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."