In yesterday’s post on sports betting basics for affiliates, we briefly touched upon how there are a variety of commission structures that sports betting affiliates can choose to work with. These include revenue share, CPA, paid tenancy, and hybrid models.
Each of these models has its advantages that affiliates should consider before choosing the one that’s best for them. So, today, we’ll be taking a closer look at each commission model, and how they can benefit a potential sports betting affiliate.
Revenue share is by far the most popular choice of commission model among iGaming affiliates because it offers affiliate the opportunity to make commission from a player for the entire lifetime their wagers — although some operators limit the length of the player lifetime. That being said, revenue share agreements are a split risk venture and require that an affiliate invests time in their players and the brand they work with.
Affiliates should get to know the brands they promote well, build a good relationship with their affiliate manager, and ensure that they get the full support of the affiliate program – such as frequently updated marketing materials. This way the affiliate can make sure that the merchant is committed to both their success and retaining the player they refer.
Affiliates on a revenue share agreement should consider how they are involved in the retention and activation of their own players. It’s in their best interest to keep players betting over the long term, so they should develop a strategy and speak to their affiliate manager about they can best implement retention strategies.Cost per action (CPA) agreements are less popular in sportsbetting because they don’t offer affiliates an opportunity to build up their earnings over time. While affiliates can earn a quick pay out and all the responsibility of keeping players active lies solely with the operators, the operators also reap all of the benefits of the loyalty and quality of the referred players.Hybrid arrangements, which are often a mix of CPA and rev share, are not always offered in sports betting, and almost always must be specially negotiated. Affiliates must generally be able to refer a significant amount of traffic, have a proven marketing strategy in place and an established relationship with the affiliate program in order to enter into a hybrid commission negotiation.Paid tenancy agreements involve zero risk to the affiliate. They involve charging the operator an upfront (often monthly) fee just to carry their banners. However, in order to demand paid tenancy an affiliate must operate a fairly high-ranking website with very high-quality traffic. Sportsbetting operators are hesitant to enter into paid tenancy agreements unless the affiliate is very well established or is asking a very small sum of money.
To determine the commission structure that is right for you, you should analyze the role of your affiliate business as a marketing agency and determine how it fits into the sports betting landscape. If you are a less established affiliate, you will generally have a choice between revenue share or CPA, or sometimes a very small paid tenancy.
If your goal is to build up a long-term roster of players who you communicate with on a regular basis – as most affiliate do – then choose a revenue share agreement. If your goal is quick but less significant return in the short terms, you might choose CPA. If you are a more established affiliate with negotiating power, then you might speak to your affiliate manager about a hybrid or paid tenancy deal and discuss why this option is favorable to all parties.