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Gaming Entrepreneur Adam Small of AdamSmall.com asks the question which is best for online gambling affiliates: CPA deals vs. revenue sharing? And while revenue sharing deals may pay handsomely over a period of time, Small explains why they are not always the better option. In fact, he titles his piece “Revenue Sharing: A Dangerous Proposition”.
In poker, a single high volume player can be worth thousands of dollars each month to their affiliate, Small explains. In the short term there’s little correlation between the work you do and the amount of money you get paid. It feels like free money.
Operators like revenue sharing because, in part at least, because of the free publicity these deals bring.
Life Time Revenue (LTR) deals allows gambling companies to punt their marketing spend to the future, when they’ll (surely!) be making millions and be able to afford it, Smart notes.
But they eventually catch on.
One day, however, particularly if the operator becomes big, they will realize that the amount they’re spending on affiliate commissions each month is not justified by the value they’re getting from their affiliates. And at this point, they will figure out a way to cut down that number.
And they will. Nearly all of these companies have clauses in their contracts that allows them to terminate said contract.
They can also choose to lower commissions, either by reducing the percentage of revenue shared or by otherwise manipulating the final number that is used to calculate commission. In extreme cases, valuable individual players are removed entirely from an affiliate’s account.
CPAs or Costs Per Acquisitions pay a one time fee with a price that can be negotiated to benefit the affiliate. Loyal and successful affiliates can negotiate the best deals.
Small writes:
If you’re successful as an affiliate in bringing value to operators, you will quickly be able to negotiate higher CPA’s. The operators will want more of the traffic you’re sending, and you can leverage that traffic into fair market rates. And if the operator doesn’t want to pay you a fair price, they can’t make you work with them.
- Aaron Goldstein, Gambling911.com
