Binary Options: Under the Hood

There are 10 types of affiliate in this world; those who promote binary options and those who don’t. You have probably heard about this relatively new trend in iGaming, so the following article is here to fully explain the hype surrounding this entire thing, focusing on the internal Key Performance Indicators (KPIs) that are commonly used by these companies. The goal here, of course, is to assist you with delivering higher ROI for your traffic.

How does it work?

First, let’s unfold the simplicity of making money from gameplay. In fact, there is no ‘gameplay’ here but ‘stake’, and there are also no players, but customers. Yes, I know… these guys are crazy.

The gaming activity is in fact a ‘limited term wager’, placed over a trend of any financial product trading, ranging from stock indices, currency exchange ratios or commodities prices. An example: the time now is 10:20 and you place a bet on whether, by 11:00, the NASDAQ index would go up (CALL) or down (PUT), in comparison to its current trading levels. If your prediction was proven to be correct, you will win back the amount you have invested (stake), plus a certain portion of it on top, as your winnings (usually, up to 70 to 90 percent). Otherwise, you lose 90 percent of your invested funds.

This is the main idea and, of course, there many variations over this concept, including adding spreads, and buy-back amongst others.

House advantage

So, what does it all equate to? To begin with, it’s important to understand that a binary options company is using the same method as casinos, so the operation always calculates a certain edge to maintain, which is the calculated margin between the CALL and PUT payouts. In most cases, this can range from seven to 20 percent, with ratios mostly above the ten percent mark. For a reference, European roulette has an edge of 2.73 percent; online slots of anything from four to eight percent and blackjack with only 0.5 percent. In this case, as with Calvin Ayre’s parties, bigger is indeed better, allowing operators to make more money out of every circulated dollar.

Acquisition

At the moment, due to the scarce (if any) regulation, PPC campaigns are still mostly allowed and there aren’t many restrictions worth mentioning. This means that markets like the US and other commonly tabooed countries maintain a far more flexible approach towards this vertical.

Even better, the ‘image’ is closer to ‘Wall Street’, opposed to the chewed up ‘Las Vegas’, enabling you access to a wide, untapped selection of potential non-gaming customers.

Conversion

Weak point of the industry, at large, and this vertical doesn’t buck that trend. In fact, considering that advertising faces fewer hurdles and, as such, the message can reach a wider audience, it is somewhat surprising that the average ratios are only in the neighbourhood of 15 to 20 percent.

How can you as an affiliate improve it? Quality traffic, of course, which may target a narrower segment of the population, but one that has a special interest in the activity.

Retention

The lifespan of a binary customer is significantly shorter than that within conventional verticals such as casino or poker, and are similar to Forex in that a few months is often the best case scenario.

That said, due to the increased edge, the generated volume of net revenue is quite significant, resulting with an average lifetime value (LTV) of circa $800 to $1,200. Conclusion How does it all affect your business? Semilegal keywords targeting, along with an exceptional high customer LTV means that you can:

●Cautiously rely on Rev Share deals, knowing that are less risks, in terms of how much money your cut of the deal would be worth, yet that in all likelihood, converted hits will not provide steady income for the long-term.

●Aim for casino-like CPAs, as the expected income is usually in the upper end of the chart, allowing enough room for your account manager to wiggle around.

Note: be careful before picking the right operators to work with, since with customer facing indictors within the boundaries of the abovementioned parameters, you should only send your traffic to companies with the tools and understanding to please your customers. It really is a 1/0 game 

SHAHAR ATTIAS, the Founder and CEO of Hybrid Interaction Ltd, is a globally recognised retention and loyalty expert, and a frequent speaker at iGaming Conferences (iCE, iGamingAsia, iGaming Super Show, etc). Since 2007, Hybrid Interaction has grown into the industry’s leading iGaming CRM Consultancy, with a portfolio including: bwin.party, Playtech, Win2Day, Casino Club, EZtrader/Global Option, Play65, Grand Duke, eToro, Gioco Digitale, Viaden and more. . shahar@hybridinteraction.com | +972- 52-8577539