INSIGHT
Outside the US the market is still finding its feet . But how long will it remain like that ? Independent analysis from Juniper Research Ltd shows that in the UK alone demand is expected to hit 890,000 active users by 2022 . The classic ‘ Nike tick ’ demand graph suggests that those DFS operators who have decided to ride out some of the tougher weather may be well placed to see a resurgence in fortunes . If the research is accurate then it is a trend that is forecast to be repeated across mainland and eastern Europe .
If the crystal ball is proved correct you can bet your bottom dollar that affiliates and DFS will be very viable partners .
Affiliate concern 3 : Lack of transparency for clear revenue streams This is the biggest and most obvious issue to date . The more conversations I have with affiliates , the more often I hear there is a lack of clarity to the prospective revenue stream when breaking down DFS partnerships .
The simple , and fairest , question is : how on earth do we make money from DFS ? Traffic and inventory are finite supplies for affiliates so they will be sent to operators who generate the largest ROI , which DFS , up to this point , has failed to prove is them . Ah , the basics of economics .
DFS has mostly adopted the sportsbook payment model . Does this conflict with common sense ? Splitting the share of NGR on sportsbooks where earnings can fluctuate wildly , offering large earning potential for traffic , is not available to DFS .
Instead , the DFS business model is based on pool betting and trying to formulate an NGR approach looks like a square peg being forced into a round hole . This is because returns on pools are only ever on margin , creating less chance of bumper months for affiliates , especially if coupled with an absence of volume and activity .
The obvious solution would be to revert to a CPA model and let the DFS operator enjoy the fruits of any excessive activities . The elephant in the room is that DFS simply cannot agree any CPA models because there is no indication to the LTV of the traffic . It would take a very brave DFS operator to underwrite the risk of a CPA on a scale that would grab the attention of the entire igaming affiliate market .
So , where does this leave DFS ? The one model closest to the nature of DFS is a revenue share on the ‘ rake ’. In some ways very similar in nature to an NGR , because it is based on the activity of the referred customer , it actually offers a lot more transparency to the affiliate . If the DFS operator can agree a ‘ rake ’ per competition , it should afford affiliates the ability to model their expected revenue for the traffic they send the DFS firms and be able to compare that to other potential igaming verticals .
Of course , this is looking only at how other igaming verticals conclude affiliate partnerships . In addition to the standard approaches , there should be a call to arms for innovation and for a leader to emerge . While DFS establishes itself , creative solutions should be found to grease the wheels . An idea I once had was ‘ Win What They Win ’. The premise is simple : the affiliate will be paid a commission equal to any winnings of any referred customer ! This could then be scaled down as time goes on , freeing the DFS to monetise the referred customer over the longer period , while still rewarding the affiliate for the higher quality of traffic . It also ensures that the affiliates are paid at the beginning of the customer ’ s life cycle , making it a more attractive proposition .
Conclusion As with most things in life we should look at the affiliate and DFS partnerships as a scale . Does it offer the rewards of lucrative poker traffic ? No . But does it offer the opportunity to participate in a growing market , the chance to diversify revenues ( you need only to read about the many stories following Sky Bet ’ s announcement
“ It would take a very brave DFS operator to underwrite the risk of a CPA on a scale that would grab the attention of the entire igaming affiliate market ”
and how it hit affiliates hard — as much as 70 % of revenues for some people ) as well as afford you the freedom to shape a new standard of agreement in an innovative way that works for both parties ? Yes — yes , it does .
DFS needs to take responsibility and start proving to the igaming world its ability to retain customers for a prolonged period ( free of just incentivising gamers with a free roll approach ). If DFS demonstrates this then it is likely it will be accepted as a viable vertical .
But in order to achieve this DFS needs affiliates to participate with operators to provide a steady stream of traffic allowing it to prove that the right concepts will work .
A new and diversified vertical is highly desirable and can be added to the affiliate ’ s repertoire if both sides come to the table . If the market takes off like many have predicted then it will be the early birds who benefit the most .
JAMES POPE is CEO and founder of Fanto Gaming Ltd , Fantasy Sports International Ltd and Wild Time Marketing . Ten years of experience in the City of London created a solid platform for driving forward disruptive and innovative firms .
iGB Affiliate Issue 65 OCT / NOV 2017
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