Placing their bets

Placing their bets

Eight industry experts share their expectations of what the affi liate sector will face in 2018, including revolutions in search, relentless consolidation, regulatory easing and tightening, the death of links and the birth of opportunities in the US

Published 28th March 2018

Ory Weihs, CEO, XLMedia

We believe we will continue to see more countries going through a process of re-regulation of gambling. With regards to XLM, we welcome regulation and believe it represents a sizeable opportunity for our business as well as large-scale affiliates who adopt diversified user acquisition methods while adhering to strict internal compliance practices. In regulated environments, many user acquisition methods can be used (such as paid search, social networks and video) to gain a much larger addressable market – at the cost of a lower proportion of users going through the traditional ‘publishing channel’.

A key trend over the last few years, in terms of optimisation activities, has been the importance of technology to drive both efficiency and scalability benefits. We at XLM have been developing our proprietary systems for more than a decade and our R&D team consists of almost 100 developers. Technology has been a central component of our growth and financial success, and will continue to be so going forward.

Having seen a substantial amount of deal flow recently, we will most likely continue to see consolidators competing over bolt-on acquisitions. However, few companies have developed robust enough back-end systems to successfully integrate many of these deals. At XLM, we have been consistently adding bolt-on acquisitions while supporting this growth with investment in technology. Investors in the sector understand the importance of underlying growth rates and not just focusing on inflated growth numbers created by an accelerated buy-and-build strategy. Larger affiliates will have to start showing organic growth. We at XLM have always seen ourselves as an organically growing business first, but are always interested at an acquisition here and there.

Jesper Soegaard, founder and CEO, Better Collective

Last year was an interesting one for the affiliate industry, with some strong trends, such as consolidation and compliance, making the headlines. I have a feeling that some of the big trends from last year will continue to make waves in 2018.

The affiliate industry continues to be a maturing market, and that means M&A activity will continue in 2018. I believe this will be the overarching trend for the industry this year, and my other predictions will likely push this trend even further.

After the focus on compliance throughout 2017, I am sure that further implications from compliance will follow this year. I predict that larger affiliates, who have the resources available to ensure compliance, will be leveraging this ability to acquire smaller, and promising, affiliates who could benefit from a collaboration that lends them the extra compliance support.

A new year brings new legislation – and this means new regulated market opportunities for affiliates. We already know that Pennsylvania is opening up, meaning there will be more activity in the US market, and with the new legislation in Poland we are anticipating more operators seeking licences. Additionally, we are expecting to learn more about regulation in Sweden. I believe that the rise of new regulated markets will support the consolidation of the industry, as larger affiliates will quickly look to join the new markets through acquisitions.

Charles Gillespie, CEO, Gambling.com group

I expect the level of compliance requests to remain elevated and that operators will continue to fail to co-ordinate consistent approaches to compliance, pushing the burden down to the affiliates. As a result smaller affiliates will be more willing to sell and get out of the game to avoid the dire
consequences of non-compliance.

Affiliate M&A will continue, although deal volume will go down and average size will go up.

New Jersey will prevail and PASPA will be struck down by the US Supreme Court, unleashing a wave of interest in regulated, US sports betting. State legislatures will then struggle to understand the differences between online and landbased and will draft ill-conceived legislation. This will largely kill off the momentum created by the removal of PASPA. Although a few states will make meaningful progress toward sensible regulation, the issue will be still up in the air at the close of 2018 (although I believe the Americans will eventually come around and sensibly regulate after a few false starts).

The world of SEO sees business continue as usual. Google’s rankings are still high quality and the company has a long list of strategic issues to deal with that are more important than improving search quality. That said, Google will continue to shift its weighting away from links and towards objective on-site factors that demonstrate user engagement and are hard to fake.

Feda Mecan, owner, Playinglegal.com

We will keep talking about blockchain technology and I’m interested in seeing if concepts like Winflow willreally be able to get to the real-life level, especially as it’s non-profit.

Mobile usability will mature and we are finally at the stage where VR is getting into the mass market with easy and fairly cheap solutions. For affiliates, the need for markups, preparation for digital assistants and the creation of ‘owning some traffic’ will be big. Voice and assistant systems will further push ‘winner takes all’ because the second result will be non-existent, just like the graveyard that is page 2 of Google results. And I don’t think the consolidation drive in the affiliate space is over. We’re still seeing a bunch of mainly WordPress sites being sold with nearly no mature underlying technology, and not all competitors have collected the IPO cash on offer.

What I am excited about is the real movement in the US market. I am a big fan of complex markets with huge potentials. I am sure we won’t see a federal solution or opening, but a state-by-state movement, driven by some court decisions in the USA.

Mark McGuinness,director, eSportsbet.com

This will be the year of pivoting for super affiliates. In 2017 we witnessed the continued and meteoric growth of super-affiliate networks evolving into digital media agencies. There was significant investment and M&A, resulting in consolidation within the vertical.

Could it be the start of a boomand-bust cycle? Or is it a race to the bottom with inflated valuations, problematic price-to-earnings ratios and the ever-looming threat of GDPR? It looks as if the boom-and-bust cycle will come in 2018 for the affiliate marketing industry.

ICOs will taint the industry: it seems that every man and his dog – with the dog being the one with the idea for an initial coin offering – are jumping on this new age gold rush. It will definitely tarnish and taint the whole igaming ecosystem, because the activity is tantamount to a Ponzi scheme and the Wild West. Caveat emptor!

AI is going to be huge in the igaming supply chain. Affiliate digital behemoths will create robots or bots to crunch big data, which is the key to unlocking revenue opportunities in the affiliate marketing vertical. And, yes, smart data analysis and visualisation, combined with cognitive, heuristics, artificial intelligence and algorithmic  thinking, are coming to you very soon.

Luke Cotton, head of analytics, data and insight, Digital Fuel Marketing

Compliance will be the key factor in how the affiliate industry evolves over the coming year and although I don’t foresee doom and gloom for smaller affiliates, more operators will clamp down on and remove non-compliant ones. Operators will have to do more to help affiliates comply, ensuring they are informed in a timely manner about changes, actively monitored, and keeping all their user journeys up to date and compliant. This is also going to require a shift in affiliates’ attitudes so that they realise there are requirements to sustaining their business partnerships as an extension of each operator’s marketing, rather than doing things in the more traditional, relaxed way. There will be a shift towards complete transparency, rather than affiliates being able to hide certain elements of their traffic sources.

There will be huge pressures created by GDPR and this will cause operators to look increasingly towards other performance-based acquisition models where more of the burden is on the affiliate as an intermediary. We will see the rise of lead generation and operators will become more open to alternative commercial models rather than the traditional CPA/rev share.

There will also be an industry-wide change in bonusing as the Gambling Commission has dictated: wagering requirements are on the way out. This will cause a conflict between compliance and bonusing as during this transition affiliates will be incentivised to push less compliant operators, creating potential risk for their other partners. Bonus mechanic changes will further ripple through the affiliate market.

Martin Calvert, marketing director, Blueclaw

Mobile remains an enormous part of SEO – and it is only going to get more important in 2018 as a whole range of factors combine to shape how players search for games, odds, gaming info and insight. A great mobile-first SEO approach, tailored towards Google’s impending mobile-first index, will win rankings. And a great mobile user experience will turn visitors into paying players. We predict that some gaming sites may be surprised at how quickly their search engine rankings are challenged by companies who truly ‘get’ mobile.

A whole range of qualitative factors are assessed by search engines but it really comes down to asking yourself: “Does my site provide the ‘right answer’ to players who are carrying out searches?” Researching the terms that other top performers rank for, spotting similarities in terms of content length/diversity/site speed, as well as other factors such as tone of voice of social reach, will get you into the game. Organic coverage of and links to your content will (of course) help.

Structured data (using Schema or another) is a big part of giving search engines — and players — more information to go on in the search engine results page. Ensuring that your site can be effectively indexed and ranked, while also giving clear information directly in the search engine results page, can increase your clickthrough rate massively – with a lot of evidence suggesting that clicks correlate to rankings. It takes discipline to code up your site correctly and systematically, especially if you add a lot of content, but again it is this type of devotion that will differentiate your brand in a very crowded and competitive marketplace defined by big-budget operators.

Nick Garner, founder, Rize Digital

Obviously, GC-licensed operators will demand that their affiliates are compliant. At the moment, operators are interpreting GC guidelines in different ways. My guess is that some time around the middle of 2018 there will finally be a well-understood set of placement guidelines that every affiliate can confidently follow. In the meantime, it’s going to be hassle, hassle, hassle.

While the GC continues to push on with its social responsibility programme, more operators will slash their affiliate programmes and concentrate on only a few megabrands with whom they can be confident about controlling placements.

We foresee the rise and rise again of the mega networks. In this climate of GC clampdowns, small affiliates are going to be less trusted by operators, meaning they’re going to get not such attractive deals. In the meantime, big affiliate networks will build extensive compliance systems, which in turn means operators will trust these large networks and offer them more attractive deals. All of this bias towards scale makes selling out to big networks very appealing for the smaller affiliates.

Links will continue dying slowly. Because machine learning is such a huge part of Google these days, the algorithms will just carry on accumulating more and more ‘knowledge’ and in turn get better and better at being able, without relying on links, to rank content that users actually want. Site owners will lose faith in the old mindset of ‘buy links and rank’ and I see them investing more in satisfying content because it works better for ranking.

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