The iGaming affiliate market has seen much success and growth over the years, but when market leading operators such as Sky Betting and Gaming started to axe their affiliate programmes in 2017, some industry commentators may have thought the ‘glory’ days of the iGaming affiliate might be numbered.
However, with affiliates being responsible for up to 50% of all online betting traffic, it’s not likely to disappear anytime soon.
Some argue that it needs to follow in the footsteps of markets such as New Jersey where the affiliates are licensed and held to higher standard, leaving less room for rogue organisations that operate irresponsibly and put their operator partners at risk.
The main challenge we face as an industry is how to implement stringent measures to improve affiliate standards without alienating the ‘one-man-bands’ and indirectly forcing these organisations and their audiences into unregulated markets. A very challenging task indeed.
We spoke with Jesper Søgaard, Co-founder & CEO, Better Collective to hear his thoughts on how he thinks we can ensure the future success of such an integral piece to the iGaming puzzle.
As operators and affiliates attempt to work closely together to ensure a more sustainable market, how will the new proposed license framework help to facilitate this?
“A license system will help bring more transparency to the industry and ultimately strengthen player protection. It will help bring more trust to affiliates and the industry in general for example; more clarity on which rules and regulations affiliates should apply to in the market. Ultimately, this will help raise the standards across the affiliate sector.
Legislators will, to a larger degree, have the opportunity to get an overview of the industry and sanction organisations on the wrong side of the law, e.g. ones that promote unlicensed partners or have targeted marketing towards self-excluded players. This will help build a safer market for the players.”
The Covid-19 pandemic has of course pushed a lot more traffic online. With an increased focus on digital offerings throughout the industry, will this mean affiliates role in the industry will be even more important going forward?
“There is a strong underlying mega trend that entails increased online activity in society – this is also the case for the iGaming industry. What we generally see is that the Covid-19 pandemic in many ways has accelerated online behaviour. When we cannot use the physical space as freely as we were used to, we naturally turn to online alternatives.
With more online activity and a broad variety of operators for the players to choose from, it becomes more complex for the players to find the operators that suit their individual needs and which ones to be trusted. From that perspective, affiliates hold, and will continue to hold, an important and value-creating role for the players to better navigate the online betting world.
Looking at the travel and tourism industry as a parallel comparison, we can see how important affiliate companies such as booking.com and TripAdvisor have become in the user journey today.”
As barriers to entry in the affiliate market increase, do you think this will lead to increased black or grey market activity going forward?
“As said, from my perspective it is important that the barriers to entry are light, so we do not end in a situation where unregulated activity increases. It is paramount that new affiliates rather easily can enter and compete in the market for the benefit of the players. These new actors often bring innovation and new ideas to the arena, which ultimately adds value to the entire ecosystem.
From that perspective, I do not foresee a license structure will increase black market activity, but as said, it is key that the right balance between market entry, regulation and player protection is found.”
What should a ‘light touch’ affiliate license regime look like from your perspective?
“There should be low barriers to entry. If obtaining a license requires spending a lot of resources for affiliates and the process is way too complex, the grey market will grow as more actors will seek other alternatives.
The structure could replicate some of the things from New Jersey and Romania where you simply need to register the affiliate company and afterwards ensure you stay compliant with local marketing laws. Hence, the structure should be designed to supplement the extensive range of regulations that are already in place.”
At iGB Live Online you mentioned that Better Collective is most interested in acquiring companies that are leaders in their niche market. Is this a trend you expect to see going forward? Should operators follow suit?
“The affiliate space has been in a consolidation phase over some years. Even though it has slowed due to various courses during recent years, I expect it will continue to accelerate.
In the operator area we are seeing steps being taken towards major M&As as well.
One of the reasons is the opportunities to achieve economies of scale, which can strengthen competitiveness and bargaining power.
When we at Better Collective look at acquiring a company, it is paramount that the company adds great value to our business – this value-addition can be based on various parameters relevant for our organisation. With the position we have, we however, need the company to have a certain scale for it to be relevant for us.”
Editor’s Note: From reading Jesper’s responses it’s clear that a licensed framework is critical. Without one we wont be able to achieve the level of trust and transparency needed in this sector to take it to the next level ,and most importantly, create a safe market for the players.
However, in order to maintain the balance and not encourage grey or black-market activity, it must be regulated with a ‘light touch’ approach. The idea of ‘light touch’ may differ depending on who’s perspective you’re looking from and it will be interesting to monitor how this approached is embraced by the industry.
This may be one of the key steps we need to take to create a comprehensive self-regulated market, instead of strict government policies that we see today impacting market growth potential.