Poker News & Strategies

New law likely to lower marketing spend in the US

Fri, 6 Oct 2006 , InfoPowa Send page to friend Bookmark page Smaller font Larger font Printer friendly

The question of what happens to marketing budgets in the wake of US political attempts to hamstring online gambling was addressed this week in a fascinating article that appeared in Click Z News.

No one knows exactly how much money is poured into American media, advertising and promotional coffers by offshore Internet betting groups, but it could run into hundreds of millions of dollars. If the US political attempt to scupper online gambling in the US is successful, a likely consequence could be a lower marketing investment.

It is known that several of the bigger online casino groups have US marketing budgets that are individually in the tens of millions, and the very large and powerful online poker sites and networks are also big spenders in this area.

Click Z says that insiders estimate the largest Web gambling firm, PartyGaming, spends anywhere from $100 million to $200 million trying to reach its U.S. target audience; the company spends on a variety of offline and online ad media. According to PartyGaming's 2005 annual report, about $860 million - 88 percent of its total 2005 revenues - was derived from its poker operation, and 34 percent of those poker monies were generated through its affiliate network. Nearly 84 percent of PartyGaming's online players are U.S.-based.

Marc Lesnik, who organizes the Casino Affiliate Convention conference series, estimates the average experienced gambling affiliate site operator rakes in anywhere from $2 000 to $25 000 a month through commissions from real money gambling sites.

"We have not had any affiliate program come back and say [they] want to withdraw from a campaign," said Bruce Sabot, director of sales for large affiliate site CasinoCity.com. The site partners with over 1,000 real money gambling sites, and according to Sabot, three-quarters of its cost-per-acquisition ad commissions come through U.S. players.

"It's in our best interest to put more emphasis on focusing outside the U.S," Sabot explained. That means targeting ads to other countries based on IP address, and steering players to lesser-known gambling sites run by non-public firms that aren't threatened by investor pressure to stay out of the U.S. market. The site is also considering developing more foreign-language content.

Sabot also expects "a negative impact" on CasinoCity.com's ad revenues, but added, the legislation also has created "an opportunity for churn."

Lesnik agrees there's an opportunity for smaller sites to make their mark on the U.S. market now that big players are ducking out. "Smaller companies or midsize companies that are privately held…such as Full Tilt Poker, Bodog and many others will be coming into this scene and sort of attacking the market to make up where PartyPoker left off," he believes.

One way of getting in on that action is to buy out current affiliate sites in the US that might be intimidated by the new law. "This whole industry is so dependant on affiliate traffic," observed Greg Boser, search engine marketing consultant at WebGuerrilla. "In the short term, [gambling sites] want to grab these [affiliate] sites that are going to shut down."

Indeed, on behalf of a client looking to stockpile successful sites, Boser put out a buy request to affiliates who want to close up shop. As of yesterday, he was contacted by about ten potential sellers, some of whom run multiple sites.

The author of the Click Z article used a pithy Lesnik quote to conclude the piece: "There's way, way, way, too much money in this business to stop it. It'd be like trying to stop an ocean liner going full speed on a dime."

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