Affiliate to white-label operator: is it for you?
In a recent survey of a large number of affiliates, iGB discovered more than a third of them were considering becoming an operator, with 11% already in the process of doing so. As someone who has already made the leap, Oshi’s Nick Garner has some useful advice for those looking to follow in his footsteps.
About a year ago I wrote about the pros and cons of setting up your own white label, based on my own experience of moving from igaming marketing into becoming a white label operator. When I look back on that article, I think to myself how little I knew.
So now I’m going to go through some of the points I made a year ago and give you an update on how I feel about white labels, affiliates getting into white labels and the best operator tips I know.
I had been in igaming marketing for many years and I was able to resource the start-up of Oshi Casino. The casino started in October 2015.
I figured it’s always better to go with something that is growing rather than shrinking, such as cryptocurrency versus poker, so I found SoftSwiss, which is a bitcoin-first white label provider, and set up with them.
Back in 2016 my main thesis was that most igaming operators are the same. And my big push had been to come up with a bunch of product innovations that would make our marketing more efficient and therefore allow us to break through.
Broadly I would say we’ve got some solid product features now, including:
- Game search
- ‘Build your bonus’ tool, making it easy to pick from 20 different welcome bonuses
- Daily reload bonuses
- Oshi knowledge base and online shop
- A multi-language infrastructure
Over the last year SoftSwiss has been releasing some great features that we’ve integrated into the site, including:
- Redeemable comp points, which are effectively cashback mechanisms
- Multiple currencies
There are still three main areas for us to improve on:
- Mobile experience
- Status comp points
- More languages on site
Did the product push work? Yes and no. In casino (which I know more about) customers expect very little from product. If you hang out on Casinomeister, the conversations are usually about bonuses and cash-outs. I’ve never actually seen anyone talk specifically about site features they really liked. People either like something or they don’t and they usually don’t know why.
Yes. We’ve got a nice website that people review us highly on. No. It hasn’t been enough to get the attention I had hoped for.
Being different and hopefully better seems to have won us a certain amount of customer loyalty, but I hear stories about competing websites on the SoftSwiss network that are completely unremarkable and are nailing it.
So if product is such a big deal, why would an ordinary white label do so well? My answer: converting traffic.
It turns out a large proportion of casino customers are promiscuous and will typically have 10 or more accounts with various operators. Customers cruise around looking for free money, they test out various casinos and if the casino doesn’t deliver, they move on. Those customers who have found the right site for them, stick around until they either:
- run out of money
- lose one time too often
- have a bad customer services experience
If you’re going to set up a white label make sure you’ve got an abundant source of converting traffic. If you do have the traffic, you don’t have to be very original, you can just come up with some standard theme and it’ll probably work.
Whatever way you look at it, acquiring customers is expensive. If you’re a successful affiliate and you have a plentiful supply of converting traffic then you don’t really have to worry about retention so much. You just throw traffic at your white label website and churn people through it. Obviously if they don’t hang around, they’ll be more traffic for you to bring through.
The biggest part of retention in my view is customer services and bonus management.
Customer service is a horrible job and operators often overlook its importance. If you take some time out and read the various complaints from casino customers, you will see a typical mix of people complaining about cash-outs being refused and customer service fails where somebody has a problem and customer services doesn’t have a clue about sorting it.
As I said earlier, it’s expensive getting customers in and therefore hanging onto them should be a number one priority. If you’re a white label operator, it’s likely you’re going to be using the customer services representatives from that white label provider.
It’s important to do your homework and pick out at least three or four brands from each white label provider you’re interested in and read the customer complaints on places like Casinomeister, AskGamblers, Latestcasinobonuses and ThePogg. You will start to get a sense of the quality of customer services per white label operator.
For me, I’m glad to say my customer services support has generally improved massively as the SoftSwiss team settled down. For any customer services representative it’s difficult to discriminate between people trying to cheat the system and legitimate customers, so there will always be customer issues.
As a white label operator, you have say over how aggressive customer services will be with customers. If you can throw loads of fresh customers at a website and do not bother about online reputation, then you can take a very hard line. It’s not the way I like to roll, but there are lots of operators who do it this way.
Customer relationship management
The strange thing about customer relationship management is that ultimately it comes down to ‘words on screens’. Most CRM is done via email and depending on the words in that email, it will determine how successful you are at keeping customers on your side.
Spam customers too hard and you get unsubscribed. Don’t push them enough, and they forget about you.
Our approach is that we keep our emails as short as possible. Typically, they might be 20 words long. If someone is interested in what we’ve got to say, they’ll come back to the site and if not we’ve only taken 10 seconds of their life.
I don’t know whether I’ve been too hard or soft, but I know our unsubscribe rates are very low and our open rates are in the 20% to 30% range, which is pretty good apparently.
Percentage of affiliates thinking about becoming an operator:
The definition of brand would be something around “mental association between you and what somebody wants”, i.e., boredom: Facebook; shopping: Amazon; finding: Google.
Get the brand right and you can create profitable associations very easily.
There are something like 300 registered online gaming operators in the UK alone. There are probably 2,000 to 3,000 brands globally. You can find operator sites themed around travelling to Mars, limousines, cute characters, celebrities and even cute animals.
What makes a great brand? I believe it’s what the service provider does for you. If you’re a white label casino, you’re like every other white label except for one thing and that is the brand look and feel.
While your utility is probably going to be very uninspiring, in a way that’s OK because you’re meeting low customer expectations anyway.
What brand do you use? For my casino, I called it ‘Oshi’ because the smallest denomination of Bitcoin is in fact a ‘Satoshi’. For look and feel I went down the ‘Tokyo nights’ theme, with dark colours so you can focus on the games.
The overall trend is to go for a very bright palette and to reuse game provider assets, because they don’t have any copyright issues and the look immediately tells a customer it’s a casino.
As an affiliate who knows what converts, you’ll have an intuitive feel for what a brand should look like. The only stopper is finding a good designer. However, a good white label provider will have their own design team you can work with.
A year ago I thought bonusing was a big deal and today I still do. It’s our single greatest expenditure and writing this, I feel pain thinking about the vast sums we’ve given away to customers.
Because the igaming ecosystem is conditioned around bonusing, you must give money away. The more money you give away, the more customers you are going to get, assuming good customer services.
So how do you break out of the cycle? It’s something I thought about a lot and more recently I’ve concluded that for Oshi to prosper in the future, we’ve got to find a way around the bonus problem.
For us it’s building relationships with customers and always getting them to want a little more. This is where comp points, tournaments and prizes are so important. These features create engagement and therefore retention and therefore longer-term profitability.
I’ve learned to my detriment that some customers will never join your casino. I’m thinking about free spins customers from low GDP countries. They are the only ones who are economically motivated to get every free spin going in the hope they could make three or four days’ wages by gambling online.
If I had my time again, I would be very targeted against no deposit free spins. That money would be much better used on affiliate placements or more product improvements.
On average the return to player for us is around 3%. To put that in perspective, on average if I gamble €100, I should expect to get €97 back. That means as an operator I have €3 to pay affiliates, game provider fees, white label provider fees, bonusing and operating overheads.
If you go to an online store, you typically get a discount of example 30% off RRP. Or go to a supermarket and you might be able to get ‘3 for the price of 2’. In other words, the amount a retailer will give back is enormous compared to what you can give back as an operator.
For that €100 bet, you might be able to give bonuses worth 1% (33% of your margin) leaving you with the other €2.00 for everything else.
In other words, bonuses in igaming are not worth very much. If your wager requirements are somewhere around 35-40 times rollover, you should be able to get your bonus money back. However, people win and you still must pay game provider fees for turnover, so bonuses do cost, even though they are more or less an ‘empty customer benefit’.
For a white label to be viable, assuming you’re going to be doing some active marketing, you’re going to need at least €1 million bet turnover a month to make it a decent earner. That would translate into 200-300 monthly active customers and actual profit of perhaps €10,000 a month.
However, as an affiliate there’s an opportunity cost. You channel traffic into your white label, you’re not channelling it into other brands. Therefore, you have a choice:
• get your 35% revenue share from other brands
• get your 55% revenue share from your own brand
Why be an operator?
Thinking back to when it all began for me, I think it was a mixture of having the money to experiment with new ideas, seeing the emergence of Bitcoin and having the right people and connections to make this happen. I was also very fortunate with SoftSwiss, which has been very supportive in this journey.
I was motivated by thinking “I could do it better”. Then, just like jumping into the deep end of a pool, I got very motivated about staying afloat.
Honestly, I was also motivated by greed, thinking here’s a scalable business in a growing niche, for example, Bitcoin. But, I have come to appreciate the greed doesn’t help you think clearly enough to make good decisions.
If you’re an affiliate thinking about becoming an operator, you should be asking yourself: “Have I got the spare time, the traffic and connections to pull this off?”
If you’re wondering if I would do it all again, the answer is… I don’t know. Getting off the ground has been much more arduous process than I had envisaged. If I had spent all that start-up money on Bitcoin and gone on an 18 month holiday, I would be richer today. But then, you can’t predict the future.
In many ways were still in start-up mode, so if I’m around to give you an update in a year’s time then I can tell you if it was worth it.
Finally, my best advice is to look at what you’ve already got and ask yourself whether becoming an operator is a sufficiently small, low risk jump for you. If the risks are manageable, then give it a go.
Related articles: Bitcoin: next big thing or passing fad? (Paywall)
Oshi: the Bitcoin-only (and KYC-light) online casino (paywall)
SoftSwiss rolls out Romania-facing slot
Bitcoin and the igaming future (paywall)