Interesting EGR Guest Blog Post - Beginning Of The End For Affiliates?

[Planet Mark]

Not sure how many of you follow eGaming Review, enjoy their news and content pieces myself... anyway, in addition to this weeks 'Top 50 Affiliates' feature I thought this guest blog post could be worthy of discussion... we are already used to seeing the rooms optimize for terms that just a couple of years ago were covered by affiliates... anyone agree with the linked post that there is an increased effort going on to push us off of the front page completely via aquisitions here? Could be a good opportunity here somewhere!

PokerStars and affiliates | eGaming Review

Mark

[MPC]

Well, the post starts off on a premise that is wrong.

"With affiliates unwilling to adopt a revenue share-based model as standard, and instead increasingly opting for CPA, tenancy or hybrid deals, operators have created a Frankenstein’s monster of their own that is gradually eating into their profits."

It's not that affiliates are not interested in an MGR deal. They're just not interested in one that is subpar and keeps changing for no reason other than greed. If PS gave affiliates 30% revshare as a standard offer (meaning those with high volumes would get a much better rate), and if they didn't screw around with the terms and fees, then I'm pretty sure a lot of people would actually be interested in such a deal.


"If the purchase of these portals is an attempt to control the beast, then it will have massive implications for affiliates.

Buying up affiliate portals means that they control the traffic to their gaming rooms at a massively reduced cost, and it also means that they control high volume search terms in competitive areas."

This sounds like an intelligent strategy at first glance but one needs to wonder if acquiring these portals is the best long term solution. Rankings can change, and affiliates are pretty darn good at sneaking up the ranks. If PS buys a portal that ranks #3 today, it could very well be on page 2 in 6 months. The investment from PS doesn't stop at buying the portal, there's the maintenance cost associated with maintaining the rankings, if they can.

This strategy does not kill the affiliate model. If I can build a site from the grounds up and bring it to the level where PS wants to buy it, then I will make a shitload of money as an affiliate while I'm getting there, and more when I sell the site. So perhaps in this sense, the affiliate game is simply changing?

More than likely however, the affiliate game isn't changing at all. Not everyone is pokerstars, and with hundreds of different programs to push, affiliates will eventually start focusing on the smaller rooms if the big rooms keep spitting in their faces.

The bigger rooms have to tread carefully because they are playing a dangerous game. The last thing you want to do is get an affiliate revolt that will turn against you and bash your brand. Remember cardspike? Sure, it wasn't a big room, but if you goggled for any cardspike term, what came up wasn't pretty. Cardspike fucked a lot of people over, and affiliates swiftly dealt the final blow in riposte.

Another trend we are seeing is that successful affiliates are starting to diversify their business to become less dependent on the gambling industry because they see difficult times ahead. It doesn't mean they are "leaving" the industry, it just means they'll be able to survive when things get worse, and they will get worse before they get better I think. Those who are very depending on revenue from big rooms should consider focusing efforts at diminishing this dependency, otherwise they will have no control over their business.


"Maybe the solution is for affiliate networks to form relationships with their affiliates to secure their sites on an exclusive basis, building a number of networks that collectively become ‘super affiliates’"

Maybe the solution is to let the big rooms have their glory! Perhaps we are no longer needed? Just because we made them doesn't mean we can take them down. I really don't think affiliates could bring PS down even if they tried. But I do think we can bring someone else up there. And after we do that a few times, guess who'll come crawling back to us for help?

What would our world be like if tomorrow there was not a single affiliate site with a reference to PS? Not a single word. Can PS now independently run their business with traditional marketing campaigns? What if they took all the money paid to affiliates, reinvest it in marketing efforts, and shut down the affiliate program altogether. How would they fare? Probably not well. The advantage of using affiliates is that we are willing to work for nothing. Yes, you read that correctly. We do it all the time when we build a new site, promote a new room, start targeting new keyprases. We put in a lot of hours for little pay because we dream of a long term potential. The reality is that most of us won't reach this potential. Sad to say, but it's the truth.

So what is the solution? In my mind it's simple: Affiliates have a choice to make. It's a simple choice that any employee makes every single day: Am I willing to work for someone under X working conditions. Yes or no? That's it. You accept the job, or you work for someone else. It's not complicated.

Let's also realize that promoting certain programs is not for everyone. Do I want to promote full tilt poker rakeback for a 1% return? Fuck no! (I have to modify my sites now...l grrrrr). It comes down to this: Some programs are based on volume - the pay sucks when you look at individual transactions, but if you can bring in volume, you do OK at the end of the day. Not everyone is in a position to bring in volume, so recognize your limits. That's the problem.

Affiliates have to make smart choices about who they promote and why. There is a relationship between volume and keyphrase. The only way I can make money promoting FT rakeback is to have A LOT of sign ups. For that to happen, I need a lot of targeted traffic, and for that to happen I need to target good FT keyphrases. The problem is competition on those keyprhases. When I think of all the work I would need to put it, I think I'm better off making those efforts on promoting a lower hanging fruit. So in that sense, there is a direct link on keyphrases/ competition, volume and brand power. In other words, those who pay less are the hardest ones to make money at because of competition. It's really like a bizarro world isn't it? The competition is more fierce in situations where our bottom line is the lowest! lol

So I conclude by saying it's all about choice. Choose which program to promote for the right reasons, and avoid (or at least minimize efforts) on those programs who require too much effort for no pay.

I was a considering dropping PS and FT completely from my sites. Now I'm thinking I’ll just drop them at lower spots in my rankings. Some people will criticize me for doing that. They'll say "Ah! That site is a joke! They put Titan Poker before Pokerstars! WTF???" and to them I say this: Room ranking is like statistics. You can manipulate the information, and still be "honest" about the results by changing the criteria upon which the ranking is based on. Maybe the purpose of my site can change. Maybe I can tell people "Look, we all know PS and FT are huge brand. You probably already have an account there. We're favoring the small rooms here because ...".
And yes, some people will still bitch about the integrity of the ranking. And bitch all you want. I'll be counting my money because I chose to work for someone who'll pay me a fair salary for my efforts.

[KevinMcC]

Nice post MPC

[321]

The article makes some very good points, and some not so good ones. The paragraph about "affiliates unwilling to adopt a revenue share-based model..." is convoluted and hard to judge exactly what he is saying, however, while "operators have created a Frankenstein’s monster of their own" it is not the affiliate aspect of the monster "that is gradually eating into their [operators] profits", but rather the operator aspect of the monster. Most obviously, having a network where skins focus their efforts on paying affiliates to move players from one skin to another, whether affiliates are a part of this or not cuts into operator profits no matter what (giving the same player four initial deposit bonuses at four skins while playing in the exact same games is a laughable business model).

The point that can be summed up as "the business is evolving" is right on the money though. Too many affiliates make assumptions that nothing is every going to change (starting with drinking the super-naive "life of the player" Kool-Aid) when in fact the business has evolved drastically over the past decade. The business is bigger than ever and there are opportunities today that didn't exist a few years ago. You just have to adapt to circumstances, including taking the lead in creating a new direction in the industry.

One comment is way wrong: "By ring-fencing these terms via a variety of what appear to the user to be impartial review sites..." Now that is clearly not what any operator is interested in. "Review sites" are worth nothing to operators. News, strategy/how-to, lifestyle, gossip, chat/forum, enetrtainment sites... these all have value to operators.

The days of no-value-added tactics are not over yet, but eventually they will be. Value-added productivity has always been sought after, but it will be more so as the industry inevitably consolidates. Complimentary, productive businesses will partner. If you produce something of value, the market will always apreciate it (even if it may not appreciate it as much as it should).

[thefarang]

I think 321 makes an interesting point when he says that review sites have no value to the operator. They will be the first type of affiliates to get squeezed out in any consolidation.

I don't agree with everything the article says. I think the author is overthinking it. Well over a year ago I was saying that poker rooms should consider buying out the top affiliates and then chucking their affiliate programs or scaling them back.

For the larger operators cornering the market on the PokerNews, PokerStrategy, 2+2, etc type sites would be a huge cost savings for them in the long run IF they can keep their greedy little hands from mucking them up trying to turn them into completely biased, unreliable websites.

[Jeremy]

I think 321 makes an interesting point when he says that review sites have no value to the operator. They will be the first type of affiliates to get squeezed out in any consolidation.

I don't agree with everything the article says. I think the author is overthinking it. Well over a year ago I was saying that poker rooms should consider buying out the top affiliates and then chucking their affiliate programs or scaling them back.

For the larger operators cornering the market on the PokerNews, PokerStrategy, 2+2, etc type sites would be a huge cost savings for them in the long run IF they can keep their greedy little hands from mucking them up trying to turn them into completely biased, unreliable websites.

Ding Ding, well put man. A few sites got acquired by Stars; that in itself is not going to change the poker affiliate landscape whatsoever.

If the operators were smart and want to start acquiring portals, they would give themselves a hedge by obviously listing their sites on top, but also being affiliates themselves. They will still get the branding and commission free conversions, however the portal won't be seen as biased, and they will make incremental money directly from their competitors.

The downside of this however from an affiliate perspective is that now they are competing with their customers (poker affiliates).......this probably wouldn't end well. (Although, make no mistake it already happens).....it's just below the radar.

Such an interesting dynamic here. It will be fascinating to see if acquiring portals becomes common for many of the big rooms, because that would without question be a game changer.

[jdwanchalk]

I think 321 makes an interesting point when he says that review sites have no value to the operator. They will be the first type of affiliates to get squeezed out in any consolidation.

Do you mean that review sites will get bought first, or what?

[Spry]

Interested in hearing more on why 'review sites' are worthless to an operator? Is it because the traffic those sites are sending are already brand centric? If this is the case, i can see how their value is clearly lower than the other types of sites (news, lifestyle, gossip, how to etc) but I do not think they are worthless unless they are just the standard, basic review of the top 10 poker sites or whatever.

so what would the 'worth scale' look like for our current typical affiliate sites... Lowest to highest here.... 'best rakeback deal sites > bonus code sites > review sites > strategy/news/how to?

[jdwanchalk]

If anything, people are always going to want unbiased reviews. There are review sites in every market, and they are all popular. In fact, I would wager that a large portion of potential customers want a review before they sign up. This goes for anything from a video game to a poker room. So, if one site had reviews listed, but another didn't, the listed site would get more players. It only makes sense. Players want information, and unbiased reviews give them just that.

[MJ]

How many reviews are actually unbiased? I know I'm guilty of buying/posting isn't almost everyone here except a select few? It's something I keep telling myself I'm going to do better and still hope too, but I think that is what 321 is inferring unless I'm misunderstanding.