Affiliate Program #2.


    As revenues increase, fees such as Admin Fees, Chargebacks, and Bonuses should become less depleting of affiliate income. For example:

    If the gross revenue $1000 (Gross Revenue only) and the fees are $50, then the revenue share is really quite a bit less at: ($1000 * 30% - $50) / $1000 = 25% Revshare

    If the gross revenue is $10,000 and the fees are $200, then the revenue share is at: 28% revshare



    Now - extrapolate that to a company like Expekt which also adds a licensing fee of 12%.

    Their published rates are: 25%, 30%, and 35%

    Their 'Effective Revenue Percentage' is: 22%, 26.4%, and 30.8%




    So - depending upon what the fees are, we can quite easily see an affiliate income drain. As long as the program is fair and has a detailed description of their 'fees', then it is ok.

    If programs use the fees to purposely drain affiliates of their revshare, that is a huge problem.

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  12. #8
    Shaun O'neill is offline Former Affiliate Manager
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    Default

    Kwblue

    How about this

    Gross gaming revenue – sign up/deposits bonuses - free spins - free bets - credit card charge - backs - 12 % admin = Net Revenue the affiliate would then be paid on.


    I would be offering poker,casino, sportsbook and skill games.


    Please give me your thoughts


    Thanks


    Shaun

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    lots0 (10 July 2009)

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    Default

    -free spins
    Can you explain that one?

    If the spin is worth say $1, do we also see that added to the gross revenue?

    Rick
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    lots0 is offline Former Public Member
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    Default

    I would be wondering about the 12% admin fee... I don't see that kind of fees very often, especially that high.

    I do have one suggestion, kind of a pet peeve I have with aff programs...

    Could you write some of the sales copy for experienced affs and include info that more experienced affs want to know... Like payment options, payout percentages, software platform... I know I am leaving some stuff out here.

    Anyway my point is that experienced affs(well at least I do) want more and better info from a program, before I sign up, than the standard newbee pitch that most aff programs have.

    I am so tired of reading... "we are experienced leaders in the industry.." then to go on and see that the entire sales copy is geared for newbees.
    Last edited by lots0; 10 July 2009 at 4:38 pm.

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    Default

    Gross gaming revenue – sign up/deposits bonuses - free spins - free bets - credit card charge - backs - 12 % admin = Net Revenue the affiliate would then be paid on.
    hmm. I would drop the admin fee. The admin fee should not be charged to the affiliate. I've seen this before as an affiliate, and it always drove me to think about the program.

    Also, qualify your bonuses. You don't want to do what many casinos do by reducing the bonuses that are not converted. Since it doesn't cost you anything to give a bonus with a wagering requirement then don't charge the bonus to the affiliate UNTIL it's converted (met wagering requirements). Imagine how bad the affiliates would be hurt if you reduced all of the given bonuses to the players. The same applies for the free spins. Only the converted bonuses from the free spins should be deducted. (compensated by the gross calculation of revenue).

    Chargebacks.. proportional to the affiliates commission. not the entire amount.

    Once you clarify those terms your set!
    Good luck

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  18. #12
    Shaun O'neill is offline Former Affiliate Manager
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    Default

    Hi

    Thanks again for the replies.

    The 12% admin fee would include:

    Monies paid in the form of betting duties or taxes

    Payments to licensing authorities in malta ect

    Charges levied by electronic payment or credit card organisations

    Network fees

    Licensing fees

    If you add the above up it works out to way over 12%.

    Thanks

    Shaun

  19. #13
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    Default

    Quote Originally Posted by Shaun O'neill View Post
    Hi

    Thanks again for the replies.

    The 12% admin fee would include:

    Monies paid in the form of betting duties or taxes

    Payments to licensing authorities in malta ect

    Charges levied by electronic payment or credit card organisations

    Network fees

    Licensing fees

    If you add the above up it works out to way over 12%.

    Thanks

    Shaun
    That may be the case sir but admin charges are there already are they not?

    12% is awfully high compared top most of the charges for admin I have seen.

  20. #14
    thepokerkeep's Avatar
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    I suppose the 12% fee would be easier to swallow if the commission was structured higher than the industry standard....
    Terry - The Pokerkeep
    President / CEO - Gambling Affiliates Union

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  21. #15
    Shaun O'neill is offline Former Affiliate Manager
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    Pomp

    I dont see how the admin charges are there, please explain?

    I could name at least 3 major affiliate program sites that have an admin fee and make it very clear as to what it covers, I could also name at least 10 that have a fee but dont put it into the T&Cs most just hide it away, hence the reason I name the thread Net Rev = What????

    I see affiliate business as a partnership I need to make money and retain players and the affiliates need to make money, you know what I am like i would never screw anybody I just it as business partnership in which we both need to make money.

    Shaun

    Quote Originally Posted by pompeyrayuk View Post
    That may be the case sir but admin charges are there already are they not?

    12% is awfully high compared top most of the charges for admin I have seen.

  22. #16
    Shaun O'neill is offline Former Affiliate Manager
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    thepokerkeep

    I am sure that you are working with site that deduct a fee from your earnings, i just want to display it from Day 1 so people know what they are working with.

    Shaun

    Quote Originally Posted by thepokerkeep View Post
    I suppose the 12% fee would be easier to swallow if the commission was structured higher than the industry standard....

  23. #17
    PokerAddictz is offline Private Member
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    Hello...

    My thought on how it should be...

    Gross revenue - chargebacks - bonuses - Credit Card fees = net rev * 30%

    Why should the affiliates pay for admin fees and such when the website is taking 70% of said revenue? If it was a 50/50 deal, then it would be a different story.

    I tried to explain this to chipleader with no success. Why should the aff pay for all fees directly out of the commissions? It should be paid from gross rev then calculate the net rev from that. Chipleader takes ALL FEES from commissions of the aff, and they only pay 25%. There are probably many others who do this same thing, but they are the only ones I deal with who do that.
    My 2 cents!
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  24. #18
    Anthony's Avatar
    Anthony is offline GPWA/APCW Program Director
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    Programs are taking out admin fees, if we know it or not. Shaun is being up front with exactly where everything is going. I appreciate the transparency.
    I am here to help if you have any issues with an affiliate program.
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  25. #19
    Shaun O'neill is offline Former Affiliate Manager
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    Hi PokerAddictz

    Thanks for your comments but if you dont mind i would like to look at your reply in more detail.

    It would be impossible to offer a 50/50 deal you would never get 50% of the gross rake, the cost of running a poker site is insaine, if you then add on a casino, sports book skill games and dice the cost goes through the roof, If we did indeed split the costs 50/50 I think you would be shocked by how little you would end up with. I can only speak for us but we use between 40 and 50% of that revenue to retain the player which of course benefits you.

    I agree with you 100% that fees ect should be removed from the Gross revenue so let me show my example:

    Player generates $1,000 in Gross win for the site, player clears a $100 bonus, no charge backs no free spins ect.

    So

    Gross win $1,000 - $100 (bonus) - (No charge backs, no free spins ect) - 12% admin charge = $792 (this is the net revenue figure that you would be paid say 35%) = $277.20 as the affiliate commission

    (sorry if my maths is crap but it's 8am).


    Over the last couple of week I have reviewed almost every poker site and sports book and 90% of them have something within the T&Cs. I intend to make mine as clear as poossible from day 1.

    Thanks

    Shaun





    Quote Originally Posted by PokerAddictz View Post
    Hello...

    My thought on how it should be...

    Gross revenue - chargebacks - bonuses - Credit Card fees = net rev * 30%

    Why should the affiliates pay for admin fees and such when the website is taking 70% of said revenue? If it was a 50/50 deal, then it would be a different story.

    I tried to explain this to chipleader with no success. Why should the aff pay for all fees directly out of the commissions? It should be paid from gross rev then calculate the net rev from that. Chipleader takes ALL FEES from commissions of the aff, and they only pay 25%. There are probably many others who do this same thing, but they are the only ones I deal with who do that.
    Last edited by Shaun O'neill; 14 July 2009 at 2:23 am. Reason: More to say.....

  26. #20
    Shaun O'neill is offline Former Affiliate Manager
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    Hi Anthony

    You are spot on, to me this is a very sensative subject that I want to get right, as you know I have no intention of screwing any affiliate I want to make it fair an equal, but as we are also running a business we have o think about our future.

    Thanks

    Shaun

    Quote Originally Posted by APCW Anthony View Post
    Programs are taking out admin fees, if we know it or not. Shaun is being up front with exactly where everything is going. I appreciate the transparency.

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