This year we celebrated our 15th anniversary in the affiliate marketing industry. To celebrate, we developed an article for iGB Affiliate looking back on the evolution of the affiliate channel in the gaming space, and also looking forward to its possible future. The piece was published in the June/July issue of iGB Affiliate, and you can check it out in the online edition of the magazine. However, the full text of the article is also available here. Check out part one below and then tomorrow you can read the second and final part.
---The affiliate marketing channel has never been more robust. Over 2016, UK firms’ performance marketing spend grew to an unprecedented £1.6 billion, according to the IAB and PwC.
The iGaming affiliate sector has come a long way since its early days. With Income Access celebrating its 15th anniversary, now is the perfect time to look back on the channel’s evolution and discuss its future. Competition today is high, but small and mid-tier affiliates can succeed if they carve out their own business niche, diversify their vertical and market focuses, and develop integrated marketing strategies.
Evolution & Market ChallengesThe earliest affiliate programme dates back to 1994, but affiliate marketing’s real origins can be traced back to the launch of Amazon Associates two years later. In 1996, Amazon was a small firm compared to the retail giant it is today – and affiliates proved instrumental in its formative growth. Other companies took note, including the emerging iGaming sector.
From 888’s founding in 1997 to the launches of PokerStars and PartyPoker in 2001, the millennium saw the rise of standalone iGaming brands, which faced increasing competition from retail bookmakers’ new online offerings. In this competitive environment, operators discovered in affiliate marketing a more cost-effective acquisition channel than media buying with high-traffic websites on a cost-per-impression basis or PPC campaigns on Google’s new AdWords platform.
Early affiliate sites placed a strong emphasis on their partners’ sign-up ads and were less focused on providing visitors with valuable content. The term ‘banner farm’ is a reasonably accurate description of the prevailing approach to site design.
The new discipline of SEO was at the heart of these pioneering affiliates’ marketing strategies. Keywords relating to their partners’ brands, verticals and products formed the backbone and, more frequently, the flesh and bones of sites’ content. Inevitably, this SEO-centric approach often meant keyword stuffing and thin content.
Google clamped down. In November 2003, the search engine’s Florida algorithm update specifically targeted the practice of keyword stuffing. Savvy affiliates recalibrated their sites accordingly. Thus began an ongoing cycle of action and reaction between Google and affiliates.
Ultimately though, the channel was strengthened by major algorithm updates like Jagger in October 2005, attacking link farms, and May Day in May 2010, targeting thin content. Affiliates became more focused on developing engaging content of genuine value to site visitors – from game reviews to tips and news. This shift improved affiliates’ conversions and, in turn, catalysed operator investment.
Simultaneously, affiliates faced market challenges. The 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) shut down online gambling in the US, whose 300 million population, high internet usage and significant disposable income made it a major market. With PartyPoker and other brands exiting the States, affiliates shifted their promotional focus to Europe.
This period also offered opportunities. The end of Google’s four-year ban on UK-facing gambling AdWords campaigns in 2008 opened up the channel to affiliates, while the launch of Twitter in 2006 and Facebook Pages the following year provided them with even more cost-effective traffic-driving platforms.
Opportunities also emerged at a vertical level. Even before iGaming’s state-level return to the US in 2013, alternative verticals had already arisen. These included daily fantasy sports (DFS), following the launch of FanDuel in 2009 and DraftKings in 2012. Meanwhile, eSports brands like Unikrn, founded in 2014, allowed affiliates to target users interested in wagering on competitive video gaming.
Unsurprisingly, affiliate marketing’s two-decade evolution has involved changes in the promotional model. Major news and comparison sites like PokerNews and Oddschecker have grown their traffic to the point that they now command cost-per-impression ad deals from operators.
Inevitably, affiliates’ transformations into major online businesses have led to mergers and acquisitions. In 2014, XL Media acquired multiple British and Finnish affiliate sites, while Catena Media purchased Right Casino Media the following year. These are just some recent examples of an ongoing spate of consolidation.
---Once you’ve read the second and final part of our iGB Affiliate article, in which we jump forward to affiliate marketing’s future, please share your thoughts in the comments section.