Rakeback sites monetized through CPA/rev share?

[RB]

I'm very new to this industry and I'm trying to understand all aspect of this niche industry.

I'm seeing a lot of posts stating that rakeback sites are 'dead' and people are moving away from it.

My questions is what's the difference between rakeback sites vs. a site that generates revenue through CPA and/or revenue share?

Aren't they essentially the same thing? i.e. raketherake.com is a rakeback site which makes its money through CPA/rev share? Or have I miss understood the definition of a rakeback site?


Thanks!

[Pokeraddict]

A rakeback site is kind of a thing of the past because most rakeback sites have offers for non rakeback rooms too. All rakeback offers are revenue share. I cannot recall any flat rakeback offer that paid as a CPA to affiliates. Non rakeback offers can be CPA, rev share, or a combination of the two.

[pokerprop]

Ask again in a different way if not understood.

Rakeback is the process of returning a player a percentage of the rake he has paid. In the old days poker sites would pay us say 60% of the rake the player generated and we'd pass on that player 40% rakeback. So he was getting 2/3 of our affiliate pay. 40% to him 20% we kept.

60% revenue share was wide spread in 2005, but eventually sites start realizing things like the importance of retention, how messed the rakeback policies were (some players got it while others didn't) and many didn't want to pay out as much. After a while the biggest sites ended rakeback while the smaller ones used it as a method to compete.

As an affiliate it's a terrible business model. First these days it's more risky sites that even offer rakeback which means a lot more often you end up stiffed on your pay. Rakeback also doesn't convert very well. Most players are recreational and simply don't care. You start introducing ideas like rake race, bonus codes, and etc. in the mix it breaks the natural process of any easy conversion, they feel sold, are on guard, or have more to think about such as hey let me google search and learn more about this, or seek other codes, see what's available.

If you feel you must give players the best deal available all the time (likely not even possible because are not going to have same races and things as long time rakeback giants who profit largely from old accounts) the solution here is just promote sites that don't offer rakeback. PokerStars, PartyPoker, Everest etc.

Now to clarify despite the advice from most in this business rakeback is not a good 2012 model and is dying and has limited future, if you do decide to promote rakeback these days it's mostly handled by the poker rooms direct. For example they might pay your player 33% and pay you 8% of his rake less all sorts of fees and such.

Now if forgetting rakeback then there are two ways to promote:

Revenue Share - you get a % of that sites profit on the player. If the player raked $100, had $20 in deposit fees and got a $50 bonus his profit is $100-($20+$50) = $30 and if you're getting 40% you make $12.00.

CPA is cost per acquisition - once the player does something you get on time lump sum. The something might be deposit, the something might be deposit x and rake x or might be play so many hands, but once he does something you're paid and done.

Despite the popular advice to the contrary CPA is a horrible business model for new affiliates. The reason why is the deals you're going to find out of the gate are stuff like $100 CPA for raking $20.00 and had you been on revenue share you'd earn a TON more (like I don't have the case type to stress ton enough). If they have to rake $20.00 just to qualify you're only getting CPA on a percentage of your players and for many you're getting nothing. (the ones you do get paid on are the ones more likely to eventually rake much more - they've already show their in the higher tier of play) Now CPA is a great model if you're getting paid fair (close to one years rev share pay) very few pay fair (especially to new affiliates) so you on average leave a ton of money on the table. Now sometimes there are cowboys though, new programs think they're going to take over poker and if only they had started when pokerstars did that are handing out stupid CPA offers and these makes sense to jump on and take. Anwyays eventually down the road changing to CPA where possible makes sense - but with what's generally out there when starting, negotiate rev share from the start, and calculate it by how much you earned in first year and count everything else as a bonus.

[RB]

As always, amazing reply to my very basic question! Thank you for the time and effort

[CasinoMack]

Rakeback = cash back.