Published 19th July 2016
In my last article for iGB Affiliate, I discussed the pros and cons of setting up your own white label casino. This time I want to talk about some of my own experiences and the financials involved in setting up my/your own white label casino.
I’ve been working within casino marketing for many years and I’ve always thought it would be great to build a truly scalable business around something I know a lot about. Fortunately, Tom Finlayson my CTO and Aferdita Pacrami the CEO of my digital marketing agency felt the same, so we started our first white label brand, Oshi. History tells us that it’s always good to pick a niche and work your way from there. Having looked at the growth of bitcoin and the relative freedoms it gives consumers within iGaming, I figured that would be a good place to start and so I decided to work with SoftSwiss as the provider and Oshi.io was born. From there, we set up Tyche iGaming to act as a framework for building out more brands and reselling white label services.
I hate risk. So I do my best to minimise it. I make calculated decisions based on a manageable downside and a substantial upside. I’m lucky in the sense that I’ve been on the iGaming scene for years, and know my way around. When I started Oshi, I said to myself it would be five years of hard grind to get this thing really working. So far, we’re ahead of schedule and everything is moving along well, but it didn’t turn out as expected.
Do some searches for ‘white label casino’ and you’ll get lots of sites telling you how easy it is to get everything set up, do your marketing and off you go. One site had a small on-site calculator giving these numbers, assuming a Curaçao licence (which I have) and 2,500 estimated users in Year 1 targeting Europe.
But the truth is, it’s a competitive market with hundreds of cookie-cutter ‘same as’ casinos, and users want something different and better. So expect a long, hard grind as you build up momentum.
At this stage, we’re just keeping development and costs as low as possible whilst we build momentum. For us, customer acquisition and retention at a low cost is really the essence of everything we’re working towards. Once we get a sense of typical customer values per acquisition, then we can start to spend more money on customer acquisition marketing. We assume the lifetime value of a customer is around $300 USD. Our strategy is slightly different to the majority of white label casinos in that we decided to release Oshi as soon as possible and learn from user interaction. We’ve since done a huge number of iterations to the site and we’re getting closer and closer to what we think is an optimal user experience. From that, we will be able to work out whether we can acquire customers for a lower-than-average figure. Putting the rather optimistic figures of Figure 1 aside, these are some of the white label numbers I do know about:
- Typical revenue share is 15% to the white label provider
- Providers worth dealing with will typically ask for some kind of setup fee and that could be from €5,000-€100,000, depending on what you’re doing. WHITE-LABEL CASINO: THE NUMBERS Figure 1: One white-label provider’s estimated Year 1 setup costs One time set-up fee: none (zero) Fixed monthly fee: none (zero) Revenue share level: 15% Estimated user LTV: EUR 200 Revenue share advance deposit: EUR 6250 Licensing costs: EUR 45000 Estimated gross revenue (y1): EUR 500000 Total revenue share: EUR 75000 Estimated net revenue (y1): EUR 425000 In theory you could walk away with just under half €1 million in year one. Nice. INSIGHT 44 iGB Affiliate Issue 57 JUN/JUL 2016
- Then you have game provider fees which come to 15 %
- Then you have bonus costs which are typically about 20-25% of revenue
- Return to player percentage seems to be around 96%
I think projections are important in order to give you some sense of what success looks like, but there’s always a risk of making projections too positive and being lulled into a sense of false security. My best advice is to always watch how much money you’re spending, make sure that you’re financially stable and that you have enough money to keep you going for at least twice as long as you initially expected.
Acquiring traffic for the right price
SEO is a good place to start, except for one big thing. You either have to be very good at black hat SEO to have a chance of ranking, or you have to have an engaging website. Today, Google is massively driven by engagement, rather than just links. If you don’t have a website people like, they’re not going to click on it, you’re not going to get engagement, you don’t rank. It’s harsh. So I wouldn’t bank on SEO to begin with. But, if you do want to give it a go…
- Black hat SEO
Go and learn all about SAPE links. Be able to set up several disposable websites and get to it. Because you’re going to end up with ‘no brand’ sites, equivalent to payday loan websites, and the only people who are going to convert will be either very naive, or very desperate. So you might get the traffic, but conversions aren’t going to be great. Cost per acquisition? A very rough estimate is £300. This assumes you finally rank, burn through a lot of cash on some very powerful links and get relatively few conversions.
- Engagement-driven SEO
This assumes you’ve got a site worth engaging with. In other words, you have a brand. Cost of building a brand? If you don’t account for the cost of building a brand, then this is going to be your cheapest source of conversions. Generally, if you’ve got a site worth ranking, you spend some money on a few good links and the rest of the rankings are driven by engagement, then you could be looking at £60 per acquisition.
Many of you demand tenancies and payment per acquisition. From what my affiliate manager tells me, we’re looking at $200 per acquisition. And then with revenue share, it seems to range from 25% all the way up to a maximum of 55%. Just on the theme of risk, paying affiliates a fixed amount per acquired customer is very risky in my opinion. If you’re asking $200 per acquisition and the acquisition is defined as a person who places a minimum deposit, one big affiliate can turn on the tap and smash you financially. This is why I’ve stayed away from such deals, because there is not enough financial control. Also, it’s really open to abuse by an unscrupulous affiliate. The problem with being another ‘me too’ white-label casino and working with affiliates is that you are just the same as the other 20 casinos that they’ve dealt with in the last month. So the real question is what you’ve got that gives them confidence in you converting and delivering them revenue?
- Banner ads
When I was at Betfair for four years, I used to sit beside the paid media manager, now a fairly senior executive in Google. I noticed how many times he would be pitched by companies offering banner space. In order for him to work out who was actually a good source of traffic, he would have to rely on a mixture of his own experience and small-scale tests to see how the results came back. The catch with people selling banners is that most often they’ve got no evidence to prove that your brand will convert on their network. Other brands might, but what about yours? If a homepage takeover on a big site is £100,000 for a day, it doesn’t take many days to just end up with nothing. In my own case, because we specialise in a niche, we’ve done a lot of research using tools like Alexa, SimilarWeb and SEMrush to get some idea of who is advertising and for how long and also where the traffic has come from to that particular website. Then, you have to have creative that’s engaging which converts. Difficult. Why? If you have another cookie cutter casino offering, then what on earth can be engaging about that? Typically in my experience you’re looking at £400 per acquisition on banners. If you find a good niche, you can get it down £150 per acquisition.
No local licence? No advertising on Google. Saying that, there are a few specialists in black hat PPC who could take your money and help you. But it’s not an area I know much about and the last time I looked into all of this was around two years ago, where I did find a few people making some money on this. The catch is that Google is very sophisticated when it comes to filtering out certain advertisers, so therefore the people who do this kind of black hat PPC are equally sophisticated and so therefore expensive. The other thing to remember is that PPC is an auction and the price per click is mostly affected by the competition within that auction. I say mostly, because Google have something called a Quality Score which they can manipulate to adjust the price-perclick upwards across a whole segment if they want to. I’ve seen this in the past. Typical cost-per-click is around £60 for good casino phrases. If you have a converting brand but a low quality score, you should be able to get one conversion out of 20 clicks = cost per acquisition of £1,200. If you don’t have the right licences, you’re going to spend another couple of hundred pounds per acquisition to pay for the blackout specialist and then it all gets very loss-making.
I’ve never come across a casino which has made social really work for acquisition. I’m INSIGHT NICK GARNER is CEO of Tykhe iGaming, which owns Oshi Bitcoin Casino. He is also founder of the successful iGaming marketing agency 90 Digital and prior to that worked for Unibet and before that Betfair. sure there are some out there, but I don’t know who they are. Social tends to work well if you’re a brand with a following and you go very gently on them. So, it’s a lot of talking about everything but casino bonuses.
I’ve never bought lists and spammed them, so I’ve no idea what the cost per acquisition here would be. All I know is that email providers are getting very good at filtering out spam and making this work would be a huge challenge.
There is a huge and vibrant bitcoin community who are very reputation sensitive. If you engage with the community and they trust you, it becomes a huge source of new customers. If you’re running a standard casino, there will be gambling communities you can engage with, but as ever, it’s all about your unique selling proposition to that community. If you get it right, acquisitions are dirt cheap.
Where does this all take us?
The horrible truth is that churning out your marketing money on a badly conceived ‘me too’ cookie-cutter white-label casino brand will probably allow you to break even at best. I go back to the underlying theme of my previous article of having some kind of practical insights into the marketplace. I think ground zero is knowing you can get converting traffic. Then it’s being smart enough to build a brand which resonates with your target audience. Put the two together and you’re in a good place. That’s why if you’ve lined up a savvy affiliate that is been in the game for more than three or four years and some random person with a few million pounds who reckons he can make even more cash running a casino, I’d put my money on the affiliate any day. In the next issue, I will talk about brand and what it actually means in the context of a white-label casino.