One step forward and half a step back for affiliates

After one of the most tumultuous weeks in its history it feels like the affiliate sector has taken a big step forward and half a step back. Leading the charge forward we have the move to establish some form of self-regulation within the affiliate industry through theInternational Gaming Affiliate Association (iGAA). It’s a long overdue move but is it perhaps too little too late for a business that is rapidly being forced to redefine itself?

As with any major transition it’s not coming without some pain. The much discussed Sky Betting & Gaming (SB&G) move to drop their affiliate programme met with a response that was certainly more of a step back than a step forward.

The hostility and adversarial tone of some of the postings on forums on social media did not suggest any rapid move towards the type of partnership-driven relationship needed to sustain what has been a very mutually beneficial relationship to-date. But affiliates need to accept there may have been some truth in the SB&G line.

Winds of change

The affiliate industry is facing some major external forces, and the push back from operators in the UK is only one part of it. Another big influence is the rise of acquisitive super-affiliates such as XL Media and Catena, and in the private sector, Better Collective announcing the latest in a string of takeovers this week. The emergence of large-scale businesses with genuine media-buying scale and huge networks of sites is changing the game for everyone.

Alongside this the rise of social media, the relatively unchartered territory of YouTube and the revolution going on in the wider media world are all presenting opportunities and challenges to both operators and affiliates alike. New affiliate models are coming through and lines are being drawn, crossed and redrawn. As an example the line between editorial and advertorial is becoming increasingly blurry, not least in terms of content discovery, and we’ve seen a handful of operators fall foul of ASA rulings regarding this in recent weeks.

What we’re also seeing is greater expertise in the core digital marketing skillsets within operators. Firms have bought in SEO, PPC and content marketing expertise, sometimes in the shape of directly acquiring affiliate marketing business in their entirety. And affiliates are therefore needing to find new value creation opportunities.

Moving forward

Some have resorted to, shall we say, non-traditional channels to continue to reach the parts operators cannot and this has caused conflict and concern at the operators and renewed interest from various regulators. But this remains a very small part of the affiliate business as a whole and the wider egaming industry needs to be careful not to throw the baby out with the bathwater here.

The response so far, as exemplified by the number of “reassuring” emails sent out to affiliates by operators in the past couple of weeks suggests operators still recognize and appreciate the value of affiliates to their business. But the tone of some of the communications makes it clear this is not business as usual. Things have changed, and will continue to change, and affiliates who don’t move with the times will potentially face a future of working with increasingly lower tier and less reputable brands.

The iGAA has sprung up in the last fortnight as a response to these growing issues. It aims to establish a code of practice to ensure affiliates are “promoting gambling in a responsible way and acting in compliance to all local laws”. It’s a relatively modest aim that should gain traction from those affiliates that want to distance themselves from the less scrupulous side of the business. But will it work?

The big question

Self-regulation feels more like a stepping stone towards a more regulated and structured future for the affiliate sector than an end in itself, but as a first step it’s an important one. And operators need to play their part in this shift. Some are already building partnerships with the large super affiliates but affiliates of all shapes and sizes are crying out for a more consistent and less capricious approach.

At a time when many of the major UK brands are struggling for gaming growth and pushing into grey markets the concept of affiliates being frozen out entirely seems fanciful at best. But the ongoing relationship is one that needs careful management and all sides need to demonstrate a willingness for change.