Fixing The Affiliate Channel

Fixing The Affiliate Channel

Lead by a small number of winners calling the shots, the affiliate ecosystem doesn’t work for the majority of affiliates, according to Nick Garner, who explains what he thinks is broken and how it can be fixed.

Published 12th August 2015

 Want to talk about something quite personal to me: the affiliate ecosystem and how broken it is. If you don’t know my story, I was search manager at Betfair from 2006 to 2010 and then head of search for Unibet between 2010 and 2012, then I set up my own SEO agency 90 Digital and now I’ve launched a bitcoin casino: Oshi.io. During all these years, I’ve been an affiliate and now I’ve become a ‘white label’ operator as well. Something, in my view, is very wrong in the affiliate channel and I’m trying to do something about it. In this article I’ll explain what I think is broken and what I want to do to help fix it. In the years I worked in-house, being the SEO guy, I constantly ended up working alongside the affiliate management teams helping out whenever I could. The reality was that time after time, I tried to help the affiliate marketing teams think in a different way, using better processes and data to find winning affiliates but somehow, it all ended rolling back to the usual haggling over commission with a handful of elite affiliates. Of course, broadly speaking the affiliate ecosystem does “kind of ” work, but there are so many weaknesses. To address this, let’s start off by looking at the affiliate ecosystem.

The affiliate ecosystem

  1. The numbers

If you’re a fairly large operator, you will probably have between 10,000 and 15,000 affiliates on your books. There will probably be four or five affiliate managers looking after these people. Generally, out of 15,000 affiliates, around 200 will produce OK monthly revenue to the operator. 50 will make a living, 20 will do pretty well and five will be living the dream. So in reality, there is a 0.03% chance of being one of those guys driving a Ferrari, living in the Caribbean and set up for life. By the way, that’s not a 3% chance, that is 3% of 1% chance. It’s tiny.

  • Let’s throw buckets of mud

Operators generally work to the “throw mud against the wall and see what sticks” principle. In this case, it’s equivalent to throwing hundred buckets of mud and one little patch sticking. To the operator, they will have a queue of 15,000 people. If one falls over, there’s another one in the line. Brutal as it is, that’s how it works. Operators don’t care who is in the line, as long as they are delivering good customers. If you are at the front of the line and a performer, every operator wants to be your best friend.

  • Why all the ‘free lunches’?

If you’ve ever wondered why corporate hospitality is such a big deal in affiliate marketing, it’s economics. If you look at the Tier 1 and 2 operators, their offerings are much the same and customer service is more or less comparable and retention strategies are similar, therefore revenues will be similar per active player. The only difference will be marketing and brand differentiation, leading to greater volumes of converting customers. That’s why in many ways iGaming is really a marketing business. When an affiliate knows there isn’t much between one operator or another, they have to take a punt on who will give them the best conversions and lifetime revenue. Therefore the question for affiliates is “which operator gets me the most conversions?’ As an affiliate, how do I know who is going to get me the most conversions? All I can do is work off some very intangible signals such as who is doing TV, the brands other successful affiliates working with, whether they are likely to cut me a good deal, or if I like the affiliate manager.

  • Ignorance

Because affiliates can only rely on their own data to say whether one operator is better than another and because that data is often very limited, how do you know who to choose? Therefore the affiliate ecosystem absorbs managers who are likeable, can have “lunch” and cut deals on commissions. Of course, if you’re an affiliate manager you will say “I do more than this”, and I’m sure you do… Affiliate managers are online marketers. It’s just that online marketing is a big subject and I constantly see them with blind spots that affect their performance. I’ll give you a little example. Affiliate managers constantly complain about not being able to find really high performing affiliates. So here’s a trick to help you if you’re on the operator side. I’m going to get slightly technical here, so I will keep this short. Use SEMrush and Majestic (set up the accounts needed)

  1. pick an operator you benchmark against, maybe it’s Bet365
  2. find a banner on an affiliate site to your target operator
  3. use a redirection checker to see where the banner ad is pointing to
  4. go to majestic.com (a link checking tool), download links to the subfolder or sub domain you found in the redirection tool
  5. pivot table the data and extract your list of domains which have affiliate banners going to your target site
  6. go to 90Digital.com and download data grabber
  7. on the DataGrabber SEMrush tool, paste in the referring affiliate domains
  8. generate your list of how visible the domains are on search
  9. go and analyse, picking out affiliates who have visibility and should have you on their site

There. I just explained how you can get every single affiliate performing in SEO, for any operator. At various meet-ups where I’ve talked about this, affiliate managers often go “‘wow” when presented with the the depth of intelligence on show here. It’s not intelligent, it’s just basic data aggregation. But that’s not even the biggest problem. Operators, in my view, have failed to address the root problems behind poor affiliate performance: • identifying talent • knowing how to support them • marketing assets that really work

  • Genius

Here’s an interesting fact: Most of us aren’t polymathic. i.e., were not expert at everything we do. By the laws of probability, one out of 3,000 of us having a go at affiliates should be polymaths. But what about the other 2,999 people? Of them, it’s fairly likely they’ll have most of what it takes, but might need a nudge in the right direction where they have a weakness.

Where affiliates often fall over

  • Identifying Talent

Identifying talent cuts both ways: for affiliates to understand what they are really good at and for operators to identify these people. If you talk to any enlightened CEO or founder of a successful business, they’ll tell you that their business is about talented people doing what they are great at in their organisation.

  • Self-awareness

Affiliates will typically just have a go and see what happens. Some projects work, some don’t. Along the way they learn “stuff ” and through the feedback cycle, they iterate, learn, improve… To a point. It’s very hard to hold up a mirror and appraise yourself in a 100% objective way. That’s because we need confidence, and confidence is irrational, because when you have confidence, people believe in you more, you believe in yourself more, you give it a go and things happen. Without confidence you would never have the faith to try things or believe. To succeed as an affiliate, you have to believe and have faith, because the odds of you winning are tiny. So by definition, selfappraisal is really tough. As an affiliate, it’s not like a job appraisal, it’s more like “what am I really good at and where will I focus my efforts?” Having been around the block, I think no affiliate can review themselves accurately, and need help working out their strengths. From that, one can help them sort out their planning strategy, tap resources for the weak spots and properly pull everything together. Effectively this is the core of being an outstanding affiliate account manager.

  • Operators identifying talent

Earlier I mentioned the little trick about finding affiliates. Once you found them, how do you know an affiliate is good? A good affiliate will leave a footprint online and by understanding the footprint, you have a good chance of knowing who to pay attention to. This footprint includes elements such as: • how well they put their websites together (and bear in mind, a pretty website isn’t necessarily a converting website) • their search visibility • the ranking history behind their websites • the kind of link profiles they have

  • Operator support

For affiliates, it’s not just “can you get me better commission”. Support goes slightly deeper than that. For instance, operators have a vast amount of very useful conversion data. Whilst maintaining confidentiality, it’s very easy for them to have a conversion optimisation specialist, identifying which sites are working and why. Once the “why” has been worked out, the “what” to do is fairly straightforward. Affiliates, when did your affiliate manager last talk to you about conversion optimisation and the things which are working for their brand marketing?

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Figure 1: Connextra-generated ad for Paddy Power
  • Assets

Leading on from understanding what converts, have you noticed how affiliates don’t really use the assets given to them by the operators? It’s either text links or it’s ugly banners that just disrupt. Of course, there are some very interesting developments around banner inventory, making them more relevant and contextual. Figure 1, for example, shows a Connextra-generated ad for Paddy Power. There are also companies such as Grand Parade, who are doing some very interesting stuff around ad serving. With assets, the root of the whole issue is understanding how to get conversions and delivering what’s needed to achieve them. So you can get very fancy like Paddy Power have, but it’s still a banner ad. And by the nature of banner ads, they don’t get clicked on.

  • Getting contextual

The above principles also apply to contextual advertising. For instance on my affiliate site clubcall.com we have a simple mouse over for certain keywords. So, in this case there is a defender from Bolton football team who is potentially being recruited by QPR. If I like QPR or Bolton, that’s interesting… So who’s playing next? What are the odds? Maybe I’ll bet. The point is, conversion optimisation is easy when you know what works, and operators should be doing more to help with this.

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Figure 2: Example of contextualised advertising with mouse over
  • Misunderstanding

In my view, affiliate management teams have a fundamental misunderstanding of the core levers that affect success. By focusing on the right levers in the ecosystem, amazing things happen.

How can you as an affiliate improve your game?

Having highlighted a number of key areas where affiliates fall down, the question to ask now is what kind of levers can you pull to improve your game? Firstly, it’s understanding how to get converting traffic and then converting it efficiently.

  • Paid media

Because of the economics behind paid media, it’s very hard for an affiliate to make a large enough profit margin to justify the risk behind their spend. In other words, you need a buffer so if something goes wrong, you are not running at a revenue loss. Because you’re competing against operators, who can spend more per customer than you do on acquisition and they have the added benefit of brand, it makes paid media very challenging. But saying that, there are opportunities for affiliates.

  • SEO

Disclosure: I’m an SEO person and I just say these things on the basis of what I see: huge attendances at SEO-focussed sessions at the affiliate conferences, paid marketing sessions not so much so... The economics of SEO are very attractive, if you can get ranked. So understanding what works to get you ranked is a huge issue for affiliates to keep abreast of, but how many of them have the time to become an expert in this subject? It literally takes 100% submission to stay ahead of the changes that occur on a daily basis in SEO. How many affiliates actually understand black hat SEO? At every affiliate conference there is somebody going on about it, but I know…they never really disclose what actually makes them a ton of money. The sad truth is they don’t really want you to know, as they want you to pay them to find out.

  • Links

Link acquisition is another mysterious area, where affiliates have no real idea about which links are going to get them ranked. We all know the term “snake oil salesman” , well the link sale scene is full of these people. And what so sad is that Google is very good at identifying “toxic” or “junk” links, and mug affiliates earn cash and go nowhere because they don’t know what to look for.

  • Conversion

Conversion for affiliates is not the same as a typical operator. The best converting affiliates are the ones which get users to pass through their website and then convert somewhere else. It’s a small, but significant, difference that people forget about. That’s why really ugly pages that you just want to click through are such huge moneymakers. The problem is that Google hates these kind of pages, because they don’t add value to their search results. But, believe it or not, these are great converting pages which Google loves. Imagine if you knew what they were and how they worked?

  • Brand and PR

Again, this isn’t brand like Coca-Cola or Paddy Power, because as an affiliate you don’t have that kind of brand. But if you think about what brand power actually boils down to - positive associations between you and the customer - brand can be whatever you are that the customer loves about you. The same principle applies to PR. It’s not about stupid PR stunts. Clever PR is about building trust in you and amplifying what people love about your brand.

  • Legals

Yes, iGaming is regulated and fortunately for an affiliate, you’re largely separated from the regulatory hassle that operators have to live with. However, if you push the wire on marketing, it’s important to know how far to go before things get really serious. When did someone last talk to you about what line not to go over?

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