ICE: Affiliates warned about operator challenges

ICE: Affiliates warned about operator challenges

Thursday, February 4, 2016 Totally Gaming

Affiliates should be wary of making the jump into becoming an operator, according to a panel of experts at ICE Totally Gaming.

Although there was a broad agreement that affiliates understand the industry and have the required access to clients, there was also an acknowledgement that operational factors should be a major consideration.

“I’m not sure when it is a good time for an affiliate to become an operator, if ever,” Joakim Stockman, Co-Founder & CEO, SuprNation, said during a seminar on affiliates at ICE Totally Gaming.

“It is crucial to understand what you are aiming for. If you are looking to become an operator, are you going to compete for significant market share or are you looking to capitalise on existing traffic?

“I would advise caution and not just to jump into it. A lot of affiliates try it and then struggle on.

“It should be remembered that an affiliate business can be very profitable. Affiliates can operate with a margin of more than 60%, which is not available for an operator.

“It’s getting very competitive so you need to find a product that you can generate demand for. You need to go for markets that are not saturated, to give you an edge.

“When I look at affiliates that have made the jump, a few have done it really well, but the fact that there are only a few shows how difficult it is.”

Roger Admeus, Head of Sales and Marketing at iGaming Cloud, said that affiliates often underestimate the amount of work involved in becoming an operator.

“I discuss this with affiliates every week, but they often don’t appreciate the time that needs to be spent on the project and how much they have to prepare,” Admeus said.

“You have to prepare marketing budgets and you need time, organisation, knowledge and a really good strategy. There’s not space in the market for just another casino.”

Frank Ravanelli, DFS/eGaming, echoed the feeling that an affiliate will not succeed in a move to become an operator if the plan is simply to replicate another online casino. However, he was more optimistic about the opportunity.

“You need to be aware of what your advantage is – if you are just going to be another casino or binary site, you’re not going to succeed,” he said.

“The first step is to work out what kind of affiliate you are. Are you an individual affiliate or a company? If at the very least you are someone who can outsource and delegate, then you can scale up.

“It’s fairly easy to outsource things like customer service, but you need to be able to scale up otherwise you will find it very difficult.

“If you have identified a specific type of audience and have the right structure and are generating traffic, then I think you can go ahead.”

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