I have covered the likely impact points of the Point of Consumption tax in earnest in recent months, particularly because my career heart lies closest to the affiliate community.
Quite simply, the reality of it will bite the affiliate proportionally more than all other parties involved – the operator and the customer included. Operators can’t negotiate better rates in the TV advertising channel and PPC spend can only realistically go up. It means they’re likely to ride roughshod over their affiliate partnerships, as has been proven by Active Win Media’s seismic terms and conditions change – and the way they have communicated it to their beleaguered affiliates, many of whom have been in partnership with client Betfred for over 10 years.
Affiliates, hear ye:
Legitimate operators will offset the taxation burden right on to your net revenue share calculation, the less than salubrious will use the shift in law to change the terms of affiliate terms to royally sodomise partnerships, and the downright cruel will probably do both.
It should be noted that Active Win Media isn’t actually part of Betfred – they are a digital marketing agency that just so happens to be part-funded by Betfred owner Fred Done. They also do some stuff for the likes of Mobibet and are actively searching to acquire customers for additional brands.
According to Cherelle Jones, Active Win Media’s representative on the GPWA forums, affiliates appear to have asked for their commissions to be slashed so brutally. In a move that even Vladimir Putin would raise an eyebrow to, Jones publicly explains:
“The policy regarding inactive affiliates changed back in May due to affiliate feedback.
“Affiliates who haven’t deposited any new players in 4 months will be given 2 months to drive acquisition before we reduce revenue share to 10%. After 8 months if the affiliate hasn’t driven new acquisition, their account will be place (sic) on a list of inactive accounts. This can be reopened upon discussion with your ActiveWins account manager.”
Operators enacting so-called minimum quota requirements to their affiliate agreements is nothing new. Many sports betting operators competing with Betfred have them in place to prohibit customers from effectively offsetting losses using a revenue sharing affiliate account – but critically, the term was always there – as with bet365 – and most affiliates accept that and quite often, the term is waived before a change to the commission payment is made.
Retrospectively changing affiliate terms and conditions – accepted as a contract between two legal entities – is nothing new – but my guess is that their occurrence is only likely to increase in the coming months. My advice to affiliates, particularly those with vested dealings with UK operators is this:
Act now, or watch your earnings in the UK market slashed to negligible.
What can you do to avoid being part of a commission cull?
1) Choose your partners wisely
Foresight is tricky as an affiliate – affiliate programs changing hands is part and parcel of the iGaming landscape and has been for some time – whether it be down to parent company mergers, buyouts or passing-overs/rebrands of downright dodgy programs to marginally more reputable ownership. But, believe it or not, it is possible to predict such events and the ramifications that follow at some point in the aftermath. Even when a surprise unfolds, there are measures you can take to limit the damage.
Firstly, read up. Following activity on forums like GPWA or Affiliate Guard Dog is a good starting point, but the best opportunity comes with meeting other affiliates at conferences to discuss live or potential threats to so-called player theft.
Operationally, the safest option is to spread the net… deliver your traffic to as many performing affiliate programs as possible. Not easy to do for a couple of reasons – affiliate programs tend to reward more for volume and managing performance is tougher.
Third – come and speak to me. My contact details are on this site and I will give you clear, free and independent advice on who to – or not to – work with based on a risk/reward assessment.
On that note…
2) Pay attention to these home truths
a) The affiliate programs who freely offer up a $600 CPA for a depositing customer are the affiliate programs most likely to shaft you.
Yeah, you know… that too good to be true deal that you almost half expect when walking around a conference floor?
When offered a deal like this, the first thing you must do is ensure that the agreed trigger for the CPA release is something that you can see in the numbers and at a player-by-player. If you can’t, there is significant risk that the baseline for this trigger might be set, or be moved, to turn your $600 CPA into something more akin to a $60 CPA. And I will tell you that this has happened time and time again since such high CPAs were first commissioned – operators will struggle to make a profit – particularly if your volume isn’t huge – on paying that much for traffic. Something has to give and it will always fall on you, the affiliate.
b) Operators struggle to make no negative carryover deals pay if you don’t send good volume.
Believe it or not, it’s financially tough to expect a casino or sportsbook to make money on a trickling of players, when they have to wipe 30-40% of a month’s losses out of the equation to pay you when the losses are dropped back to the house the following month. No negative carryover terms when you’re not delivering the volume lead to unhappy relationships. It goes a long way to explaining why the likes of bet365 and Affiliate Edge are so well respected in the community (they carry over negatives).
It would explain Active Win Media’s actions, if not their delivery.
c) Plenty of standard affiliate terms and conditions include a “we can shaft you whenever we want” clause.
I know, I know – nobody bothers with the small print, but when it’s your livelihood, read the Ts and Cs before you sign up. If you don’t like them you have a choice. Either:
i) Don’t join the program and promote someone else.
ii) Tick the box, agree to the terms, bury your head in the sand and them grumble when things go array (a popular choice).
iii) Draft your own contract, on your terms if you have concerns. If the operator wants to work with you and has no plans to shaft you, they’ll sign the deal.
My gut feeling is most affiliates understand the potential implications when legislation is concerned and the obvious answer is to talk.
Whilst it is impossible to deny the delivery of the term change with Active Wins is inflammatory to say the least, it is essential for affiliates to approach their account managers with both respect and professionalism if they intend to resolve the situation amicably, if at all.
I know a few of the guys at Betfred personally and they are fine, reasonable people who may well be able to assist in explaining these changes in a more rational fashion. My advice to them – and indeed any other affiliate program dead set on revising affiliate terms and conditions – is as follows:
1) Do not make the process non-negotiable – this, in its very definition, terminates a partnership. Instead, outline the need for change, explain the long term benefits to doing so and genuinely welcome feedback. Engage in a consultancy period with affiliates on an individual basis, should they so wish, and within a community. Only then can a true partnership continue.
2) Do not let a junior account manager loose on affiliate forums when a contractual change is concerned. Aside from not giving the issue senior manager/director level credence, it has the potential to damage a burgeoning career and that is unforgivable.
Expect to witness further changes to terms and conditions for affiliate programs large and small in the coming months. Guardian angel forums like Affiliate Guard Dog and GPWA must seek to oversee the handling of this change, rather than automatically labelling them ‘predatory’ to the affiliate and drive positive cooperation between affiliate and affiliate program. Operators must communicate better than they ever have before and treat the relationships they have with affiliates as genuine partnerships or they will lose their traffic for good.