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Influencers vs affiliate networks
What do influencers and affiliate networks have in common?
I’ve been writing a lot about affiliate networks and my affiliate network 2.0 article seems to have hooked the interest of a few companies.
The past few months, there have been direct and indirect announcements of new sub-affiliation products hitting the market. Mrktplays is the newly announced network by Catena Media and last week a post by Dan Moore of Game Lounge announced the arrival of Kiickr.
I’m still wondering more about this GLX project at Game Lounge, they don’t sit still.
Raketech are the envy of sub-affiliation with AffiliationCloud and Acroud is very reliant on Matching Visions. Both are public companies so you can easily track some of this data.
Jesper Søgaard from Better Collective recently wrote that the company will be patient in acquisitions. 🤔
At the conferences, the discussion is the same: there seems to be less affiliates but the bigger ones are getting bigger.
Thanks to StatsDrone and FTDx as our newsletter sponsors.
I feel like I’ve connected the dots myself and I want to share these thoughts for validation.
There are less M&A opportunities
People buy from people
But you cannot buy people
An affiliate network will connect the dots
Here is the thesis of this post.
iGaming affiliates are finding less acquisition opportunities for M&A but want to tap into the growing segment of influencers aka social media. Social media influencers haven’t fully tapped into their revenue potential but you can’t just buy people and personalities.
Hopefully you can see where I’m going with this.
I’m going to share my thoughts in chronological order.
People buy from people
1 year ago, I was shocked that one of my B2B heroes said yes to being on the Affiliate BI podcast. He’s a sales pro, knows marketing but didn’t have a lot of affiliate marketing experience.
My questions were a challenge to see if the learning from his work in B2B could be applied to affiliate marketing. He did NOT disappoint!
Chris Walker hosts the Revenue Vitals podcast and is now the founder of Passetto and also the founder of Refine Labs. The guy has a cool 164k followers on LinkedIn.
Chris understands how to build an audience and get people to trust you. So I asked how the learnings can be transferred from B2B sales to B2C affiliate marketing.
He said affiliate marketers traditionally are capturing the demand while influencers are creating demand.
Basically one is making it rain and the other is collecting the rain. However when you can make it rain, you can position yourself to also capture more of the rain.
That is, there is more power in being a rainmaker than a rain barrel.
He took it a step further and I’ll just share the quote from the podcast recording.
Maybe a hundred years ago, people bought through word of mouth and referrals. And guess what? Today, it still happens and it's the biggest driver of business growth. And it's the biggest driver of lowering customer acquisition costs. And it's a signal that you're doing a lot of things right.
What Chris is saying is important in the B2B space but it shouldn’t be lost on the B2C affiliate marketing space.
You cannot buy people
Now back to Jesper Søgaard from Better Collective.
When he mentioned that Better Collective will be more patient in acquiring assets, his comment proved a point.
Revisiting that quote once more “he sees little competition for potential targets”. He followed that up by saying waiting longer isn’t risking the opportunity.
Let me translate that for you.
There are very few companies in the market that have big budgets to acquire expensive assets. My take is that with 10 years of companies growing, M&A activity and it getting tougher for new affiliates to launch and grow, the affiliate marketing inventory is a little scarce.
I don’t think you’ll see AskGamblers on the market again unless Gentoo gets acquired by an even larger company.
We are now seeing a new channel of players coming through streamers and video however there is a major problem with this entire business model. A model that creates problems for companies like Better Collective.
You can buy assets all day long, but buying people is extremely difficult.
Make your influencers a business partner through an affiliate network
So we already know what an affiliate network is, or mostly is.
1 affiliate manager
1 payment
Better deals than you’d get on your own
Better logistics
In an affiliate network, who owns the players, the data, and more importantly, the revenue share accounts?
It is likely the affiliate network but of course that depends on their setup and the terms and conditions.
Joining a network has some pros and cons, or rather tradeoffs.
On one hand, you get a ton of benefits which the biggest appeal is access to amazing deals, protection your account might not be shut down and potentially access to markets that require expensive licenses.
Getting an equity stake with influencers
Getting an equity stake with an influencer is in my opinion, very difficult.
I don’t know this first hand but trying to get equity in anything is not an easy process.
A revenue share account itself is a digital asset so there isn’t a reason why an equity stake can’t be made with that.
If an affiliate network is taking perhaps virtually 20% cut of the business, then isn’t this the equivalent of an equity stake?
It might be even better than trying to negotiate equity through a long series of negotiations and complex contracts.
An affiliate network is better. Not because people don’t read the terms and conditions but because each party is depending on each other for business.
An equity contract is handcuffs without a key.
An affiliate network partnership is like a handshake where either party can choose to let go at any time but you don’t when the deal is a good one.
I have talked to people that have tried to do equity partnerships with celebrities and the big roadblock is the negotiations.
Joining an affiliate network isn’t a complex decision and an affiliate or influencer can choose to stop sending traffic at any moment.
Solutions for affiliate networks
I’ll end this newsletter with a little shill from StatsDrone.
I’ve written this article titled solutions for affiliate networks and it explains how a data aggregator tool like StatsDrone can be used to power an affiliate network.
Other articles of interest
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