Affiliate Profile: Michael Kruse, Kruzey

Affiliate Profile: Michael Kruse, Kruzey

Australian sports betting is, globally, one of the fiercest regulated markets to crack. We caught up with Michael Kruse from Melbourne-based affiliate business Kruzey to find out more about it.

Published 15th November 2016

How and when did you first come to enter the gambling affiliate space?
Michael Kruse (MK): Back in 2013, we set out to create a scalable web-based business. After analysing all of the various types of affiliate revenue we settled on arguably the most challenging one, believing that our long-term horizon and skill set would allow us to eventually secure quality revenue streams over the fly-by-nighters.

Can you tell us more about how the overall business is set up and structured?
MK: Currently live is our Australian site www.kruzey.com.au. Australian sports betting is, globally, one of the fiercest markets to crack, so we figured if we can do that first it will make our global rollout easier. We are currently building out individual sites for all of the major English-speaking nations. We have a small team of six; two gambling freaks and four search specialists each focused on a silo: on-page, content, link profile and competition. We are based in Melbourne, Victoria.

How important a presence are affiliates in the Australian online gambling market at this time, and what percentage of operator acquisition and/or marketing budgets do they command?
MK: There are a handful of affiliates that are important in the landscape and which offer genuinely good content, but the vast majority are backyard operations with a limited shelf life of around two years, which we believe lines up with the renewal of their domain registration.

Do you use third-party agencies for any of your digital marketing/ acquisition activity, and if so, which budgets/types?
MK: No, it is all done in-house. We do however lean on a family-business that specialises in marketing strategy to ensure we are headed in the right direction. South Australia is threatening a transition to a point-of consumption tax regime.

What has been the response to this among stakeholders, and how do you see this impacting the product and offer enjoyed by online bettors?
MK: In truth, we don’t see it actually impacting the offer enjoyed by online bettors at all. We definitely think this is an unfair burden placed on the betting agencies, who already pay their share via significant and varied taxes and fees. But  ultimately, if one betting agency was to try and pass on this cost to the punter, their competitor would absorb it in an attempt to steal market share. I know I would.

There were a few guys who were lucky enough to use Norfolk Island as a means of getting a ‘no frills’ gambling licence, but that loophole has now been closed

What is the policy of the leading search engines towards online gambling in Australia, and how does this affect the types of marketing and acquisition activity you are able to undertake there?
MK: In order to use any of the majors (Facebook and Google) you are required to have a gambling licence, but this has forced us to become much better and more creative with the avenues that are available to us. There were a few guys who were lucky enough to use Norfolk Island as a means ofmgetting a ‘no frills’ gambling licence, but that loophole has now been closed. However, acquiring a gambling licence is definitely a future tool for us to unlock new customers and we will address it in due course.

Which are the leading online operators in Australia across sports betting, and which newer entrants are making their presence felt? What is is about their particular approaches that have resonated?
MK: It’s crowded and aggressive. All the major global operators have a presence here, with CrownBet being the big local. Of all the metrics we monitor, the one thing that has a direct correlation to variances in sign up rates is the 1+ reach of their respective TV campaigns by state, regardless of the actual offer. Although there is increasing audience fragmentation in the Australian TV market, it is still unmatched for building front-of-mind awareness and brand trust.

In-play is obviously not an option with the federal ban in place, but what are the most popular forms of betting, markets and bet types among Aussie online bettors?
MK: Horse racing is king for Australians. It alone accounts for more than 50% of online betting. This number does not factor in bets placed in physical betting shops, which represents a large untapped audience for the betting agency that masters the art of educating the older punters and helping them transition into the digital world.

Video content is a significant component of your site. Why did you decide to diversify in this direction?
MK: The answer is twofold. Firstly video is an exceptional medium to communicate large amounts of information, so we assumed it would be very valuable for our visitors. At the time, it was also seen as a great way to get additional traffic through the search benefits it provided. Although these benefits have since been eroded, we will still be using it where appropriate to help our customers figure out which betting agency is best for them.

The video content on the site is unique to you. How is this produced, are the barriers to entry as high as they appear from the outside, and what advice would you give to other affiliates considering this direction?
MK: We have a great video partner, however it is a very expensive exercise. We will continue using this as an alternative method of informing our users. That said, if we have our time (and budget) again, we would probably spend it on creating good shareable video content to help with a good organic link profile. For anyone new starting out in the affiliate space this can be a great way to get some traction, and you can keep costs down using animators from crowdsourcing websites. Although the quality can sometimes leave much to be desired using these services, a great piece of content can always overcome shortfalls in production values.

Although there is increasing audience fragmentation in the Australian TV market, it is still unmatched for building front-of-mind awareness and brand trust

What share of your traffic is now coming from mobile vs. the desktop, and what challenge does this present?
MK: Our business was quite late to the mobile show. In the early days when ‘everyone’ was moving to mobile, most of our conversions were coming from desktop, and we assumed that although bettors may research using mobile, they converted from desktop as they felt safer inputting credit card details etc. Today, we find mobile has caught up and overtaken desktop/tablet.

The Australian online betting space is hugely competitive, without the capability to grow through in-play or offset risk by offering casino. Is this in turn making it harder for affiliates to drive high volumes of traffic, preserve their margins and grow?
MK: For us, we thrive on the competitive nature of our industry. Although it is not impossible for new players to establish themselves, it is very hard without budget, resources and a profit horizon measured in years. We will continue to concentrate on our own metrics and drive as much value for our visitors as possible. We have got a site that is reliable and effective, we will take these learnings to global markets over the next 12 months to fuel our next phase of growth over the next three to five years.

What do you see as the biggest immediate challenges ahead for your business and the wider affiliate sector in Australia?
MK: It’s traffic, always has been and always will be. In the old days some ‘grey hat’ SEO techniques could get you what you needed. Today, you need to be as advanced in genuine customer acquisition strategies as the betting agencies themselves. Staying ahead of this curve and ensuring users have everything they need is a constant battle.

Finally, which three things do you wish you had known before embarking on a career as an affiliate that would have allowed you to have reached your goals more quickly?
MK: One, you can’t do everything; get the best people your budget can afford. Two, if you can’t afford to do a new site feature well, don’t do it. Stick to the basics and avoid chasing every new gimmick. Three, listen to your data, do what it tells you and love your data. That, and just use WordPress!

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