Hmm... Affiliates on % - part 2.

[PeterBey]

Hi Bryan,

Remember my thread about affiliates being paid on % of turnover, getting paid if a player plays regardles off his/her result?

Well now it seems that after FA made a less than successful attempt at trying to even out the bumps in their affiliate program they are test driving another (“not absolutely finalized”) approach based on a percentage of turnover.

This should create some talk in the community and hopefully get few affiliates to give it a go. I just hope that FA can bury their recent blunder and get on with testing this new approach with the effort that I believe is due to it.

What do you think?

Do you think that it is a topic that will get some attention at CAC?

Peter Bey

[Casinomeister]

Hi Bryan,

Remember my thread about affiliates being paid on % of turnover, getting paid if a player plays regardles off his/her result?

Well now it seems that after FA made a less than successful attempt at trying to even out the bumps in their affiliate program they are test driving another (“not absolutely finalized”) approach based on a percentage of turnover.

This should create some talk in the community and hopefully get few affiliates to give it a go. I just hope that FA can bury their recent blunder and get on with testing this new approach with the effort that I believe is due to it.

What do you think?

Do you think that it is a topic that will get some attention at CAC?

Peter Bey

If you plan on being there, I would suggest bringing it up during the open panel discussion.

[PeterBey]

I'll be there for sure.

I actually brought up the subject last year and it got a luke warm response. Ted Loh was the only one who showed any interest in it actually. Lets see what happens now that FA is giving it a whirl.

[spearmaster]

Sadly, Ted Loh won't be there to show any interest this year I had to cancel my trip because I've got too much on my plate this year.

It's an interesting idea, to say the least. But it's also what is commonly done in land-based casinos.

I haven't done any serious calculations yet, but I sort of tested on one player I know who occasionally wagers over a million a month.

At 0.6%, that would make me 6K. Which isn't that bad, except for the fact that he usually drops $30K in the process, which would make me about $7500.

On the other hand, there IS NO negative - which is to say, if the whale were to wager over a million and win, I'd still get $6K. And judging by his performance over the past few months (until this last month), I would have made a lot more money that way.

Then again, let's say someone deposits $100, plays one hand of blackjack, and loses. On the percentage, I'd get $25. On the turnover, I'd get 60 cents.

I guess the best way is to know your players, which isn't all a bad thing unless you're like some people I know who have thousands of players on their books... for me, based on the limited data I have at hand, I think I'd lean towards the turnover and hope like hell that the players do well and keep playing.

With a fair game, that's a decent chance.

[PeterBey]

SpearMaster,

Pitty you can't make it, I was actually looking forward to bending your ear on this topic.

You are right, it is the system that on land casino use, used and will keep using as it is the ONLY system that over time can reward the player and the business fairly.

You are quite right about the $100 player but only if she is a MUG punter! You absolutely don't have to worry about the player who comes in and does $100 playing perfect BJ strategy and with one bet looses his 1st and only bet. This player is just part of the calculation of your whale that came in and punted 24hrs straight, kinda like the local players who wander in and out of a casino with a whale playing in the next room, you still count his turnover and comp him based on that. This is because there is a thousand local players at the same level doing the same thing.

Now the mug punter is where the casinos will win a bit on the affiliates. Old muggy swans into the casino via the how to play black jack page and does his money in 10 seconds and leaves. Nothing for the affiliate, everything for the casino. On the other hand muggy who turns up at the casino who found the site via a how to play slots page deposits $25, gets a bit lucky and takes out $200 just robbed you (and only you) of your hard earned. Meanwhile the casino is not worried at all becasue it is is all in the percentages!

So yes the mug punter can have a negative affect on affiliate earnings but in the long run it is quality punter that both the affiliates and casinos want. Get the punters in, sit them down, keep them happy and you WILL make money!!!!!!! It is about action, not win or loss. That's why good casino managers (and owners BTW) will be smiling just as much when they are loosing as when they are winning.

Affiliates task - get the punters in.
Casino task - keep the players happy.
Players task - tell the casino what makes them unhappy, oh and play.

This subject IMHO will be part of the next affiliate revolution on the net.

Peter Bey.

P.S. The players don't have to do well, they just have to do average!

[spearmaster]

HI Peter!

Well, I've had my ears bent for quite some time, and I decided this year I needed to rest more. The next opportunity will probably be at ICE in London, though I don't expect to be speaking - or perhaps the next CAC.

We shall see about the outcome - honestly I would have been happy to see this become the standard from the beginning, but most casino programs in their greed and haste to land affiliates simply played copycat and offered what everyone else did - in the same manner as every casino offered players signup bonuses.

Had they simply instituted a decent comps program instead of rushing to beat each other over bonuses, not only wouldn't we have to worry about bonus abuse, loyalty would have been properly rewarded and every good casino would have made good money.

So I think they don't have anyone to blame but themselves... now it's just a question of whether it's "too little, too late" or not, in both player and affiliate arenas...

[dominique]

I will be on the panel and I will be delighted to talk about this.

I am not exactly your math genious though and I have had people tell me all kinds of things - that it would be equal to 20%, or 35%.

Here is one comment:

- Participating Affiliates will be paid 0.6% of their players’ total wagering
- NO COSTS will be deducted e.g. comps or progressive contributions
- NO DOWNSIDE. If your player plays, then you must earn. There will be no such phenomenon as negative earnings

So it's on theoretical play, and not actual play ...

and if you look here:

http://www.7sultans.com/pwc.asp?BTag=7S_Direct

they have an average of 97% payout ... so

~3% of turnover = their cut
.6% = affiliate cut

do the math and it works out to 20%

obviously a smaller %, but affiliates don't have to worry about winners ...

Another comment was that this would average more like 35%.

This is confusing me....Ted made more sense to me.

[PeterBey]

Spearmaster,

Maybe it is too little too late but the way things are swinging with the current affiliate programs you never know. If casinos on mass (should be en masse I think?) start to wind down their programs something has to give and in the gaming business where maths is kink I'd rekon that simple maths and laws of averages will win.

Dominigue,

Yes they are sort of on point with 0.6% being 20% of 3.0% but where you will get variations up to 35% is in two areas:
1. 0.6% is only kick of for FA and as with the deposit bonuses casinos will fall over themselves to give that little bit more. This will lead to higher percentages.
2. Cool operators will work out that they can pay higher percentages on different games and in fact will do so. Who gives away 0.6% of BJ turnover day in / day out will be giving away far, far more than 20% of their theoretical win! On the other side those who only give away 0.6% of the turnover on their fat margins in a tight slot machine or a poker progressive bet will actually be paying the affiliates way less than 20%, actually closer to nothing.

My guess is that we will see quite complex schemes appearing in the near future based on turnover.

Peter Bey.

[spearmaster]

Complex is far beyond the capabilities of most operators - not to mention the fact that the affiliates won't buy it simply because they are confusing.

Even "simple" is beyond the capabilities of most operators - for example, they don't know how to separate stats, revert to old algorithms, even display ordinary stats. It's like trying to walk with one good foot and one bad one.

Compound this with the fact that they are given wonky stats to begin with by software manufacturers who provide superior software but absolute shit reporting backends and it's no wonder these operations have to bend over backwards in order to look upwards sometimes.

Not to mention other manufacturers who report "uniques" as "views" and essentially have full control over the stats for their software but are seemingly unable to guarantee stability or accuracy.

No, complex isn't going to happen any time soon. Any operation who thinks they are going to implement "complex" will learn the meaning of "simplify" or "reengineering" pretty damn quick.

[mary]

Dominigue,

...2. Cool operators will work out that they can pay higher percentages on different games and in fact will do so. Who gives away 0.6% of BJ turnover day in / day out will be giving away far, far more than 20% of their theoretical win! On the other side those who only give away 0.6% of the turnover on their fat margins in a tight slot machine or a poker progressive bet will actually be paying the affiliates way less than 20%, actually closer to nothing.

My guess is that we will see quite complex schemes appearing in the near future based on turnover.

Peter Bey.

That's nuts. I mean, giving out the same % for all games. At some places, blackjack and video poker players will be costing the casino money-- Jacks or Better has an edge of only 0.5% for perfect play...which the Viper software does. And that's *without* bonuses.

Affiliates who send table game and video poker players will be actively sucking money out of the casino. So the casino can't sustain this deal. It's no improvement for them at all.