Look at the ads on the top generic betting terms. As you can see, most of them are affiliates. As a result, many marketing managers at betting/casino operators are asking the question “How come affiliates can pay hundreds of pounds per click?”
Well, there are a number of reasons for this. The first thing to understand is that operators and PPC affiliates have two completely different business models. That’s right, although targeting the same search terms in the same industry the business model of PPC affiliates and operators are completely different.
The Operator Model
The operator business model is to acquire customers and generate revenue from them over time.
In the context of PPC this means that the advertising cost is upfront but the revenue is delayed. Also, a customer can only ever be a new customer once.
The Affiliate PPC Model
The affiliate model has an advantage over the operator model.
- CPA deals allow the affiliate to get paid upfront.
- Users can sign-up to multiple operators at CPA rates.
- Personalisation can be applied (once the affiliate as proper tracking on their links) this allows the affiliate to maximise revenue on repeat clicks as any operator the user has signed up to can be replaced on the grid.
- ROI of ad spend much more favourable when annualised. (They make a return each month and when annualised this is much greater than operators who get a return over a one and a half to two and a half year period for sports and a four to five month period for casino)
- Cashflow can actually be positive if Operators pay CPAs 15 Days after month and the Affiliate has 30 Days credit with Google. So, they are booking revenues before they pay for their ad spend.
- Click through rate maximised by combined offer: Example, “Over £5,000 in Free Bets from Top Betting Sites”
Example – Affiliate PPC Model vs Operator PPC Model
We are going to use Casino for this but the same applies to Sports.
For Example – CPA charged by Affiliate to operator £400
The average number of operators a converted user triggers a CPA with is 2
Value of a new (converted) user to an affiliate £800.
CLV of a Casino User for an Operator – £400 – £600. And this is over the duration of the customer’s lifecycle with the operator.
Now, when you normalise everything and bring it down to a click level.
Operator – Conversion rate 15% – Lifetime Value £450 – Value per click = £67.50
Affiliate – Conversion rate 15% (2x repeat) – Value £800 – Value per click = £120
Some affiliates can get a much higher conversion rate. We are just using this as an example.
In conclusion, when you combine annualised monthly returns with higher revenue per click you can see that the affiliate model has a clear advantage.
The Most Important Thing for PPC Affiliates
As I mentioned before, there are so many variables when it comes to betting PPC both for Sports and Casino that a proper set up is essential.
What does this involve? you ask.
- Account structure – How you structure your campaigns and ad groups.
- Keyword targeting – You must target high-value keywords otherwise you won’t achieve high CPAs from operators. Free Bet terms should not be targeted if you want to maintain higher end CPA deals.
- Tracking – Storing keyword data and GCLID on affiliate database. For example, this is done on Income access by utilising the “c” part of the “btag” url tracking parameter.
- Offer/Ad Copy optimisation – This is so important. Using Ad Customizers is key to managing this.
- Cross-sell to Casino is Important – Which keywords have the highest percentage? – Ask the operator to make this available to you on their affiliate tracking platform.
- For Affiliates, a major part is removing operators that the visitors already have an account with. You can do this by implementing personalisation based on converted clicks. Also, by analysing user behaviour changing the operators displayed on the grid for repeat visitors in order to remove operators that the visitor may already have an account for (before they visited your affiliate site).
- On-page optimisation is essential. This is a combination of personalisation, CTR, operator conversion rates and offers along with the CPA deals that are in place for each operator.
Why Do PPC if You Are an Operator?
So, from the perspective of an operator, there are many reasons to do PPC. Essentially it is about comparing doing PPC directly or only buying traffic from PPC affiliates. We always suggest doing both.
- Extra volume.
- Running ads at specific times may result in lower CPAs than Affiliates are offering.
- Will work hand in hand with your affiliates as you will know where to allocate budget based on market pricing of traffic through affiliates.
- PPC for betting has many variables. Even though many affiliates may inflate the CPCs there are still plenty of strategies to obtain a good return on investment from your ad spend.
PPC for Betting/Casino Affiliates – Conclusion
All in all, there are many differences with how affiliate and operator PPC campaigns are managed. However, these mostly concern the knock-on effects the different business models have.
Obviously, understanding how to squeeze as much value from PPC from an affiliate standpoint important for PPC affiliates but also operators must be familiar with best affiliate PPC practice. This is because for many generic PPC terms affiliates are the main competition for operators, not other operators.
Therefore, getting to grips with how affiliates manage PPC campaigns can be a huge benefit to optimising operator campaigns.
If you have any questions on PPC drop us a line. We can arrange a chat.