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Affiliate Monitor Executive summary
Executive summary
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One of the biggest issues in the old world of European online gambling is the looming threat of affiliate licensing . Particularly in the UK , the issue has risen to prominence and now looks almost certain to be included in future legislation . In the meantime , the sector can look to the new world for an example of how affiliate licensing works in practice – and going by the comments from those who have gone through the process in various US states , affiliate licensing is nothing to be scared of . A lot remains to be decided , and whether the two situations are strictly analogous is up for debate . Yet the fact is that affiliate licensing is a reality that most will now already be dealing with .
More worrisome , perhaps , are the moves that Spain , Italy and Sweden have taken in terms of gambling advertising bans and moves against some forms of player bonuses . However , while moves against gambling marketing sound ominous , the evidence suggests that affiliates can actually prosper under a limited remit , such as the one that exists in Italy for odds / product comparison sites . Moreover , with the Swedish regulator recently suggesting the new legislative intervention on deposits and player bonuses had been unworkable , the hope is that the more draconian measures introduced due to the global pandemic might not be in place for much longer .
In terms of the other effects of the pandemic , there is some evidence these are subsiding . During the early phase , casino did well and more than covered the shortfall in sports , even in the US . However , the initial rush from the early months of the lockdown has subsided , such that various firms warn that casino traffic had gone back to normal by the end of the second quarter . All eyes will be on the return of sport and what that does for the thirdquarter numbers .
Second-quarter results continued to highlight the growing split between affiliates when it comes to PPC . While the biggest company in the sector , Catena Media , is notably seeing less business in PPC , particularly in percentage of overall revenue terms , others in the sector – notably GiG – seem keener on taking the PPC route , despite its inherently lower margins compared with regular SEO affiliate marketing . Interestingly , as is discussed later , Better Collective ’ s potential acquisition is likely involved in PPC given its circa 20 % EBITDA margins .
This move towards PPC might be related to the issues that came up over the period due to Google ’ s most recent update . As one source suggested , while those involved in SEO are clearly at risk of their sites being targeted by Google ’ s updates , those with a PPC angle are more clearly a client of Google and therefore their efforts might be less susceptible to disruption .
iGB Market Monitor October 2020