Struggles of the American dream: smaller affiliates facing squeeze out

Running your own affiliate business is no different from any other business. There are good times, and there are bad times. 

In my last few articles for iGB Affiliate, I have covered some of the positive points of being an affiliate in the US. However, in this latest article, I want to explore some of the struggles smaller (and to a lesser extent, larger) affiliates face in the US igaming market.

Since the repeal of PASPA in 2018, the US has opened up massively to legal sports betting in the years since. This has allowed many companies to chase after the American dream and start marketing to sports-mad fans across the country. With such a huge influx of new and old affiliate marketers in the US, it’s no surprise that competition has increased massively over the last few years.

All eyes have been focused on the US, and as more states have legalised sports betting, more and more companies have been putting all their eggs into the stars and stripes baskets.

Both Catena and XLMedia have recently sold off a large portion of their European portfolio to go all in on North America. Having freed up a lot of cash and staff, I can only see the competition getting harder and harder in the States.

However, even though it was the second largest igaming affiliate, Catena has had struggles, ultimately leading to Michael Daly stepping down from his position as CEO. If Catena with its years of experience, huge budgets, and influence is still struggling, is there much hope left for the little guys?

Affiliates have always done well in markets where there have been a lot of choices and options available to players. In the US there is a disappointing lack of choice when it comes to operators. There are less than 15 online sportsbooks (and even fewer online casinos) and most are not available in all states. To put that into perspective, there are 175 licensed betting operators available in the UK. With a lot more choices, there are a lot more opportunities for affiliates to find a niche that they can be successful with. 

CPA vs. Revenue Share

Most of the US operators only want to work on a Cost-Per-Acquisition (CPA) basis. This is unless you are one of the big players and hold an expensive, hard-to-get rev share license. We are slowly seeing more states offering rev share as an alternative to CPA, but operators are still keen to only pay affiliates a CPA. Getting the payment for the player upfront in one go may seem great at the time, but in the long term, revenue share is far better for affiliates. 

The US is a relatively new market so knowing the true value of a player is still a work in progress, so paying out on a CPA basis was the most sensible option to start with. However, now there are a few years of data, operators must have a good understanding of the long-term value a player will bring. Better Collective is transitioning more of their US partnerships to revenue share as they know the real value will be in this kind of deal in the future.

Not only are these huge corporate companies able to get more lucrative revenue share deals, but they are the only ones who get to work with some of the operators. As I mentioned earlier, there is only a finite number of operators available, and some of those will only work exclusively with the top dogs.

No place for the smaller operator

It is not just affiliates who have struggled in the competitive US market, operators too have faced the full force of increased competition. You only need to look at the growing list of companies that have tried and subsequently left the market. WynnBet, Unibet, Fubo, PointsBet, TheScore Bet, and more recently, 888 have all called it a day and closed down operations. The big players in DraftKings and FanDuel hold the market share and any new operator is finding it hard to compete with these well-established giants. Even huge industry names like BetMGM and Caesars have found it hard to win market share.

It’s clear that not only are smaller affiliates being beaten off the field, but on the field, there is also a growing struggle. We are in the middle of one of the biggest Google algorithm updates we have seen for many years. It's too early to call, but it seems the update favours older, authoritative sites. This makes it very hard for any newer affiliate to even make a dent in the search results.

The SERPs (search engine results pages) are filled with huge authoritative sites, and large newspaper sites that have partnerships with these larger operators, and this has ultimately pushed the smaller niche sites out. Affiliates have always adapted and pivoted to counter this in the past, but this recent update seems to have taken that ability away. 

These larger sites can take good content found on smaller sites, copy it, change a few things, and publish it. They will then rank above the original site and push them down (or sometimes even out) of the SERPs.

The results pages are a mess. Full of spam, hacked sites and only showing the voices of big publishers and media companies. Will it stay this way after the update has finished rolling out? Only time will tell. But it has certainly made it harder for new, less authoritative sites to compete in an already competitive search landscape.

New partnerships

Google has also recently announced a new partnership with Reddit to start showing even more user-generated (UG) content in the search results. This will also have a further impact on affiliates in the future. As more UG content is favoured by Google, you can expect to see a lot more Reddit threads and subreddits appearing in the search results.

Not only now having to compete with Reddit, affiliates also live in a time where there are Google's AI-powered results in the form of SGE (Search Generative Experience), people also asked, sponsored ads, news results, and a whole raft of other Google search enhancements, the real estate available for affiliates is getting smaller and smaller.

Is there much hope for the smaller affiliate companies looking to break into the US? Times are certainly a lot harder than in the past, but there will always be space for those affiliates willing to step outside of their comfort zone and try new and innovative techniques and approaches.

Photo by Chris Chow on Unsplash