Response to a Worried Affiliate Webmaster

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5 October 2006, 3:52 pm
MichaelCorfman

Response to a Worried Affiliate Webmaster

Quote:

Originally Posted by tropics

Dear Mr Corfman as a new affiliate webmaster i must tell you that i am extermely worried about this ban that Congress will put on online gaming. I mean as an affiliate marketer I have to be concerned because the US market as far as I understand is responsible for close to 50% of the revenue generated by online gaming companies. I personally do not have a webhosting account in the United States but because of this bill it is going to make it even harder for affiliates like myself to market effectively. We now have to turn our attention to the European market but one can only do so little marketing in Europe! Do you think that there is a serious concern from our perspective as affiliates to these online casinos? I would just like you to share your views on this matter!! Do you think this is something that will really cause a significant drop in the revenue generated by online gamig and eventually cause the online gaming industry to fall or is it just something that will only have an effect for about a couple of months and then afterwards everything be back to normal. Please share your views on this matter

I think there will be different answers for different affiliate programs. Some online gaming sites currently accepting US players will continue to do so, and some will decide it is in their best interest to discontinue doing so.

In my opinion, a significant portion of those sites with a small current percentage of US players will discontinue accepting US players. The reason is that many such sites will decide it is in their interest to maintain the upper ground if the cost is not that high.

There will also be some players with a higher percentage of US players (say 30%) who will make a similiar decision. This will be particulary true for publicly traded companies. If a company receives 30% of revenue from US players, and the stock market values a company 30% higher if it is not entangled with the US, then the company looses nothing in market value from a result to withdraw from the US. If the company believes that withdrawing from the US better positions it for future valuation increases, then withdrawal is actually the better option from a shareholder perspective. And from an executive perspective, it means the company's executives can continue to travel into the United States if they should want to do so.

Then there are the players who are withdrawing that I simply do not understand from an economic perspective. These include the likes of PartyGaming, which has a huge percentage of US players. Maybe the biggest stockholders are just worth enough that a few billions less is not as important to them as being able to travel into the US without being arrested. If I had a few billion dollars I'm not sure what I would do with it, so maybe I wouldn't care either.

But in spite of the above situations, a good many companies will continue to do business with US players - BoDog is an example of such a company. No way is Calvin Ayer going to give up 96% of their revenue. I believe the companies in this group will constitute the majority of online gaming companies. And I believe these companies will grow as US customers find new sites where they can play.

In terms of affiliates, some that were not that serious will drop out, but I think most will stay. Those who are earning revenue share arrangements with online casinos who drop US players will take a definite hit on the customer base they have built up over time. But the forced churn with customers who need to find new places to gamble will mean there will be an increase in new customer acquisitions for those promoting gaming sites that open their doors to these displaced customers.

Of course, there will be some players who will stop after being displaced. But I don't think it will be a huge number - I think most will find another place to play.

So the bottom line is that there will be a lot of disruption in the market over the near term, and a lot of individuals who will suffer as a result. But I also think the overall market will not change much in size because of this, which also means I believe there will be many who will benefit by being nimble and helping players who want to continue playing.

Michael
5 October 2006, 4:14 pm
tropics

Quote:

Originally Posted by MichaelCorfman

I think there will be different answers for different affiliate programs. Some online gaming sites currently accepting US players will continue to do so, and some will decide it is in their best interest to discontinue doing so.

In my opinion, a significant portion of those sites with a small current percentage of US players will discontinue accepting US players. The reason is that many such sites will decide it is in their interest to maintain the upper ground if the cost is not that high.

There will also be some players with a higher percentage of US players (say 30%) who will make a similiar decision. This will be particulary true for publicly traded companies. If a company receives 30% of revenue from US players, and the stock market values a company 30% higher if it is not entangled with the US, then the company looses nothing in market value from a result to withdraw from the US. If the company believes that withdrawing from the US better positions it for future valuation increases, then withdrawal is actually the better option from a shareholder perspective. And from an executive perspective, it means the company's executives can continue to travel into the United States if they should want to do so.

Then there are the players who are withdrawing that I simply do not understand from an economic perspective. These include the likes of PartyGaming, which has a huge percentage of US players. Maybe the biggest stockholders are just worth enough that a few billions less is not as important to them as being able to travel into the US without being arrested. If I had a few billion dollars I'm not sure what I would do with it, so maybe I wouldn't care either.

But in spite of the above situations, a good many companies will continue to do business with US players - BoDog is an example of such a company. No way is Calvin Ayer going to give up 96% of their revenue. I believe the companies in this group will constitute the majority of online gaming companies. And I believe these companies will grow as US customers find new sites where they can play.

In terms of affiliates, some that were not that serious will drop out, but I think most will stay. Those who are earning revenue share arrangements with online casinos who drop US players will take a definite hit on the customer base they have built up over time. But the forced churn with customers who need to find new places to gamble will mean there will be an increase in new customer acquisitions for those promoting gaming sites that open their doors to these displaced customers.

Of course, there will be some players who will stop after being displaced. But I don't think it will be a huge number - I think most will find another place to play.

So the bottom line is that there will be a lot of disruption in the market over the near term, and a lot of individuals who will suffer as a result. But I also think the overall market will not change much in size because of this, which also means I believe there will be many who will benefit by being nimble and helping players who want to continue playing.

So what you are saying is that affiliates like myself who are just starting out in the affiliate marketing world will have a better chance of recruiting new players and those that have been marketing for a long while (3 to 5 years) and have attained a large number of US customers will suffer?
5 October 2006, 4:29 pm
MichaelCorfman

Quote:

Originally Posted by tropics

So what you are saying is that affiliates like myself who are just starting out in the affiliate marketing world will have a better chance of recruiting new players and those that have been marketing for a long while (3 to 5 years) and have attained a large number of US customers will suffer?

Well, I think those who have just started out can't have that large a base of existing players on a revenue share arrangement to lose as a result of the current transitions, so they won't be hurt nearly as much over the near term because they don't have as much to loose.

I think those that have been around for a while on revenue share arrangements will have to deal with the biggest financial hit, but they also know how to make a go in this business.

I think those that have been around for a while on a CPA basis (this includes Casino City) will suffer some near-term turmoil, but the effects will be significantly muted as compared with those working on a revenue share basis.

I think everyone (all three groups above) will have an opportunity to help displaced players find new places to play.

Michael