Black Friday, Affiliates, and New Markets

While the impact on poker players and poker operators has been well documented not only in the poker community but also in the mainstream media, not a lot has been said about how affiliates were impacted.

Shortly after Full Tilt began issuing statements which implied that they might not be able to get players paid out as quickly as PokerStars had done, Tony G, the man behind one of the largest affiliates sites, PokerNews, indicated that he had been in discussions with people at Full Tilt about millions of dollars that were owed to him.

Nowhere in any of the reports about deals and possible deals to sell Full Tilt and pay back players has the discussion of paying back affiliates come up.

Most of the affiliates I’ve spoken with say they’re resigned to the fact that they won’t see a penny of the money that’s owed to them. Obviously they’re not happy about it but considering that nobody has even hinted that anybody other than players would be paid – and even that was a big “if” at times – most are ready to assume the worst.

Doing a little math mixed with some estimating, Full Tilt was doing roughly $1.5 – $2.0 million in revenue daily. For the sake of argument, let’s peg it at $2 million. That means that Full Tilt’s monthly gross revenue was in the neighborhood of $60 million.

Typically, a poker room ranges from 10% – 50% of daily signups via affiliates (newer rooms with smaller marketing budgets are closer to 50% while established like Stars would be closer to 10%). If I had to make a cold guess, I would peg Full Tilt’s affiliate cost to be about 15% – 20% of gross revenues. I’ve actually been told by someone who saw the numbers that I’m a tad on the low side but close enough for this example.

Twenty percent of $60 million puts Full Tilt’s outstanding affiliate liability at around $12 million.

That’s a pretty good chunk of change to remove from the affiliate chain. But for every action there is an equal reaction.

In speaking to many of the affiliates who had their world shaken up pretty dramatically by both Black Friday and Full Tilt’s eventual collapse, there seem to be a few major reactions.

poker black fridaySome affiliates rushed to promote poker rooms still friendly to US-customers. They simply swapped out their ads for sites like Lock Poker and the like who would still take US players.

Others have attempted to monetize their traffic through non-gaming related links. Some of the bigger sites have been able to get land-based casinos to advertise. Some promote cross-over products like fantasy sports leagues.

More than a few have taken a hybrid approach. They use the geographic location of the visitor to change the offers presented. For instance, someone visiting their site from the UK might see a real money gaming ad but someone visiting from the US might see an ad for Fantasy Football.

Some affiliates have given up on the US market entirely (for now). They’ve localized their content and SEO efforts for markets outside of the US.

Even the affiliates who have not given up on the US at least trying to get more non-US traffic. Everyone is thinking about diversifying these days.

One of the more interesting approaches involves a minor tweaking to the existing affiliate model. Going outside of the comfort zone into untapped markets is usually where you see innovation happen.

While many affiliates have shifted to established markets in Europe, the real risk takers are venturing into uncharted waters.

For instance, Poker Portal Asia appears to be aiming for the PokerNews sort of role in the Asian markets. They promote and report on all of the various poker tournaments happening across Asia and Australia.

Intense Gambling focuses more on informing people about which gambling websites accept players from specific Asian countries and what one’s options might be.

One of the reasons why I find this turn to Asia and other markets interesting is because Asia has been the territory that so many poker operators have tried to crack and most of them have ended up coming home defeated.

Perhaps if interest in poker comes from the grassroots level rather from a top-down push, it will gain more traction. Already, we’re seeing tours like the Asian Poker Tour slowly expand into new Asian countries as interest in poker slowly grows in the region.

Whereas just a few years ago the only poker action in Asia was in Macau and Manila, the market is expanding into Singapore, Cambodia, India, Korea, and Mauritius.

So, while the affiliate side of the online poker industry may be under reported in the media, they’re adapting to Black Friday just like everyone else. As affiliates get forced to take a more global approach to customers and diversifying their monetization of eyeballs, hopefully they’ll also be raising awareness and interest in the game of poker on a more worldwide level.

We probably will never see a full-blown boom like we did back in early the 2000’s. Back then there was a lot of pent-up demand for poker already and online was just waiting to take off. In these new markets, poker needs to be introduced, nurtured, and grown into the mainstream which is a very different challenge.

5 thoughts on “Black Friday, Affiliates, and New Markets”

  1. @Shawn: I really haven’t heard much about Singapore in regards to poker. They seem like they would be a decent fit though.

    It might have to do with the fact that their casino industry is more resort casinos.

    Could also have to do with the amount of tables they can have in the casino under the law. They probably get better value in other games.

  2. Bill, just wondering where poker is in Singapore. As far as I know there are 2 new casinos there but last I checked they both didn’t have poker. Poker coming soon or is it there now?

  3. @Adam, agreed across the board. I was only a little, teensy bit surprised that they didn’t pay out money already due but can understand that in the negotiations they wouldn’t want to assume any liabilities of FTP over and above the player balances.

    That was one reason why I questioned why none of FTP’s creditors didn’t force them into bankruptcy so they could have a trustee negotiating the deal instead of Bitar, Lederer, et al. A trustee would have attempted to find a fair resolution which might have included creditors getting paid as well.

    And yes, the leech affiliates are bad for the industry. No value yet they’re the first bitching and moaning when someone changes the way rake is calculated (even though the new rake calculations are the fairest measure of contribution).

  4. Good timing on your blog, Bill. I posted similarly on PAL in the thread there about this, but just to be short, today’s email came as no surprise. I was holding out some hope they’d pay out on existing invoices, but I’m not surprised they aren’t doing that either. It should come as no surprise whatsoever to anyone that they won’t pay out future commissions on old players or that they aren’t going to immediately open the affiliate floodgates upon relaunching. This stuff is just common sense. Forget fairness or whatever else anyone may gripe about. Even if those gripes were legitimate, there was never any chance that these aspects would have played out otherwise.

    On another, not entirely unrelated note, I’m looking forward to the day when affiliates and marketing partners are rewarded based on value generated, and “leech” affiliates are excluded entirely. The way this industry has been set up, incentive deals dominate the market. Everybody is left with less money to invest in genuine additions to the industry. The future to me seems brighter, particularly in the US, for people who want to build sustainable businesses that aren’t subject to the whims of one or two partners and the stupid decisions that their (usually unqualified) executives make

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