Which would you prefer? Advice on commission structure

[Rachel @ TradaCasino]

Hi All!

We've been having a lot of discussing internally about potentially restructuring our affiliate commission structures (for future registrations, not existing) as well as changing how we advertise them.

We have jumped back and forth for a few months on how to move forward, and on my commute to work today I realised that it would be crazy to make any decisions without asking you for input/feedback. I also posted on GPWA and I'm hoping to gather some learning from both before we move forward.


So (for the record) I'm personally leaning towards keeping the structure as it is.


Current Structure:

As it stands, our affiliate program pays on gross gaming revenue and there are no deductions on payments.

The reason we chose this model was in the interest of transparency. We didn't want to pitch seemingly high commission structures which are then dramatically reduced when it comes to the day of payment (as a result of varying fees, taxes, banking charges etc.)


The Challenge:

Lately, some of our partners have commented on their revenue share & the fact that it's seemingly lower than other deals they're on.

In addition, when signing up new affiliates it can be challenging to explain our system and the benefits of operating on a gross revenue/no deductions basis (as the moment someone hears 25% they assume it's not worthwhile).


The Question:

At the moment, we are discussing whether it is more advantageous to advertise a higher revenue share and pay on net revenue instead of gross, or to leave the structure as it is.


What model would attract you more? A higher advertised revenue share, or a more transparent deal?


So the question is:

A) Keep the revenue structure as is (excluding deductions such as tax, supplier costs, banking charges, admin fees etc) and try to advertise this in a clearer way.

B) Change the revenue structure to Net Gaming Revenue and advertise higher commission structures.


Any feedback on this would be extremely helpful and greatly appreciated,


Thanks,

Rachel.

 

[KasinoKing]

Without having all the relevant figures - it is an impossible question to answer.
It depends how much all the fees and overheads take off the gross figure.
I mean, say the fees knocked off 50% of the gross, then...
25% of Gross £100 = £25
But 40% of Net £50 = only £20.

Your current reports don't seem to give a full break-down of all the costs - so I can't judge.
What they do show though, it that I am getting 25% of NET Gaming, not Gross as advertised.
Is that just an incorrectly titled column on the report?

KK

 

[Kristine]

Well you are doing the right thing paying on GGR because it is honest and transparent. I think it would be a step back to pay on NGR because it is not done with the affiliate’s best interest at hand.

I find it helps immensely to know the effective rates of your top 10 competitors that way you can provide your prospective affiliate partners with an effective rate legend. Wouldn’t it be great if AGD had this? It is really needed because if Instacasino is deducting 23%, Tivoli 20%, Mrgreen 18%, Guts 25% and you are deducting 0% then you are at a competitive disadvantage without an effective revenue share legend to share in your negotiations. Perhaps you are already doing this, I do not know.

Anyhow, I have great respect for Trada and I hope you can continue conducting business in such a professional manner.

 

[Guard Dog]

The way I see it. Pay off Gross Revenue. This whole idea of artificially inflating revenue sharing so you can "appear" to have a better deal - I just don't like it. Over the last few weeks I have been thinking more and more about this. It's frustrating. You see programs that show a base of 35-40% revshare when their "effective revshare" base is about 14%. That is almost criminal, IMO. It is my current rant du jour I hate it!

So - go with GR/GGR because (as Kristine says) it is honest and transparent.

And Kristine... I am putting that together. It's NOT easy. And it is also why it is my current rant du jour.

 

[NDG]

I think that the gross revenue share would be better for affiliates, because they don't have to worry
about all of the fees. There is less transparency when it is net revenue share and then you
have to deduct for progressive games, licensing fees for branded games, UK tax, etc. Normally
the stats will just give an amount for fees, etc.. without a list of what the fees are taken for.

Maybe it would be better to have an explanation of how your program offers gross revenue share,
and the benefits of that commission structure (no admin fees, licensing fees, etc.) and add that
to the commission section of your affiliate homepage. I would rather start with 25% of gross
revenue share without any fees, over net revenue share with skepticism of the fees deducted.

 

[CaseyM]

Leave it as it is but explain to affiliates what the equivalent percentage would be in net revenue so they fully understand your commission structure

 

[Mikew]

Without having all the relevant figures - it is an impossible question to answer.
It depends how much all the fees and overheads take off the gross figure.
I mean, say the fees knocked off 50% of the gross, then...
25% of Gross £100 = £25
But 40% of Net £50 = only £20.
...
KK

As KasinoKing mentioned, it is not very clear as of the deduction would be for the Ner revshare.

However, I would for sure prefer a rev-share on Gross figures

 

[Rachel @ TradaCasino]

Without having all the relevant figures - it is an impossible question to answer.
It depends how much all the fees and overheads take off the gross figure.
I mean, say the fees knocked off 50% of the gross, then...
25% of Gross £100 = £25
But 40% of Net £50 = only £20.

Good point, below is a conservative estimate of costs that would be deducted if we paid on Net just to give you an example. I'm using estimates based on a UK player as this market makes up the majority of our revenues.

Net Revenue: Bets - Wins - 22% (Including Licence Fees/Platform Fees/Bonus Costs/Jackpot Contributions) - 15% UK gambling tax - 3% banking charges (low estimate).

Gross Revenue: Bets - Wins

Deposit £100
Withdrawal £0

@ 25% Gross = £25

To achieve £25 on a £100 deposit if we pay on Net:

@ 42% Net = £25

£100 (Revenue) - £40.00 (Costs) = £60 @ 42% = £25.

Our commission structure is tiered and can increase by 10% depending, resulting in a maximum possible rev share of 52% when paid on Net. This is on the basis of conservative estimate of costs.

Your current reports don't seem to give a full break-down of all the costs - so I can't judge.
What they do show though, it that I am getting 25% of NET Gaming, not Gross as advertised.
Is that just an incorrectly titled column on the report?

KK

Good spot, you are paid on gross as are all our partners so it's a mistake. I'll get the terminology changed in that report, thanks for the heads up!

 

[Rachel @ TradaCasino]

I find it helps immensely to know the effective rates of your top 10 competitors that way you can provide your prospective affiliate partners with an effective rate legend.

Love this, a rate legend would work extremely well - I'll look into it.

Thanks for your feedback, absolutely invaluable.

 

[AussieDave]

Edit: Not aimed at you personally Rachel

What really annoys me as a company owner/operator, is trying to audit my books for each program, when I have no idea what each player has deposited in a given month. Add in non declared 'gifts' (these are not cash or bonuses) and the picture become even less clear and consise.

I need 100% transparency - it's the operative word.

If that's taking place, then I'm all for commission paid on GGR.