Affiliate marketing remains a cornerstone of the iGaming industry's customer acquisition strategies. Two of the most commonly employed payment models are Revenue Share (Rev-share) and Cost-Per-Acquisition (CPA). Each model offers distinct benefits and drawbacks, making them suitable for different affiliate and operator objectives. Here, we explore these models, breaking down their mechanics and optimal use cases.
Rev-share: A Long-Term Partnership
The Rev-share model is structured around sharing a percentage of the revenue generated by referred players. Affiliates earn ongoing commissions based on the lifetime value (LTV) of their referred players. For example, if an operator offers a 25% revenue share and a referred player generates €1,000 in net revenue, the affiliate earns €250.
One of the primary advantages of the Rev-share model is the potential for long-term earnings. Affiliates benefit from consistent revenue as long as the player remains active and generates income. This creates an incentive for affiliates to refer high-quality players who engage with the platform over the long term, as this maximises their income. Additionally, this model can be highly scalable, allowing affiliates to build a growing passive income stream, which is ideal for those seeking sustainable earnings.
However, the Rev-share model is not without drawbacks. Affiliates may experience delayed returns, as earnings depend on player activity over time. Additionally, if referred players become inactive, the affiliate's earnings can decline. This makes the model best suited for affiliates with a strong understanding of their audience and the ability to drive high-LTV players. Affiliates specialising in casino games, where players often remain loyal to a single platform, may find significant benefits in this approach.
CPA: Instant Rewards
CPA offers affiliates a one-time payment for each player they refer who meets predefined criteria, such as making a minimum deposit. For example, an affiliate might earn €200 for every player who deposits €50 or more.
The immediate payouts associated with the CPA model are one of its main advantages. Affiliates receive quick returns, which can be reinvested into marketing efforts or other ventures. This model also carries a lower risk since earnings are guaranteed for every qualifying referral, regardless of player activity beyond the initial criteria. Furthermore, CPA campaigns often have clear and straightforward KPIs, making them easier to track and optimise.
Nevertheless, the CPA model comes with its limitations. Earnings are capped at the agreed-upon CPA rate, meaning affiliates miss out on potential long-term value. Additionally, the focus on quantity over quality can result in a higher churn rate of referred players. CPA models are particularly suitable for affiliates operating in competitive niches or those with traffic sources that yield high conversion rates. For example, affiliates running pay-per-click (PPC) campaigns targeting sports bettors during major events can generate quick wins with this model.
Key Factors to Consider
When deciding between Rev-share and CPA, both affiliates and operators must consider several factors. Player retention is a critical element. If the operator has high retention rates and offers engaging experiences, the Rev-share model may prove more lucrative. Additionally, affiliate expertise plays a role. Experienced affiliates with a loyal audience may prefer Rev-share, while newer affiliates might benefit from CPA’s immediate returns.
Traffic quality is another essential consideration. Affiliates with high-quality, niche traffic may excel with Rev-share, whereas general or untargeted traffic often performs better under CPA. Lastly, risk tolerance is a key factor. Affiliates willing to trade short-term guarantees for potential long-term gains often lean toward Rev-share.
Hybrid Models: The Best of Both Worlds?
Some operators offer hybrid models, combining elements of both Rev-share and CPA. For example, affiliates might earn a small upfront CPA payment alongside a reduced revenue share percentage. This approach balances the immediate rewards of CPA with the long-term earning potential of Rev-share, making it a popular choice for affiliates seeking flexibility.
Conclusion
Rev-share and CPA each serve unique roles in iGaming affiliate marketing, with their effectiveness depending on individual goals and circumstances. Affiliates must carefully assess their audience, traffic quality, and long-term objectives when choosing a model. By aligning the payment structure with their strengths, affiliates can maximise their profitability and foster successful partnerships with operators.