Back to the future of igaming affiliate marketing
With Paysafe’s Income Access recently having marked its 15th year in the industry, Sarafina Wolde Gabriel, vice president of strategy and operations, looks at the affiliate channel’s evolution during this time and where the opportunities lie today for smaller and mid-tier affiliates.
The affiliate marketing channel has never been more robust. Over 2016, UK firms' performance marketing spend grew to an unprecedented £1.6bn, according to the IAB and PwC.
The igaming affiliate sector has come a long way since its early days. With Income Access celebrating its 15th anniversary, now is the perfect time to look back on the channel’s evolution and discuss its future. Competition today is high, but small and mid-tier affiliates can succeed if they carve out their own business niche, diversify their vertical and market focuses, and develop integrated marketing strategies.
Evolution & market challenges
The earliest affiliate programme dates back to 1994, but affiliate marketing’s real origins can be traced back to the launch of Amazon Associates two years later. In 1996, Amazon was a small firm compared to the retail giant it is today – and affiliates proved instrumental in its formative growth. Other companies took note, including the emerging igaming sector.
From 888’s founding in 1997 to the launches of PokerStars and PartyPoker in 2001, the Millennium saw the rise of standalone igaming brands, which faced increasing competition from retail bookmakers’ new online offerings.
In this competitive environment, operators discovered in affiliate marketing a more cost-effective acquisition channel than media buying with high-traffic websites on a cost-per-impression basis or PPC campaigns on Google’s new AdWords platform.
Early affiliate sites placed a strong emphasis on their partners’ sign-up ads and were less focused on providing visitors with valuable content. The term ‘banner farm’ is a reasonably accurate description of the prevailing approach to site design. The new discipline of SEO was at the heart of these pioneering affiliates’ marketing
Keywords relating to their partners’ brands, verticals and products formed the backbone and, more frequently, the flesh and bones of sites’ content. Inevitably, this SEO-centric approach often meant keyword stuffing and thin content.
Google clamped down. In November 2003, the search engine’s Florida algorithm update specifically targeted the practice of keyword stuffing. Savvy affiliates recalibrated their sites accordingly. Thus began an ongoing cycle of action and reaction between Google and affiliates.
Ultimately though, the channel was strengthened by major algorithm updates like Jagger in October 2005, attacking link farms, and May Day in May 2010, targeting thin content. Affiliates became more focused on developing engaging content of genuine value to site visitors – from game reviews to tips and news. This shift improved affiliates’ conversions and, in turn, catalysed operator investment.
Simultaneously, affiliates faced market challenges. The 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) shut down online gambling in the US, whose 300 million population, high internet usage and significant disposable income made it a major market. With PartyPoker and other brands exiting the States, affiliates shifted their promotional focus to Europe.
This period also offered opportunities. The end of Google’s four-year ban on UK-facing gambling AdWords campaigns in 2008 opened up the channel to affiliates, while the launch of Twitter in 2006 and Facebook Pages the following year provided them with even more cost-effective traffic-driving platforms.
Opportunities also emerged at a vertical level. Even before igaming’s state-level return to the US in 2013, alternative verticals had already arisen. These included daily fantasy sports (DFS), following the launch of FanDuel in 2009 and DraftKings in 2012.
Meanwhile, esports brands like Unikrn, founded in 2014, allowed affiliates to target users interested in wagering on competitive video gaming. Unsurprisingly, affiliate marketing’s two-decade evolution has involved changes in the promotional model.
Major news and comparison sites like PokerNews and Oddschecker have grown their traffic to the point that they now command cost-per-impression ad deals from operators. Inevitably, affiliates’ transformations into major online businesses have led to mergers and acquisitions. In 2014, XL Media acquired multiple British and Finnish affiliate sites, while Catena Media purchased Right Casino Media the following year.
These are just some recent examples of an ongoing spate of consolidation.
Finding niches and diversifying
The current wave of affiliate M&A begs a question: can smaller and mid-tier affiliates succeed today? The old saying of ‘adapt or perish’ are words affiliates should live by in 2017 and beyond. Today’s forward-thinking affiliates will look at their sites less as a promotional space and more as a digital product. As with any product, affiliate businesses need a unique selling point (USP) fulfilling a particular market need that isn’t currently being met.
As an example, the launch of Oddschecker in 1999 bridged a gap in the market by providing players with a tool to quickly compare bookmakers’ odds on multiple sporting events. It fulfilled a distinct need.
With a USP that’s genuinely unique, affiliates will gain a first-mover advantage over subsequent imitators. Savvy affiliates will analyse new verticals, products, technology and emerging markets to discover the next big thing. Extensive market research, joining relevant networks and discussion groups, and following forums closely can all help identify latest trends and new business opportunities.
Esports remains relatively unchartered territory for affiliates. Wagering on contests involving games like Dota 2 and League of Legends is projected to reach $11.5bn by 2020, according to Eilers Research. esports’ focus on events and an expanding portfolio of games supports the development of content-rich sites and allows affiliates to target wider gaming keywords and traffic.
DFS is another alternative vertical whose core focus on US sports enables affiliates to adopt broad traffic-driving strategies across multiple channels – from organic and paid search to social media and their sites themselves. As with esports, the vertical is growing: in August 2016, FanDuel expanded into the UK market and, more broadly, DFS entry fees are expected to top $5.3bn globally by 2020, according to Juniper Research.
Another vertical for affiliates to explore is promoting forex, binary options and other financial trading brands. The retail forex trading market alone averaged $15.5bn in daily turnover globally in 2016, according to the Bank for International Settlements.
Aside from the financial trading market’s strength, the vertical is also content rich for affiliates, with forex and binary options traders as hungry for analysis on central bank announcements and economic indicators as DFS players are for NFL game previews.
Ideally, affiliates will be exploring multiple alternative verticals – and a range of emerging markets as well. Following UIGEA, US igaming has gradually re-emerged, with New Jersey regulating online poker and casino and Nevada permitting poker. The Garden State in particular offers affiliates an important foothold in the US amidst ongoing legislative efforts in Pennsylvania, California and New York.
New Jersey’s igaming market continues to expand, with the state regulator reporting record revenue of $21.7m for March.
Affiliates can also explore the growing market for online sports betting in sub-Saharan Africa. Kenya and Nigeria are currently leading this expansion and increasingly leveraging the affiliate channel. While an ecosystem of local football bloggers exists, the majority are hobbyists, providing an entry space for international marketing partners.
As well as exploring opportunities at a market level, affiliates will also diversify their marketing strategies.The fledgling industry’s fundamental focus on SEO remains important, though affiliates have since diversified to leverage paid search, social media, mobile, video and, more recently, programmatic media buying using demand-side platforms.
A degree of fragmentation has occurred, so that there are today cohorts of affiliates without sites who monetise traffic solely through social media. A diverse marketing strategy is a great asset. Affiliates should focus on using the full spectrum of digital channels in concert, with ads balanced by non-promotional,
For example, an affiliate promoting the growing niche of political betting could quickly draft an on-site analysis piece on a breaking news announcement.
Published beside a banner for a political betting brand, the content would then be shared in organic Facebook and Twitter posts followed by Facebook ads, promoted Tweets and AdWords ads, all accompanied by the affiliate’s Facebook Live video commentary.
An integrated marketing strategy involving the coordination of multiple channels will place affiliates in the best position to meet igaming’s diversified future. While the affiliate space remains competitive, emerging verticals and markets will provide savvy affiliates with their own business niche. These affiliates will stand the test of time – just like the industry itself.
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