PokerStars and affiliates: the beginning of the end?

POKERSTARS’ recent acquisition of three established gaming portals has barely registered in the minds of most affiliates, but is this the start of an increase in such activity across the board?

And if it is, are we witnessing the beginning of the end of affiliate marketing in gaming?

With affiliates unwilling to adopt a revenue share-based model as standard, and instead increasingly opting for CPA, tenancy or hybrid deals, operators have created a Frankenstein’s monster of their own that is gradually eating into their profits.

As with any other industry, operating costs (staff, technology, offices) always go up, but unlike other industries, the cutthroat world of the operator has ensured that payments to affiliates have always been high ““ the competition between operators is so fierce that if an affiliate doesn’t get the payment structure they want from one, then they will find it from another.

If the purchase of these portals is an attempt to control the beast, then it will have massive implications for affiliates.

Buying up affiliate portals means that they control the traffic to their gaming rooms at a massively reduced cost, and it also means that they control high volume search terms in competitive areas.

By ring-fencing these terms via a variety of what appear to the user to be impartial review sites, operators can essentially stifle other affiliates’ activities by pushing them down the search engine results pages – eventually forcing them out of the market, whereupon the operators will then buy these sites as well.

With the operators also controlling the affiliate sites, the costs come down ““ their affiliate payments are reduced, and with fewer affiliates they won’t need so many account managers, instead diverting this money into SEO, PPC and technology in countries with cheaper overheads.

Ultimately there will be few affiliates left in the gaming sector, and operators will be able to run a much more efficient ship at a much greater profit. Which, at the end of the day, is what business is for.

What next?

Maybe the solution is for affiliate networks to form relationships with their affiliates to secure their sites on an exclusive basis, building a number of networks that collectively become ‘super affiliates’.

This way would allow fairer representation of different brands owned by different operators, although it would mean a massive reduction in affiliate fees to facilitate the extra link in the chain. But at least the affiliate would still have a business.

This shift in tactical approach by PokerStars is just the beginning of what will be a massive consolidation.

Instead of the operators competing against each other for players, they will be competing against each other for the source of those players. And when that happens, what will happen to your traffic?

Read our Power 50 Affiliates feature here to discover the top affilates in bingo, casino, poker and sportsbetting. For more posts on affiliate issues or for more from Neil, click the tags below.