A warning to operators: mess with affiliates at your peril
With the debate about the end of Sky Bet’s affiliate programme intensifying, Oshi’s Nick Garner urges other operators with grand ideas about ditching their affiliate programmes to reconsider.
If you’re an operator, it’s very tempting to look at the huge amount of money spent on affiliates every month and think to yourself, “if we cut affiliates, we’d save money, we could advertise, we’d make more profit”.
On the surface, terminating your affiliate programme may seem like a sensible idea.
After all, if the fourth largest operator in the UK has killed its affiliate programme on the basis of “decreasing risk exposure from affiliates”, why not you?
But Sky Bet is not a typical operator. Sky Bet is part owned by Sky Television, which means it can leverage Sky TV for more advertising and not be as reliant on affiliates as other operators.
For other operators the importance of affiliates in the igaming ecosystem cannot be underestimated and there are two main reasons why: organic traffic from search engines and brand.
The SEO story
I used to work for Betfair and Unibet on the SEO side, so I’ve got a general idea about the acquisition numbers for a typical tier 1 operator and I’m also an affiliate with a sports news website.
In my experience 80% to 90% of all affiliate conversions come from SEO and by my estimation, probably 30% to 40% of all new business to operators comes via affiliates.
Therefore, you could say between 25% and 35% of all new acquisitions are from organic traffic via the “affiliate proxy”.
If you’re an operator, you might say, “without affiliates, we’d save so much money, we could do lots of SEO instead”. But if you’re an operator and you think you can compete against affiliates, you’re delusional.
A typical tier 1 operator will comfortably spend from £300,000 to £1 million a month on paid search and yet spend only 10% of that amount on organic search.
Yet paid search might only account for 7-15% of click-throughs on any given search result, leaving 85-93% of search traffic going to organic results.
Logically you might think you could spend the money on SEO and cut back on paid search to maximise on traffic volumes. But in paid search the correlation between what you spend and what you make is 100% clear — you spend money on paid media and you make profits which are completely definable, i.e., you know what key phrase made what money.
In organic search, there is no solid way to account for money invested and that’s because of ‘not provided‘. In case you’re not aware, ‘not provided’ is a geek SEO term for when Google does not tell you what key phrase a user converted on.
When Google switched over to secure search, one of the profitable by-products was ‘not provided’, which eroded the business case for SEO and led to increased spend on paid search.
An SEO manager at a typical operator can only say that traffic from SEO is good and that it converts, but they don’t know on what key phrase and therefore they don’t know how much profit those conversions make. All they can say is “this block of traffic made this profit”.
Add the layer of uncertainty caused by Google penalties and big operators are very cautious about aggressive organic SEO.
And now with the UK’s Gambling Commission becoming increasingly aggressive with operators that are doing anything questionable, how would it react to the kind of aggressive SEO activity 888 was famous for in years gone by?
Affiliates don’t work to the same rules as operators. Affiliate businesses are geared around the uncertainty of ranking on organic search results.
Nearly every affiliate’s existence is based on SEO and so there’s no need for any argument to cover the ‘not provided’ problem. Can you imagine how ridiculous it would be for an affiliate to stop doing SEO because they couldn’t build as solid a business case compared with paid search? And yet this happens with operators constantly.
Playing the Google game
You can’t game Google like you used to be able to. Google has become an engagement driven ecosystem, with small pockets of search results remaining gameable but overall if it’s a high traffic, valuable phrase then what I call the ‘law of engagement’ rules.
The law of engagement says that Google search results are driven by what results are most satisfying to a user for a given key phrase.
It makes absolute sense for Google to make its search results as meritocratic as possible. Links can be gamed, however engagement is very hard to fake. And engaging search results keep Google’s users coming back for more.
The reason operators can’t win at SEO is because one operator is much like another. One casino or betting site is basically the same as another, so no operator has a true unique selling proposition, except perhaps Betfair as an exchange betting platform in its early days.
So if all operators are the same, it doesn’t matter which operator a player goes with, as long as they give good bonuses. We know igaming customers tend to have multiple accounts with different operators and as operators dish out attractive bonuses, it pays for them to jump from one operator to another.
Another reason customers move between operators is superstition. They want to gamble, but maybe they lose a load of money with one operator and then think they’ll have better luck somewhere else.
The affiliate edge
The affiliate ecosystem, on the other hand, has grown up around three areas:
1. affiliate reviews, sometimes with social proof, i.e. customer reviews as per AskGamblers
2. odds comparison i.e. Oddschecker
3. bonus lists
One thing these three areas have in common is some type of comparison and this is why operators can’t compete in organic search.
An operator writing a review on itself is unable to make any comparison with any other operator, so it is not engaging to a customer who is looking to shop around. Therefore it’s not going to rank.
If an operator tried to be an affiliate and hide its true ownership and put out fake reviews favouring itself, known as ‘astroturfing’, it would fall foul of multiple governments and trading standards departments.
Not only that, operators would also be under fire from local igaming legislators about deceptive practices leading to ‘socially irresponsible activity’.
For example, a recent Guardian article raised the conflict of interest tipsters have since they profit from customers losses.
For sites like bettingexpert.com, the whole ecosystem is based around tips from the most successful tipsters. Operators can’t copy bettingexpert.com because they can’t/don’t want to offer competing offers from other operators.
In marketing people talk about eight impressions equals a memory. Google talks about ZMOT (zero moment of truth), a fancy way of saying people click around on the Internet and look at at least 10 sources of different information before making a purchase decision.
As you can imagine, for an online operator, Google is where people jump from to make their minds up.
In igaming, users will click around various affiliate sites looking for consensus between them on which offers are good and which operators are trustworthy.
Affiliates will typically promote operators which convert well and produce good lifetime revenues. Operators which do their job properly will convert and hang onto customers for a long time. So, the correlation between who pays well and who is good is very strong.
I’ve worked in two tier 1 brands and I know from experience that brand awareness is heavily influenced by affiliates. Turn off that brand awareness and online brand awareness fades away. As an operator, you ignore the power of organic search at your peril.
Sky Bet will no longer be part of this ‘consideration’ ecosystem. Users will see other brands in Sky Bet’s place and Sky Bet will then haemorrhage conversions on direct brand traffic. I reckon that despite a higher ad spend, in 18 months from now Sky Bet will have lost at least 20% of its overall acquisitions on an annualised basis.
If you’re an operator, go to your in-house SEO manager and ask if they can debunk everything I’ve said and see what happens. I hope you stop any plans you may have for killing your affiliate programme. If you pull the trigger, in my view you deserve the financial pain that will come.
If you’re an affiliate you might see more operators following Sky Bet’s lead. But one operator is much like another and you will fill the spaces with competing operators. In time, those operators that dropped you will feel the pain and they will come back begging for you to take them on again.
Nick Garner previously worked in Betfair as an SEO manager, then at Unibet as head of search, before setting up the SEO agency 90 Digital. In 2015 he founded Oshi bitcoin casino.
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