South Africa: Understanding the opportunities
Published 26th November 2019
While fully licensed online casinos in South Africa still look a way off, the regulator has shown willingness to adapt with the approval of some live RNG-based games, writes Quinn Olive. Now, as local operators start to seek alternative digital acquisition channels, affiliates stand to start profiting
South Africa has established itself as an attractive destination for international brands in the sports betting space. The country is one of the more advanced in Africa, with higher levels of access to internet, smartphone penetration and established regulations.
CURRENT REGULATORY STATUS
The regulatory landscape is slow-moving in South Africa, but with well-established legislation in place, it is still an attractive destination for operators looking to expand their ventures beyond Europe. The legislation is comparable to larger, more developed markets such as the United Kingdom with one marked exception: online casino and RNGs. This is a fundamental difference between the South African market and many international and African regulated markets.
Generally, you find gambling regulation couples sports betting, casino, RNGs and skill under one set of regulations, but South Africa currently only has regulation around sports betting. The market has shown willingness to adapt to demand and innovation with the approval of providers such as Evolution and BetGame.tv, both of which produce live RNG-based games with televised draws that can be bet on. This is an encouraging step by regulators. While we’re still a way off from having fully licensed online casinos in South Africa, this is a step in the right direction.
MARKETING AVENUES IN SOUTH AFRICA
While the increase in access to cheaper smartphones and subsequently the internet has provided marketers with a route to the lower-end markets in South Africa, an excessively high data cost has been crippling.
As well as expensive data costs, there is an issue of money in and money out. Many African countries have adopted the mobile money system in many forms – M-Pesa being one of the more popular. South Africa has tried to implement several forms of mobile money across different industries, from telecoms to retail outlets, without any truly significant adoption taking place. A recent increase in voucher-based systems has shown promise in helping to get the unbanked into a form of monetary system outside of cash. However, it has been met with some resistance from the regulator, whose primary concern will always be ensuring that the people who cannot afford to gamble are not gambling the little they do have. This will always be the crux of any system that enables the unbanked to participate in gambling activity.
These two issues have been difficult to overcome for operators in South Africa. That being said, there is still a growing population of people who can be targeted via traditional digital marketing avenues.
As the larger retail outfits in South Africa have started to move from a purely retail-based business into a more omnichannel business, the costs of media have gone up. CPAs are increasing slowly across all acquisition channels as we start to see an influx of operators running digital campaigns.
This growth in competition across PPC, display and social will only see an increased need for specialised digital marketing skills, alternative acquisition methods and a more dynamic digital marketing space. I feel that operators have only just started to fully explore the opportunities that the digital marketing landscape really has to offer. Platforms like Reddit, Instagram, WhatsApp and Snapchat haven’t really seen too much activity yet. This bodes well for international operators and affiliates who have experience acquiring across these channels.
As the digital space opens up, operators will continue to pursue alternative avenues of acquisition to the more traditional forms of digital marketing. The affiliate model hasn’t been implemented by many operators, but this is changing with the introduction of some international operators such as Betway. With its launch of a South African product, the company launched an affiliate programme that is actively being promoted, something that is not often seen. This will shine a light on the opportunities that the affiliate marketing model brings to operators.
As we don’t really have an overly large number of actively promoted affiliate programmes, the aggregator model doesn’t really work currently, but that doesn’t mean there isn’t a huge opportunity here. The two most common acquisition methods for the aggregator model are through PPC and SEO. The former might not be viable quite yet as we don’t see too many CPA offers being pushed out by affiliate programmes to justify competing with brands for key sports betting terms, but the SEO model definitely has some legs to it. There is an opportunity to start ranking now in the hope that the local operators start implementing and actively promoting affiliate programmes.
A popular affiliate model that is often followed is a freemium tipster service. Currently, there are user-generated tipster content groups that are being distributed through various platforms including Facebook groups, WhatsApp groups and Telegram groups without a serious effort to monetise this traffic. I think once the competition opens up more, we’ll see these groups actively looking to monetise their traffic with affiliate links, registration offers from multiple operators and potentially the freemium model too.
South Africa is primed for affiliates to start profiting as soon as the local operators begin to look for alternative digital acquisition channels. International operators moving into the market with experience in the affiliate marketing space will also help grow the affiliate marketing angle within South Africa.
REST OF AFRICA
Africa seems to be one of the hottest topics within the igaming space at the minute. Operators are constantly looking at opportunities throughout the continent for a casino, sportsbook or lottery. I think South Africa being one of the more established regulated markets presents itself as a strong market for any international operator looking to get a foothold into the Africa market.
As for the affiliate space, we’re already seeing operators incorporate affiliate programmes and actively market them. The fastest-growing markets in Kenya, Nigeria, Tanzania, Uganda and Zambia are starting to see some level of affiliate traction with affiliates beginning to focus their attention on acquiring traffic in these geos with the purpose of monetising through affiliate programmes. It’s a prime opportunity for affiliates looking to expand beyond the current hyper-competitive tier-one geos.
As international operators begin to expand into the African market, I hope to start seeing more localisation of products. Bringing products into the complex African market requires some level of localisation and I look forward to seeing how the international operators plan to embrace that.
Through increased competition throughout Africa, I hope to see regulators embrace the evolution of operators’ products and help build legislation that both safeguards citizens and encourages investment and product innovation.
As for the affiliate space, well, I think the introduction of international brands will bring further exposure to the need to embrace affiliate marketing. I believe there is an opportunity in starting to pursue a few key markets within Africa with a view to monetising at some point through affiliate programmes. If there is no demand for an affiliate programme, don’t expect them to come. By the same token, understanding the market, its complexities and the pros and cons will only stand affiliates and operators in good stead going forward.