Home > Marketing & affiliates > Affiliate marketing: maturing channel faces compliance challenges

Affiliate marketing: maturing channel faces compliance challenges

| By Hannah Gannage-Stewart | Reading Time: 5 minutes
Income Access’ Sarah Robertson says good affiliates will always be indispensable to customer acquisition, despite increased scrutiny from regulators

Increased scrutiny from regulators has led many operators to streamline their affiliate programmes over the past year, especially in the all-important UK market. But Income Access’ Sarah Robertson says good affiliates will always be indispensable to customer acquisition.

Igaming affiliate marketing is currently facing a moment of reckoning in the core UK market amid greater scrutiny from the country’s Gambling Commission and advertising regulators. Both operators and affiliates can, however, consider 2018 as a window of opportunity to streamline what has become a powerful and ultimately indispensable acquisition channel.

After all, a mature affiliate programme can drive as much as a third of a UK brand’s acquisitions, according to Income Access data. The country also remains the heartland of affiliate marketing. A recent company survey revealed that two out of three global affiliates (64.7%) promote UK brands.  

From ROI to regulators
One major reason for affiliate marketing’s enduring presence in operators’ acquisition arsenals has been its cost-effectiveness, as its performance-based model means that brands only pay for converted players. Its return on investment (ROI) remains far stronger than pay-per-click (PPC) advertising, for instance. The average cost-per-click (CPC) for ‘online gambling’-related UK AdWords keywords is £25.45, second  in cost only to ‘casino’, for which the CPC averages £58.57, according to WordStream.

The channel also provides better ROI than media buys with high-traffic websites. Even if programmatic contextual targeting is improving click-through rates (CTRs) – Google/Ad Age report a 44.3% increase in CTRs from programmatic – operators are still paying for ad impressions rather than conversions.

Affiliates are also increasingly fronting the risk of media buying. “In the last five to seven years, many media buy and data-driven affiliates have come to the forefront,” says Allan Turner, chief marketing officer at online casino and bingo operator BGO Group. “This really enabled the affiliate channel to drive traffic – all the way from very broad traffic sources targeting the public to very targeted high-value, gaming-specific traffic.”

But the channel’s flexibility – from media buying and social media to native advertising – has unfortunately facilitated dishonest tactics in a small minority of affiliates, leading to greater oversight from the Commission and the Advertising Standards Authority (ASA). Last September, the ASA censured four operators for an affiliate’s native advertising campaigns referencing their brands in a ‘fake news’ story involving a fictional gambler.

Even if the ‘fake news’ were true, the tactic would have fallen foul of the ASA’s all-important July 2017 update on igaming affiliate marketing, which specified that “ads must be obviously identifiable as such”. The update emphasised operators’ fundamental role in ensuring affiliate compliance: “When it comes to non-broadcast affiliate marketing, primary responsibility for observing the CAP [Committee of Advertising Practice] Code remains with the gambling operator.”

Against this backdrop, operators have adopted various approaches to ensure compliance. Last September, Sky Bet closed its affiliate programme, citing “changing regulatory requirements”, while the same month Paddy Power Betfair introduced a one-strike policy for affiliate compliance.

Streamlining affiliate programmes
The many benefits of the affiliate channel mean that shutting down a programme makes little business sense. “I don’t anticipate many other operators following this approach as most, like BGO, very much value their affiliate partners,” says Turner.

He sympathises with Paddy Power Betfair’s strategy. “I absolutely understand operators adopting a zero-tolerance policy,” says Turner. “They must ensure they are working with partners who are compliant with Gambling Commission directives, and thus ensure they don’t have any issues with the regulators that ultimately allow them to operate in the UK market.”

BGO Group’s own affiliate marketing strategy has focused on transparency, with the operator publishing a 13-page ‘Marketing and Advertising Guidelines’ document for UK affiliates on its affiliate portal. A similar approach, going beyond simply updating a programme’s terms and conditions, is an important first step in ensuring compliance.

Compliance documents should also be emailed to a programme’s existing affiliate database. Affiliate managers can then request written confirmation from affiliates that they have read and understood these rules and guidelines.

Even when both parties are on the same proverbial page regarding promotion, a brand still needs transparency on affiliate tactics. “All operators must maintain control over how their affiliate partners are promoting their brand, to make sure it’s not misleading for the consumer,” says Turner.

To maintain such control, operators can request that affiliates declare all promotional channels they use. The rise of native advertising makes this especially pressing. Indeed, an Income Access survey reveals that content marketing is today affiliates’ main promotional approach – practised by three-quarters of surveyed affiliates (76.6%) – while only half (55.3%) focus primarily on banner ads.

Operators need to vet affiliates’ native ads and also ensure they update banners within limited time periods. To do this, they can carry out audits of affiliates’ declared marketing channels. As well as manual audits, a brand’s affiliate software can be leveraged to track links, while PR and social media monitoring platforms like Meltwater can be used to flag unapproved native ads and social content.

Beyond existing affiliates, a change is also needed when onboarding new partners. As David Learmonth, managing partner of affiliate company Triple Hat Media, notes, “At the moment, all you need to do is fill in a limited questionnaire that glosses over the subject of how and where you intend to advertise.”

Programme registration pages can be expanded to request more detailed information on affiliates’ promotional methods and their identity, including contact details. It’s now advisable to make registration contingent on providing phone, Skype and business postal address details as well as email. This prevents any misunderstanding about urgent communications to update a banner or remove an unapproved native ad.

Even if the Gambling Commission places the onus of responsibility on operators for their programmes, affiliates still have an active compliance role to play. “Affiliates need to take responsibility for the advertising that we place,” says Learmonth, who even suggests this will allow more promotional flexibility. “That means that we need to be in a position to change advertising material from operators to better suit the location of our placements.”

Turner shares Learmonth’s view on affiliate responsibility. “I think that it would be very helpful if all UK affiliates were proactive, and, rather than relying on the correspondence with operators, they have a thorough read of all the documentation,” he says, adding that BGO’s partners have acted quickly to ensure compliance.

Above all, affiliates can self-audit their marketing channels to ensure creatives are up-to-date and that they are promoting partner brands responsibly using native advertising and media buys. These channels, especially affiliate media buys and data-driven traffic, are more of a challenge for operators to police as they have less control on how their brands are being promoted in these spaces.

Turner suggests that operators’ and affiliates’ respective self-interest will ensure that affiliates regulate themselves. “With so much at stake for the operators, this will naturally make affiliates that want to comply do so, and means that any rogue affiliates not willing to comply will simply not be able to do business with operators.”

To further facilitate compliance, the International Gaming Affiliate Association (iGAA) was founded last autumn. The affiliate trade body is currently working to establish a ‘Code of Practice’ to improve promotional practices. While David Learmonth has concerns that the iGAA will have no authority over advertising standards, he concedes that it does suggest the industry is looking to tackle the issue.

From an operator perspective, Turner is more sanguine. “I definitely think that a body that helps with training and education in the affiliate space would be very beneficial for everyone concerned.”

This year will be epochal for affiliate marketing, providing both operators and affiliates with a golden opportunity to improve this highly cost-effective acquisition channel as it comes of age. After all, with maturity comes great responsibility.

Sarah Robertson is head of business development for Paysafe’s Income Access, overseeing its business development in the igaming space. She holds bachelor and graduate business degrees from Canada’s University of New Brunswick and McGill University.

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