Running up that hill: part 3

Much is made of the behemoths in our space. A handful really benefited from talented management who had the gumption to press the accelerator hard at the right time, favourable tailwinds, a lack of competition, clever technologists, being ahead of the curve and a good dose of luck.

I have always believed that you make your own luck in life by putting yourself in the position for Lady Luck to play her role. So hats off to those executive teams for doing what they did last decade. Their share prices might not be near all-time highs, but you cannot baulk at the revenues and impact that they have on everything that a new entrant faces.

Sharks in the water

You can quite easily imagine the water cooler conversations that happen inside the offices of smaller affiliates about the bigger movers in the industry.

“Look what Catena is doing…”, “Have you heard what Gambling.com is testing?”, “If we had the pockets of Better Collective…?” and “XL is primed to have a great 2023”.

These big boys, and upstarts like TheGameDay, know their onions. They act as the big sharks in the ocean protecting their young and pursuing any large fish which emerge. These sharks are not afraid to take out the middle tier of competition if any get too big for their boots. I’m intrigued to see how BestOdds will evolve in the years ahead.

A challenge for the newer entrants to this space is how can they achieve sufficient scale such that the major players can smell a takeover opportunity. Against better-capitalised, more experienced, older, global affiliate brands with a stable of domains and websites in their arsenal and higher CPA or rev-share terms, it’s not an easy task.

Scaling stateside

In this series of articles for iGB Affiliate, I have outlined and will continue to outline various pitfalls and provide some thoughts to the next generation of US-focused affiliates about how to scale stateside.

Last time, I explained how Wall Street’s shift, from the “scale at all costs” mantra to one of “let’s be profitable” had various repercussions. My argument was that this shift had made the conversion process tougher for affiliates, and also that less marketing spend by the books in general was reducing the pool of first-time bettors coming to the market.

Aside from reduced TV and outdoor marketing spend from the US sportsbooks in 2022 compared to 2021, there was another factor at play which was noticeable for affiliates of all sizes: bonuses and promos. And the subject of account opening “gifts” is the main theme of this article.

Gifting gamesmanship

In the UK, with the market at such a saturation point and the bookies so knowledgeable about their customer bases’ lifetime values (LTV), the promo and bonus landscape is very different to the one across the Atlantic.

In 2023, a British bookmaker’s best bonus could well be along the lines of a free fiver and a carriage clock. OK, I’m being slightly tongue-in-cheek with the carriage clock comment and the value I attach to such items, but the fact of the matter is that a British punter’s account opening present nowadays is not exactly salivatory.

Think back to 2021 across the pond when one of the household names seemed to tire of the game that was “which sportsbook has claims to the highest account opening promo?”

It felt a bit like the days of the crypto lunacy when Bitcoin seemingly doubled in a matter of days. Although, it actually took two months to rise from $30,000 to $60,000.

One week this sportsbook was offering an eye-watering $2,500 account opening bonus. The next week, they played their “see you and I raise you (big time)” card. Yes, for a month or so, one operator was attracting an audience with a mind-blowingly massive $5,000 bonus.

As it happened, the figure was so large that it actually scared off customers who were concerned that they would not be able to afford to bet such an amount of money in order to be awarded their bonus in full.

However, from an affiliate’s perspective, the attraction of being able to shout about large bonuses and exciting promos is part and parcel of what many companies are doing.

In 2021, even if the $5,000 bonus was a one-off and major outlier, the average bonus during the NFL season for all the major brands as well as most of the mid-tier operators was easily four figures.

Tempering expectations

Fast forward to the biggest betting months of 2022 in the US from September through to Christmas and the quantum of bonus and promo buzz had certainly tempered. Hopes of substantial bonuses and awesome promos were not delivered, even with American Football dominating the airwaves.

Instead, it felt as though there was less hype and excitement around what the sportsbooks were offering new and existing customers alike.

So, for any new young affiliate launching stateside in 2023, be prepared. In my last article, I wrote about “semper paratus” – meaning “always prepared” or “always ready” – well, here are my takeaways.

You are up against some very professional stock-market-listed outfits and the glory days of sportsbooks being overly generous with signup offers are over. If you try to replicate the playbook of a major successful affiliate, be prepared for an uphill battle. You must be truly differentiated!

Without being so, you will struggle to break out from an increasingly crowded landscape. If you don’t build a genuine destination for bettors, it’s odds-on that you will soon shut up shop.

Some of the industry old guards would privately acknowledge that they had it easy five or so years ago. They are maintaining their momentum well and thus make it tough for any new affiliate to outperform dramatically from a standing start.

It makes for fascinating viewing from both inside and outside the industry!

Give it a crack

To conclude, my advice to anybody looking to start a US-focused sports betting affiliate in 2023 or later would be simple: if you are product-led and have something of genuine intrinsic value to an American bettor, then give it a crack.

There will be other factors which will make your life difficult that I have touched on in my previous articles and will mention in my upcoming ones. They are navigable, yet onerous.

With hard work and luck, the DNA of such a ‘destination’ business makes it possible to scale and succeed in this market.

However, if you look at the behemoths and think you can replicate their playbook, think again. Save your cash and launch a business in a different industry instead!

Image by PIRO from Pixabay