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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