Affiliate marketing is an approach to advertising whereby third-party publishers, or affiliates, generate traffic to another company’s website, and then the affiliate receives payments or commissions based on the number of leads or users they are able to capture on that company’s behalf. Through using affiliate marketing, companies are essentially outsourcing the selling of their products or services in order to reach people across a variety of networks they might not normally have access to, and they then pay affiliates based on their performance and success.
Although predominantly used in online advertising, affiliate marketing pre-dates the Internet era and still continues to be used in the offline space. However, it is in the generation of online traffic where affiliate marketing plays the most prominent role today, with the global value of the affiliate industry now estimated to be around £12 billion annually.
A number of sectors and industries successfully use affiliate marketing strategies, following the model which was established by Amazon, such as dating sites, online gifts and homeware stores, editorial and news sites, blogs, coupon and voucher sites, and travel websites.
The appeal for companies in using affiliates to undertake much of their marketing is twofold; it frees up resources for businesses to concentrate on customer retention rather than acquisition, while at the same time allowing their marketing spend to be more focused, as they are only paying for positive leads in the form of traffic being referred directly to their site from an affiliate, rather than more general advertising that may or may not be reaching the right target audience.
This is clearly a model that also works for the affiliates themselves, as it enables them to promote a range of brands in the same sector at the same time, and thus maximize their potential for commissions and revenue.
It is also a relatively straightforward process to move into the affiliate marketing space. There are a number of networks that run the affiliate programs for multiple brands operating within the same industry. You can set up as an affiliate marketer through one of these networks, who provide marketing collateral in the form of banner ads, access to special offers and bonuses, ideas for content, etc.
The role of the affiliate then becomes to find ways in which to promote these brands and generate traffic for them through existing websites, specially created sites, electronic direct marketing, or other means. There is a great deal of scope for imagination and innovation, which is one of the reasons why affiliate marketing has such widespread appeal and can be so effective.
How affiliate marketing works in online gambling
One of the sectors in which affiliate marketing is a dominant form of promotion and advertising is online gambling. There are a number of reasons for this. Firstly, the online gambling industry is extremely competitive, and operators tend to be quite inventive in terms of the incentives they offer new players in order to get them to choose one site over another.
This competitiveness and inventiveness has in turn led to the creation of one of the most popular forms of affiliate marketing for gambling websites, which are casino review portals, or comparison websites. These are designed to showcase different operators and their offers side by side, so that punters can easily compare their relative merits in the same way that you might compare flight deals, or hotel tariffs. These comparison sites are operated by affiliate marketers, who design the site and produce the content with the aim of encouraging players to click through to their featured casino sites or poker rooms.
It is also the case that outsourcing their advertising through affiliate marketing means that casino and poker operators can tap into a greater variety of networks and connect with more people in more ways than other marketing approaches allow. For online gambling firms, this diversity of approach is particularly important.
It’d be hard to deny that affiliate marketing in online gambling has been hugely successful and lucrative for operators and affiliates alike, with the number of sites promoting online casinos increasing year on year. It is also borne out by the data in regard to the rapid growth of online gambling and the forecasts for its continued expansion.
In 2016, worldwide online gambling was worth $44.16 billion and is expected to grow to around $81 billion by 2022. In the UK, the latest report by the UK Gambling Commission showed that online gambling now makes up 32 percent of the annual gross gambling yield (GGY); that figure has risen year on year and is expected to continue growing.
Poker Affiliate vs. the Casino Affiliate Market
Two of the biggest streams for affiliates in online casino marketing are poker rooms and online casinos; however, they do seem to be heading in markedly different trajectories at the moment.
The position of online poker is particularly interesting, as there would appear to be some conflicting data as to how well the sector is performing. For instance, we can see operators like PokerStars, whose businesses and reputations have been built on online poker, now shifting their focus towards sports betting and online casinos. This is partly because of a general waning in the popularity of online poker, but also because it’s estimated that 30 percent to 40 percent of poker players also play online casino games on a regular basis.
On the other hand, overall analysis of all the leading operators figures in Q3 2017 shows neutral or growing revenue, although player numbers remain largely flat. Some analysts have suggested that revenue numbers look positive because poker rooms are placing more emphasis on promoting more profitable Sit N’ Go and other tournaments over cash games, and that the introduction of better rewards and incentive programs have led to better player retention.
Nevertheless, most industry experts take the view that, while online casinos and sports books will continue to flourish, the future does not look as bright for poker, with player numbers seemingly stagnant at best. The poker boom of the early to mid-00’s now looking like a distant memory. Online casinos, on the other hand, continue to be moving in an upward direction, with more players, more revenue, and more operators entering the industry all the time.
The different trajectories of the two sectors is also reflected to some degree in the way affiliates are paid.
It’s generally the case that an affiliate will receive fees in one of three ways: cost per acquisition (CPA), where they receive a flat fee for each player who signs up at a casino or poker room as a direct result of clicking a link from an affiliate’s website or an email; Revenue Share, where affiliates are paid based on a percentage of the net gaming revenue generated by players who it has referred, usually paid out on a monthly basis (this can be for a limited period of time or ongoing); or a hybrid model, which is part CPA and part revenue share.
For affiliates, revenue share deals with poker operators tend to be more profitable in the long term, as online poker players, despite the recent decline in its popularity, tend to provide lifetime value. For example, they tend to be more committed to the game and to play more consistently over prolonged periods of time than other online punters. They also tend to be more loyal to the one site.
Online casino players, however, tend to change sites more often, or to have accounts at multiple sites, in which case a CPA deal can often work best for affiliates as they can pick up commissions every time a player joins a site. This means that it’s also possible to pick up more than one payment from a single player if they change casinos often but still sign up for new sites via links provided by the affiliate.
CPA deals also reflect the health of the vertical – with an operator being happy to pay up front a sign of confidence, and those on revenue shared adopting a more circumspect wait and see approach.
What will the future hold?
It is always difficult to make any sort of prediction with regard to the online gambling industry, but there are some developments that we can look out for with regard to affiliate marketing.
First of all, we will likely see an increased emphasis on the specifics of local markets in the strategies of affiliates. This will mean affiliates adopting vastly different approaches depending on the individual characteristics of the countries or regions they are targeting. Generic marketing in this space has never been effective, but implementing even more localized approaches is likely to be a direction in which affiliates move. This will be reflected in the language used in content, the look and design of websites, and the degree to which affiliates target different mobile and social media platforms in different regions, for instance.
We can also expect to see more affiliates creating sites and other marketing tools promoting online casinos that use Bitcoin and other cryptocurrencies. This is likely to be accompanied by affiliates also finding new ways to raise greater awareness of other electronic and alternative payment methods being accepted by online gambling sites, like Apple Pay, Boku and Android Pay.
We will also likely see affiliates giving players more detailed and specific descriptions of the conditions attached to casino and poker room signup bonuses, given the recent investigations by the CMA into how these deals are offered to punters, and the use of fine print to obscure details with regard to withdrawals in particular.
A final area in which we can expect to see affiliate marketing move is to make more of the fact that growing numbers of operators are focusing on offering players and punters an omni-channel gaming experience. For example, a casino, sports book, bingo and poker under the one brand. Players increasingly expect to be able to bet and play on their mobile, their tablet or their laptop with the one account and set of login details, and so affiliates are more likely to have more success promoting brands that offer this experience. Therefore, we can expect to see affiliates giving more of their attention to the brands that are best able to meet player expectations in this way.