Interview with GPWA Executive Director Michael Corfman on the future of US affiliates

[MichaelCorfman]

CalvinAyre.com's Becky Leggero interviewed me on the future of U.S. gambling affiliate marketing. You can see the article she wrote on the CalvinAyre.com website here:

calvinayre.com/2012/08/06/marketing/interview-michael-corfman-future-us-online-gambling-affiliates/

And, for your information, following are the interview questions she posed to me and the raw answers I gave that were used as input into the article she wrote:

Can smaller affiliates make it in a regulated US market?

I believe a smaller affiliate can make it in a regulated US market if they have, or can develop, a focused audience that is able to play at one or more sites where they are able to establish an affiliate relationship. That is different than the way many small affiliates operate today, where they do not have a focused player audience in any particular geographic area in the Unites States.

Does a regulated US market mean you’ll look more at Asia in future?

I view the Asian and U.S. markets as being completely distinct marketplaces, and I do not view there is any fundamental business reason why the activities in one of those marketplaces should directly influence business activities in the other. There is no current revenue opportunity in the United States for affiliates operating in a regulated fashion, and it is likely that it will take some time for the marketplace to mature and grow to the point that affiliates will be able to earn substantial revenue in the United States versus what they can earn globally.

How big, in your view, can the US market be for affiliates?

Gaming industry revenue is substantial within the United States. In the 2012 edition of Casino City’s North American Gaming Almanac, our research showed that gross gaming revenue in the United States was $88.139 billion in calendar year 2010, even after some declines from prior years due to the harsh economic environment. Over time we believe an increasing share of that revenue will be attributed to online gaming, and we believe that opportunities for affiliates to earn revenue, either on an affiliate revenue-share basis or as advertisers, will grow substantially. The size of the affiliate marketplace will depend on the extent to which operators use affiliate marketing to grow their operations, and the jury will be out on that question for some time.

Why are affiliates getting worried about affiliate marketing in the US when they were excited about it last year?

It is easy to be optimistic about the future. I believe some affiliates felt that the emergence of a regulated marketplace would allow them to soon earn additional revenue that would improve their financial results. However, as a regulated market actually begins to take shape, and the nature of being an affiliate in a regulated U.S. market becomes clearer, overly optimistic expectations are being replaced with expectations that are more prudent.

What ways do you think affiliates might try to get around the new regulations?

I don’t believe affiliates will be able to get around the regulations if they work with regulated operators. Some affiliates will likely continue to work with unregulated operators, although those operators will probably find it increasingly difficult to be successful as a regulated marketplace emerges. Fundamentally, regulated operators will not want to work with affiliates that are trying to get around the regulations because it would jeopardize the operators entire operation. I expect many folks that would prefer to operate on an affiliate basis may choose to avoid being subject to regulations by operating as advertisers who earn revenue on a more traditional advertising revenue basis from U.S. regulated online gaming sites versus on an affiliate-based revenue-share or CPA model. It is also possible that an organization such as the GPWA might be able to work as a super-affiliate with some operators on a regulated basis, and work with smaller webmasters on a performance basis in a way that was consistent with the regulations of one or more jurisdictions.

When will a regulated US market become profitable for affiliates who were previously operating in an unregulated US market or outside the US?

A timeframe is difficult to predict. First there have to be operators in place, and then there have to be operators in place that operate an affiliate program. In addition, because online gaming seems headed in the direction of being regulated on a state-by-state basis, at least over the near term, an affiliate will need to be able to operate on a profitable basis within each state where they have affiliate relationships. That is a lot harder than promoting online gaming sites that are available on a nationwide basis.

Which historically successful affiliate sites will remain a success in a regulated US market?

Well, I believe Casino City will be able to be successful in such a marketplace. Fundamentally, in a state-by-state marketplace, an affiliate site will need to have a critical mass of players within each geographic area they target. That means sites will need to have a high level of overall traffic in order to have a critical mass of potential players within individual jurisdictions, or they will need to have a large percentage of their visitors from a narrow geographic market.

Describe what type of affiliate site or sites will be the best positioned to crack the regulated US market?

A critical requirement will be for a site to be able to target site visitors by their geographic location and provide both content and promotional material for online gaming opportunities targeted based on the geographic location of site visitors. There may also be new opportunities for sites specifically tailored to the residents of particular states, much as there are current opportunities around the world for sites targeted to players located in specific countries.

Michael

[Maria F]

Nice interview Michael, thank you for sharing.

[ocreditor]

It is also possible that an organization such as the GPWA might be able to work as a super-affiliate with some operators on a regulated basis, and work with smaller webmasters on a performance basis in a way that was consistent with the regulations of one or more jurisdictions.

Interesting! Thanks Michael, good interview

[bboyspyder]

Great interview. A lot of things to think about the future US market.

[boczom1]

Which historically successful affiliate sites will remain a success in a regulated US market?

Well, I believe Casino City will be able to be successful in such a marketplace. Fundamentally, in a state-by-state marketplace, an affiliate site will need to have a critical mass of players within each geographic area they target. That means sites will need to have a high level of overall traffic in order to have a critical mass of potential players within individual jurisdictions, or they will need to have a large percentage of their visitors from a narrow geographic market.

Small amounts of targeted traffic should remain just as important/successful as large amounts of junk traffic. I don't see any reason why it would change from an unregulated to a regulated market.

[bboyspyder]

One thing I am wondering. Will affiliates actually have to register somehow under USA law or follow some specific rules for advertising to USA visitors? Because this is something that politicians are trying to do in Bulgaria.

I agree that the way you are going to target traffic is going to change.

[mojo]

[B]
Small amounts of targeted traffic should remain just as important/successful as large amounts of junk traffic. I don't see any reason why it would change from an unregulated to a regulated market.

Exactly what I was thinking.

Really great interview Michael and Becky!