LiAC 2019: Regulators' ignorance harming affiliate sector

21 October 2019

Regulators’ lack of understanding of the scale of affiliate marketing or even how it works is already hitting the sector hard, and the situation is only going to get worse before it gets better, according to Responsible Affiliates in Gambling chair Clive Hawkswood.

Regulators’ lack of understanding of the affiliate market presents a growing challenge to a sector struggling to ensure compliance with responsible and safer gambling standards, according to Responsible Affiliates in Gambling (RAIG) chair Clive Hawkswood.

Speaking on Friday’s afternoon’s panel, Link Building: The Operator Remix, at the Lisbon Affiliate Conference (LiAC), Hawkswood, Oddsium chief executive Krister Malm and Paddy Power Betfair senior affiliate executive Beatrice Varlam discussed operator-affiliate relationships, regulation and the future of the market with moderator Martin Calvert, marketing director at ICS Digital.

“Even the advertising regulator [CAP] in the UK doesn’t get affiliates,” Hawkswood said. “When I asked how many they thought there were, they needed to add a couple of zeros to the answer to get there.”

Hawkswood, appointed chair of RAIG in May a few months after he stood down after more than 14 years as chief executive of operator trade body the Remote Gambling Association, said that this lack of understanding could have significant consequences. He cited the example of regulations around free-to-play variants of real-money games as one case of a move that had a larger impact on affiliates than regulators may have expected.

“Regulators don’t really understand the affiliate industry and what they consider a small tweak may be devastating to the affiliate world,” he pointed out

Similarly, Hawkswood stated that a greater level of understanding between operators and affiliates could help ensure greater compliance.

“One problem we face is that different operators are interpreting the same regulations differently,” Hawkswood said. “We want to get in a position where operators are asking for the same things from you, but also letting affiliates know what operators are asking for and why they’re asking for it.

“I think there are some toxic views out there about what affiliates are. At some of the top companies, I think affiliates are seen as a necessary evil rather than a worthwhile partner.”

Malm from sports betting operator and affiliate Oddsium pointed out that increasing pressure from operators to ensure affiliates are compliant means that the consequences of failings from affiliates are high.

“If you do something wrong as an affiliate, that can create big problems for operators,” Malm commented. “An operator can even lose their licence and how would you like to be responsible for that?”

Hawkswood added that operators having to adhere to these higher standards means affiliates now need to be on their very best behaviour.

“If operators are adopting zero tolerance for non-compliance, you have only one option and that’s to be compliant,” Hawkswood said. “Some small mistakes can be forgiven but there are some big problems out there.”

Paddy Power Betfair's Varlam said that communication on compliance matters is something her company’s affiliate programme already tries to do, sometimes even before the regulations come into effect.

“In international regions we sometimes rely on affiliates to keep us up to date because they’re experts,” Varlam explained. “We try to join forces and prepare for the regulation so that when it kicks in we’re already compliant.”

That increase in communication between operators and affiliates is something that Malm said could also help commercially, by ensuring affiliates send the right kind of players to operators.

“I think operators can help by sharing data themselves,” Malm said. “I would like it to be a combined effort. Most affiliates are focused on traffic. There is no retention with most of them. That has to be added. You need to think about what type of customers the operator wants and it needs to be a long-term partnership.”

Looking ahead, Varlam said that social tipsters and micro-influencers were very important to the future of the industry, but that a high standard of compliance should be expected in that area as well.

“We’re trying to be more compliant with micro-influencers and social tipsters,” Varlam said. “We’re working with them a lot these days, that’s really where the market is moving to, but we know that regulations will come in.”

Hawkswood, meanwhile, was downbeat about the imminent future for affiliates, noting that the current reputation of the gambling industry likely means the situation could get more difficult soon.

“In the wider world patience with the gambling industry is short and it will be with affiliates as well,” Hawkswood said. “Change is coming and it won’t be good I’m afraid.”

Reporting by Daniel O'Boyle