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Affiliate Monitor A sector in flux
growth as noted in the US and elsewhere comes about because of the intense competition seen in growing markets .
“ Competition for customers is likely to slow at some point , as markets become more mature ,” they wrote . “ The challenge for the affiliates is therefore likely to be maintaining relevance as operator market shares consolidate around a diminishing number of market leaders .
“ In our view this is a strong case for investing in the short term , but a question mark remains over whether it is sustainable . Operators clearly want to move towards profitability ; this could simply come from scale and operating leverage , but some may result from reducing marketing budgets directed at affiliates .”
For the team at Symmetry , the answer to where to invest means discriminating within the listed space . They suggest that Better Collective and GiG are more sustainable compared to the likes of Catena Media , Raketech and XLMedia where , they add , each is “ struggling in their European home markets while growing heavily in North America mainly because of a lot of M & A and relying heavily on one-time CPA revenue ”.
ROLL UP , ROLL UP
Simon Pilkington , CEO at Kafe Rocks , points out that going down the route of “ acquire , acquire , acquire ”, as practised by Catena
“ After the Dutch and German regulation , the biggest regulatory hurdles in Europe are behind us and the industry is more mature ” SYMMETRY INVEST
and others , has proven to be a troublesome strategy further down the line . “ It can be difficult ,” he suggests .
“ The strategy of just shovelling market share into the gullet , you have to take the risk that it won ’ t be stable when you come out the other end ,” he adds . “ You have to question it for the long term .”
Allan Petrilli , VP of sales and growth at customer acquisition resources provider Intelitics , points out that Catena Media ’ s “ dual strategy ” of Europe and the US was very difficult to maintain .
“ The markets are so different ,” he says . “ There is obviously massive potential in the US , but clearly they see SEO continuing to become less and less prevalent . And at the end of the day , with SEO traffic you are 100 % reliant on Google .”
He suggested that following the resolution of the strategic review , Catena could “ go all in ” in the US . “ I think they can tell a story ,” he says .
It remains to be seen what comes out of the Catena Media strategic review , but there is more than a hint that whatever the conclusions – and whatever bits of the business they are able to sell – the result will be significant not just for the company but for the sector overall .
iGB Affiliate Monitor November 2022