#2: Examining Listing Fees

I’m fortunate enough to have built a significant network and speak to a lot of people in my average week. This has afforded me the ability to look into the depths of the industry, like a one-man social listening tool. From there, I can quickly tell when the industry is facing a widespread issue. Today, I want to talk to you about one of those issues.

Listing fees.

I think I’m uniquely positioned to speak about this topic. As the former CMO and CCO of a major operator and now an investor in a few major affiliate companies, I’m able to see the situation from both sides of the fence.

So, this week's essay isn’t going to be an opinion piece. Instead, I’m going to explain the topic from both sides, alternating between my operator hat and my affiliate hat. Then, you will be left to form your own opinion at the end.

Sound fair? Then, let’s get into it.

The Dynamics Driving The Market

Look, many operators couldn’t survive without affiliates, and affiliates couldn’t survive within this industry without operators. It’s a symbiotic relationship. Well, that’s the aim anyway.

But driving the dynamics of the market is an unseen and often unspoken power balance that pits operators and affiliates in battle. Depending on the stage of the market, one side of the relationship will be given more power at any one time. So, before I get into the affiliate/operator relationship issues, I want to explain my thoughts on the lifecycles that drive the iGaming business and impact the affiliate/operator relationships. Often, each party is the “victim” during the lifecycle stage where the other has the power.

Phase #1: Operator-Driven Market

The operator-driven market definition is early-stage, so operators dictate the rules. One good example is Brazil because the market is new, the operators there are entering, and they're spending a lot of money on brand marketing and user acquisition.

The operators have all the power, and affiliates are searching for operators with whom to do deals. But operators are either not interested in affiliate deals, not educated enough to work with affiliates on the CPA and rev share models, or don’t have affiliate platform integration with their product.

Operators have also been known to shave their affiliates in this market. And because there are no balancing forces within the market, the affiliates just have to swallow their medicine.

Phase #2. Transitioning Market

The second stage is the transition phase, where the dynamic switches. Operators start grasping the importance of affiliate marketing; they understand that user acquisition through brand marketing is expensive.

It’s unsustainable to keep up with their brand marketing campaigns, so they start looking for other channels. This is how they end up finding affiliates. Competition at that stage is increasing.

Maybe the market is becoming more regulated, so the operators' unit economy and P&L are becoming worse. This means they have begun looking for more ROI-driven channels. India is in the transition phase, but unfortunately, they’re not even close to regulation.

Phase #3: Publisher-Driven Market

The publisher-driven market is the exact opposite of the Operator-Driven Market. The power balance has done a 360. The market is highly competitive now, and it’s a bloodbath trying to acquire players.

And who has the most well-optimized traffic channels? That’s right, the affiliates. So they hold the cards now. So operators are trying to secure unique and exclusive deals with affiliates, and the affiliates are dictating the conditions of the deal.

The obvious example of this type of market is the UK.

So, now that the scene is set, let’s dive into the issues both affiliates and operators have to defend against when they’re in a phase where they don’t hold the cards.

Listing Fees: Presenting The Case For Affiliates

It goes without saying that an affiliate business is a money-making entity. It’s not a “traffic charity.” Affiliates acquire customers for operators and get paid for the value they provide. But that contract has been broken a lot recently, as seen by the recent drama with Pixbet (and many others) not paying affiliates.

Then you have the problem of affiliate programs playing “the long con.” They work with affiliates, play nice, and pay out on time. But once they have a sustainable player base and are big enough to spend their marketing budget on brand marketing, they close their programs without paying the affiliates what they owe. Casumo, I’m lookin’ at you, bro.

So listing fees are seen as a necessary part of business, a form of security to guard against these rogue operators. Listing fees ensure that only serious operators are featured and they help to maintain a fair and transparent market.

Many affiliates have fallen foul of shelling out lots of costs up front, and then an operator not paying. So these listing fees are necessary to cover the setup costs, reflecting the affiliate's investment in content, videos, and administrative setups like contract and account management.

Listing Fees: Presenting The Case For Operators

Of course, operators have their own fair gripes to shout about, too. The danger for them is that the traffic they receive doesn’t justify the listing fee they paid. So they never get their investment returned, let alone a return on investment.

Of course, there’s also the danger of the affiliate site getting dropped by the great Google overlord, and so, no traffic was ever delivered (hi, readers from the future, it's Q1 2024 and Google is playing some tricks - and maybe as you’re reading this - there is no Google). Then, the affiliate refuses to refund the operator once the site is dropped by Google.

Another is the age-old tale that everyone has experienced. The affiliate lied (shock horror) and promised ridiculous numbers they couldn’t fulfil. They talked the big talk but couldn’t walk the walk. 

Now, last but most certainly not least…

As an operator entering a new market, finding your way onto the crème de la crème of websites is impossible. You have to sign an 8-year contract and invest $1.5m upfront if you want to make it into the top 3. And the kicker? You can’t test the traffic first.

The Nature of The Affiliate Business

Affiliate marketing is, at its core, a negotiation-driven business. A negotiation is defined as “a strategic discussion that involves two or more parties to resolve an issue that each party finds acceptable.”

Given the sums of money involved, the intricacies and technicalities of the possible deals, the ever-changing market dynamics and power balances, and the thin veneer of trust, it’s not a straightforward negotiation. So you need an experienced, well-trained team to survive. And that’s just part of the negotiation to ensure you get a good deal.

That’s before you consider that SEO is a long, bloody war. PPC is a high-risk battle that can have expensive consequences if you get it wrong. And the affiliate game is now demanding skills that reach far beyond the traditional domain of affiliate businesses. Such as nurturing and truly engaging players. Building communities and high-quality content.

Concerns about operators de-tagging players or changing terms unfairly are prevalent, backing affiliates further into a corner with the need to charge upfront to protect their investment.

So, having an affiliate system and manager isn’t enough for an operator. It requires careful planning, execution, and well… significant investment. However, an experienced affiliate manager can negotiate lower listing fees for new brands. This is a shining example of how strong relationships and trust driven by networking are crucial in this industry.

My Advice to Operators (aka How To Not Get Screwed)

The following advice, comes from 100s of millions of dollars of affiliate marketing spend. Here are some tips for selecting affiliates with whom to do listing fee deals, without any fear of getting screwed. If this is the only advice from me that you ever implement, then you will have picked well, my friend.

#1. Study the affiliate website from the perspective of external spy engines. It’s a simple 10-minute check: Ahrefs, Semrush, and the like will help you here. Check top pages, keywords. Job done

#2. Check which brands are listed at the top. Are these credible names? Have you ever seen them? “Puppy123…? Hmmm, it doesn't seem too credible.” Simply avoid them and close the tab.

#3. (Warning: If the rest of the advice is gold, this is a gold mine.) Many affiliates “pretend” they work with brands. But, really… they don't. Click through the links to see if they are real. Putting Bet365 and sending traffic to our friend Puppy123 is not going to help you much.

#4. Is traffic declining? With the latest Google updates, many websites seem to be decaying. Pay attention to the trend, but keep seasonality in mind if it's a sports-related website.

# 5. Okay, now with the easy ones: Ask for the metrics, conversion rates, ARPUs, etc., just to finish the health check and calculate your math and unit economy.

Finally, this piece of advice comes with a caveat. Please print it and stick it on your monitor. If you're really dedicated, you might consider getting it tattooed on your hand.

drum roll

If you calculate your listing fees and revenue share/hybrid/CPA on the review sites in direct response terms, that's Sunday League Football. Basic stuff. But measuring brand marketing impact spend as a marketing director, not as an affiliate manager? That’s the Champions League. It’s what you should aim for. 

Let me give you an example here:

Your brand is shown on bestgamingsitesever.com in the top 3 among the best brands in the market. The impact of that placement shouldn’t only be measured in clicks and conversions. It also gives you credibility, trust, and brand awareness. You are being seen and recognised among the best.

Puppy123 well done on top spot, you’ve now in the big leagues, playa!

How do you measure an impact? Well, that’s tough and you should come up with your own maths, so I will leave this to you. But I’ll give you another example here.

Let’s say the top page on bestgamingsitesever.com is being searched with the keyword “best online casino 2024”, it’s gonna do a lot of damage. Go to Ahrefs, Semrush, or other tools and see how many estimated pageviews it got. Do the maths, and do it well. Because this is the possible amount of relevant views your brand will get.

These keywords are pure gold. A very good example.

I’d say based on the geo, and search query, the possible CPM is going to be “insanely high”. Could be $30, could be $100. Based on the keyword, and its overall user value. My suggestion here is to try to create your formula. If you want - I can create one for you and write another post (not kidding here, I’ve done this before).

Now your affiliate marketing mix could look like this:

1. Direct cost (CPA/rev share/whatever) = 1000 USD

2. Listing fee = 1000 USD (minus brand marketing impact)

3. Brand marketing impact (you can send this to your brand marketing director) = 300 USD

One last piece of advice: Please don’t change your bonuses to match those on the list. This will hurt your brand’s economy, look weird, and be simply unsustainable. Do your homework and check the average bonuses on the market, not on that particular page.

My Advice To Affiliates (aka How To Not Get Screwed Also)

My dear affiliates, this is my advice to you. Please don’t measure the value in wordcount. It looks less than the operator advice, but its impact is just as big. Maybe bigger? That’s up to you, true power lies not in the sword, but the hand that wields it. 

#1. Invest in diversifying your revenue. Different geos, different product types, different traffic sources. You’ll be thankful you did. A single point of failure is not sexy when it fails.

#2. Be friendlier. This is a relatively small, relationship-driven industry. Word spreads fast. Come on… it’s “partner” marketing, after all

#3. Be more transparent. Share data, funnels, ARPU’s, conversion rates. It sounds basic, but it’s funny how often basics are forgotten. Do that and operators will love you.

#4. Justify your listing fees with real data. How many clicks is each position generating in the ranking? Study Google Analytics, it’ll help you a lot.

#5. Affiliates justify listing fees as necessary for covering initial setup costs and for distinguishing operators who are serious about a partnership from those just looking to test market response .

And for the final piece of advice… let me reintroduce my old friend Puppy123.

Here’s how you detect shady operators:

#1. Shady nicknames? Random names? Unreal photos of affiliate managers? Google search the hell out of these, and reverse image search. Treat it like Tinder when you see the red flags and it feels too good to be true.

#2. Shady license, or no license? 

#3. LinkedIn profile is blank and unsearchable. Or LinkedIn profiles lack connections with no mutual connections.

#4. You see people on the forums screaming for mercy. People are getting screwed, not being paid.

Conclusion…?

Well, look, I promised you that I wouldn’t draw any conclusions. You’re on your own for this part. But I do have a suggestion.

Both parties need to invest (not just financially) to ensure the long-term success of any operator/affiliate partnership. Operators should consider listing fees as an investment in market presence and affiliate relationships. 

Affiliates should be more transparent about their traffic stats and user engagement data.

And then we’ll all live happily ever after.

The end.