Affiliate Marketing 2014 – Opportunities for Entertainment/Leisure/Casino Businesses

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By Greg Powell and Shaun Doyle

Customer Acquisition via Affiliate Marketing

Today, a vast majority of customers make their decisions on holidays, vacations and entertainment as a result of a review or personal testimony read online.

While some of these reviews are personal reviews, most of this content is created to steer potential customers to businesses via affiliate links.

This trend has caught the attention of marketing executives worldwide, and as a result, many have developed Affiliate Marketing Programs as a cost effective, results based marketing strategy. Many publically traded companies’ attribute more than 65% of their customer acquisitions to their affiliates’ marketing efforts. An Affiliate Program opens up the company brand to a vast audience of customers who may sometimes be impossible to reach through inhouse marketing campaigns.

Affiliate Marketing is a type of performance-based marketing in which a company rewards its affiliates for each customer brought to them by the affiliate’s own marketing efforts. There are four core participants in the process:

  • The merchant (retailer/brand)
  • The network (contains offers for affiliate to choose from and issues payments)
  • The publisher (aka the affiliate)
  • The customer

Affiliate Marketing has become the linchpin of online marketing due to the guarantee that you ONLY pay for successful advertising. Rather than paying upfront, you pay only when that advertising is successful and your company has profited. The affiliate’s payment (via a referral fee or commission) is a results-oriented function, e.g.: if a customer performs the desired action (i.e. pay-per-click, pay-per-lead, pay-per-sale) through the affiliate’s link to the merchant’s website, the affiliate is rewarded for bringing that customer to the company.

Possible Business Plan for US Casinos & Online Poker Platforms

A large majority of the online poker operators in Europe have built their player databases through Affiliate Marketing Programs. Because of the vast number of affiliate websites already dedicated to gambling, there is no faster way to reach a mass audience than by allowing affiliates to promote brands and offers on their sites.

In the US, all signs point to a significant interest for a regulated online poker and casino market, whether on a state or intrastate level. In states like New Jersey, Delaware and Nevada there are thousands of customers already playing real money games online. These players are generating great new revenue and will continue to grow rapidly in 2014.

In New Jersey, for example, where online gambling was most recently approved, online gambling sites are seeing a weekly growth rate of new players and analysts predict this trend will continue to grow as more players are introduced to the online games. Affiliates have been building sites and collecting data of NJ players since 2011 when the legislation was first being presented.

There is no question that in the new online landscape, gaming operators will adopt affiliate marketing to grow their customer base. Once an affiliate program is launched, the operator will choose between two primary commission models for their affiliates:

  •  CPA (Cost per Acquisition) for each new player who makes a deposit; or
  • Revenue Share, where the affiliate receives a percentage of the ‘rake’ generated by each player per month.

All existing, large poker software providers (real money online poker/casinos) have an Affiliate Marketing Program to support their internal marketing efforts for new players. One prime example is the growth of PartyPoker.com. From their early days they embraced affiliate marketing as their primary sales force. In 2008 at the Casino Affiliate Conference in Amsterdam, a presenter acknowledged that 85% or more of new players who registered at PartyPoker.com that year were brought in through their Affiliate Program.

Affiliate Marketing is the top marketing strategy for online poker and casino sites to acquire players – and building a database of customers can be done exponentially cheaper and faster by allowing affiliates to promote each company’s offers and promotions.

Before selecting an online gambling site, online poker and casino players will research and evaluate where to spend their gambling dollars. Many of their searches will lead them to affiliate websites and they will take the reviews and recommendations into account when choosing which gambling site to join. Operators whose brand is displayed across hundreds of affiliate websites will increase their brand awareness, traffic and ultimately new registrations.

Online Gambling in New Jersey

The New York Times gambling analysts say the regulation of online gambling is the most significant development since casinos opened in Atlantic City over three decades ago. Upon the launch in late November 2013, Governor Chris Christie estimated that the States casinos would generate over $1 billion in the first year. Even the most conservative estimates place revenues in year one to over $300 million.

Online Gambling in Delaware

Delaware is yet to attract the same levels of interest that has been recorded in fellow regulated states New Jersey and Nevada. As of January 23, 2014 Delaware was averaging just 18 players online at any given time during the previous seven days. Popular websites in Nevada and New Jersey on the other hand record an average of several hundred players. Delaware officials have announced that online gambling in their state generated just $253,000 during its first two months of operations. These figures leave Delaware well short of its goal of generating $5 million in revenue during the first year of online gambling. The state will collect 100% of the first $3.5 million generated in online gaming revenue, meaning that casinos in Delaware are yet to receive any of the income.

Online Gambling in Connecticut

Online poker is a possibility for the State of Connecticut in 2014. After the 2011 decision from the Department of Justice regarding the Wire Act being inapplicable to Internet gambling or poker, Connecticut began to investigate the opportunity. Governor Dannel Malloy recently acknowledged that Internet gambling was inevitable because, ‘if one state legalized it, everyone else would as well’. The State Legislature’s Public Safety and Security Committee held a hearing in February 2012 to examine the issue, and while legislators were not enthusiastic, the two primary tribes in Connecticut were supportive of online poker. The Governor and Legislators are in ongoing discussions with the tribes to work out a possible agreement.

The State currently benefits greatly from the receipt of 25% of tribal casino revenue. In 2011, reports note that Mohegan Sun turned over more than $186 million in slot machine profits to the State, and Foxwoods added another $174 million to that. Should online poker and gambling be legalized in Connecticut, those numbers would grow exponentially.

Some casinos, in Connecticut, have already built fully functional websites and platforms: players register and play free games that can be redeemed for hotel prizes (concert tickets, restaurant coupons, etc.). Once approved by state legislature, these games could immediately be turned into real money games. To incentivize affiliates to send players to free online money games – a small commission is paid per unique registration. Then, once real money gaming is allowed, affiliates will gain real value by tagging players to their account for life.

Current Affiliate Marketing Landscape

Casinos and hotels are using Affiliate Marketing to reach audiences they were previously unable to access. Affiliates use a variety of ways to promote products and services within the terms of each respective Affiliate Program, and tend to specialize in various forms of marketing, such as: search engine rankings, blog posts, social media, pay per click, content marketing.

A search through Google will show just how many major US hotel and casino groups have embraced Affiliate Programs. There are countless review sites, blogs and trip report content pages being added to the web every day – and most of these sites have an Affiliate Program linked to them to promote offers in a variety of ways.

Launching your own Affiliate Marketing Program

To launch and start operating an Affiliate Marketing Program a company will need to:

  • Create goals and expectations on what it would like to gain from launching an Affiliate Program (i.e. sales, revenue, new customers, other metrics, etc.).
  • Select the right affiliate network or software package based on the goals above.
  • Identify which affiliates would make a great addition to the program and what type of marketing message/medium is required to attract producing affiliates into the program.
    •  An example of hotel/casino affiliates would be: RetailMeNot.com, WorldCasinoDirectory.com, AnyCodes.com, FatWallet.com, SmarterTravel.com
    • Online Poker and Casino affiliate examples: CasinoCity.com, CardsChat.com, 500Nations.com, PokerAffiliateSolutions.com, Poker.org, PoketFives.com • Create marketing tools affiliates will use to take offers to market (in-house/outsourced).
  • Launch a marketing campaign to promote the new Affiliate Program, making it feel exclusive and inviting. The goal is to create a buzz in the affiliate community and encourage early affiliates to promote the brand.

The biggest mistake a company can make when launching an Affiliate Program is selecting the wrong network, tracking platform and marketing strategy. It takes experience to know what affiliates are looking for in specific markets, and more importantly where to find the right affiliates who will promote specific brands. There are dozens of affiliate networks and software providers and they offer a variety of services including sales tracking, reporting, payments and more. Selecting the right provider is crucial to each programs success.

For more information on how to launch an Affiliate Marketing Program, please contact Cognitive Box Consulting LLC.