As the iGaming market continues to flourish, so too does the role of affiliates along with it. Online affiliates were once more commonly thought of as ‘one-man bands’ operating out of their bedrooms. But now they are emerging as major corporate entities, a key part of the online player experience and spearheading the future growth of our sector.
As the sector continues to transition to a more corporate structure, what challenges still remain for the smaller entities and how can the sector improve its working relationship with operators to secure the sustainable growth of our industry?
We caught up with Joonas Karhu, Chief Business Officer at Bojoko to hear his thoughts on the topic.
What are some of the key reasons for the breakdown in operator affiliate relationships?
“Instead of looking at why relationships between operators and affiliates break down, I believe it is more effective to look at what makes for a great relationship in the first instance as this will prevent any issues further down the line.
“It must be remembered that the relationship is mutually beneficial. Affiliates provide operators with new players, and they are compensated for doing this. This means that both parties must respect one another and be accommodating to each other’s requirements.
“For operators, this is often around compliance and ensuring that all content, bonus offers, and T&Cs are correct and that any marketing activity carried out is in line with the expectations and guidelines of regulators and advertising watchdogs.
“For affiliates, this is often that they are compensated fairly for the players they send to their casino partners and that operators are honest and transparent around the terms they are working to.”
Bojoko recently published a report stating that some affiliate revenue share deals can be as low as 8%. Why is this an unacceptable rate and what can affiliates do to ensure a better deal going forward?
“When working in a free market, the rates can be whatever both parties agree on. The issue, however, is around transparency and in the case of the online gambling industry, whether the rate agreed on is the rate received.
“It can be tough for affiliates – whether new or experienced – to make sense of the fees that are applied to earnings and how this impacts the rate they are being paid. As our report identified, in one instance we had an agreed 45% revenue share but actually received 8%.
“We read a lot about misleading advertising in the consumer world, but this is clear misleading advertising in the B2B world. This is problematic for affiliates for several reasons but most significantly it makes running a business incredibly hard.
“When the rates are so much lower than those agreed, the reduced income received makes it near impossible to reinvest in the affiliate site and for bigger companies with employees and offices, to make sure running costs can be met each month.
“Of course, if operators were upfront about the actual rate received at the start of the relationship, the affiliate can decide whether they are a brand they want to work with or not, or look to renegotiate the deal perhaps so that it includes a CPA element.
“With the current situation, it often leads to affiliates dropping brands when they realise the rate is much lower than agreed which ultimately is bad for the operator.”
Many affiliate deals have been agreed in the industry without a comprehensive, legally binding contract to support it, leaving affiliates at risk. What steps have you introduced to combat these situations and help affiliates to become more mature and professional?
“The biggest contribution we have made to date is to launch the Professional Gambling Affiliate Association which has brought together affiliates from across Europe in order to gain momentum behind ensuring contractual security for all publishers in the sector.
“To do this, we have created a legal contract – funded by Bojoko.com – that all affiliates can use to ensure a mutually fair agreement between both parties. Until now, this has simply not been the case with most affiliates having no legal contract at all.
“To contract works for both parties; it requires that affiliates act professionally and follow regulations and responsible marketing practices but also requires operators to be transparent with fees and stick to the agreed revenue share.”
Some industry commentators believe that licensed affiliate frameworks in jurisdictions such as New Jersey will make the affiliate more responsible and improve the standard of customer support in the market. Do you think this is enough, or is there more the affiliate can do to help mitigate the risks of problem gambling?
“Licensing certainly helps affiliates understand the rules they must play by, but, to be honest, I think most professional affiliate businesses understand this anyway. Take the UK, for example; affiliates are not licensed but at Bojoko we have prioritised responsible gambling from day one.
“This has seen us go beyond standard disclaimers and links to gambling addiction charities and actually do things that make a difference. This includes partnering with gambling block software provider, Gamban, to give our members free access to the service.
“We also work with a gambling law expert who carries out an annual audit of Bojoko and the marketing activity we have undertaken to ensure we are being responsible and are protecting players as much as possible.
“Gambling is a form of entertainment, and we want our site visitors, members and players to be happy and healthy when playing at the brands listed on Bojoko. We don’t need to be licensed to be able to do this, but for affiliates that are less responsible it forces them to up their game.”
The Professional Gambling Affiliate Association (PGAA) was launched last October. What role can organisations like this play in maintaining healthy working relationships between operators, affiliates, and other key industry stakeholders?
“The PGAA acts as a foundation for a healthy working relationship between operators and affiliates. The issue of contractual security or a lack of had been harming the industry for a long time.
“For affiliates to take their businesses to the next level, scale and drive even more new players and first-time depositors to their operator partners requires substantial investment, and this in turn requires contractual security.
“Prior to the PGAA and the contract we have created, affiliates where at the whim of operator terms and conditions that could change at any time. In some cases, operators would even close affiliate accounts yet keep the players the affiliate had sent to them – which is just unacceptable.
“Changing these predatory terms for a mutually beneficial contract makes the industry more professional and in line with B2B relationships in other industries. This is something I believe has been long overdue.”
Editor’s Note: After speaking with Joonas, it’s clear that the key to the future success of the affiliate market is in the fine print. Ensuring contracts are legally binding and fair will be a major step forward for many smaller affiliates, giving them the confidence to operate without risk of missing out on revenue. Especially with the introduction of key industry entities such as the PGAA, the market will be held to a higher standard, pathing the way for more sustainable business models. Companies like Bojoko represent a new age in affiliate marketing and are committed to levelling up the industry, ensuring a profitable and responsible future for everyone.