Affiliate Marketing is basically where a business rewards affiliates for each client or transaction that is specifically created by the affiliate’s own marketing activities. In the online world, the most common way of becoming an affiliate is by having any number of websites driving traffic to retail brand in the hope that said traffic then becomes regular customers.
This type of marketing and revenue generation usually makes up a sizeable proportion of any online business, especially in extremely competitive spheres like the online casino business. This is because it offers operators with the ideal method of reaching any particular market without having to invest in local expertise, physical presence and consumer research. Thus making it relatively cheap to venture into new markets and/or locations. Again this has been borne out by online casino brands like Unibet being able to aggressively target new markets and audiences, by successfully utilising the affiliate approach.
Traditionally, there has always been two types of agreements open to affiliates, Revenue Share and Cost Per Acquisition (CPA). The Rev Share model is where the affiliate is awarded an agreed percentage of the lifetime revenue derived from all the customers that he directly brought to the business. The alternative CPA model is where the affiliate receives a one off bounty for every customer that he brings to the business, with the payment only being released when mutually agreed terms are met.
Each model has their own pros and cons. So, for example, Revenue Share is for affiliates who hold a long term view of their business and have the confidence that the customers that they refer will possess above average spending power and habits. The idea being, the affiliate’s revenue should increase over time, as more and more customers are introduced to the chosen operator. Furthermore, if the quality of customers being directed to the operator is above average, it means that revenues earned from said customer will be enhanced.
However, the Cost Per Acquisition does offer other benefits. In this scenario, the affiliate is guaranteed an immediate and fixed income for every customer introduced. This means that an affiliate can have a better idea of income levels and can plan ahead, in terms of investment or other business spending requirements. It also gives affiliate the flexibility to switch operators as when they so desire. As one would expect, every affiliate would often have a preferred model, mainly depending on their personal circumstances, their view of the business and financial outlook.
Nowadays, operators have started to offer an alternative to the two models, and this comes in the form of a Hybrid Deal. This is where the affiliate is offered the best of both worlds, as the Hybrid deal consists of both revenue share and a one off payment for every customer. The only difference being that the actual percentage share and amount of the one off payment will be slightly reduced; in order to offset risks on behalf of the operator.
Not surprisingly, many experienced and new affiliates are beginning to embrace this hybrid revenue model; as it gives them the best of both worlds. Affiliates will be able to predict immediate payments, whilst still being able to benefit from the lifetime value of the customer. In spite of the perceived perfection of the Hybrid option, it is always advisable for affiliates to assess their current business and its long term goals, together with making sure that they are familiar with the audience that is being targeted.
Is this Hybrid option the way to go, one would be able to argue that indeed it is. However, there will always be room for all three in the market place to be employed.