RETROACTIVE CHANGES BREACH CONTRACT LAW :
But let’s be clear – attempting to change terms and conditions to RETROACTIVELY apply a quota or minimum player scenario to all existing affilaites will not engender any goodwill – NOR is it actually likely to stand up legally if it was taken to a court of law.
I know that most programs have a clause that says that they can change the T&C’s at their will – but as a general principle of contract law these changes are only legally enforcable going forward – and all customers acquired prior to the changes should be defined by the contract that was in force at the time – unless both parties (affiliate and program) agree to a new contract.
IF programs attempt to streamroll RETROACTIVE changes through – then they will simply see that many of their solid revenue affiliates will not make the effort to acquire new players under the new terms – while still retaining the right for payment of existing player revenues.
Is that really the scenario that the bean counters wanted to achieve?
However, here is how I see the quotas, why they are being considered and what it will mean if they are enacted for future periods :
AFFILIATE PROGRAM COSTS :
With the continued difficulty of getting access to the lucrative US market following UIGEA – it’s no secret that the revenue flows have changed for many casinos and that the affiliate programs are obviously chopping staff and costs left right and centre.
Most established affiliates will have seen tangible signs of this within the programs in the number of affiliate managers changing or leaving – and a slow down in the responses of exisiting staff.
The facts are that there are less people in the business at the program now, and they are trying to look at ways to service affiliates at less cost.
REAL RATES OF RETURN OF AFFILIATES / ADVERTISING :
I have no doubts that like most businesses affiliate programs look at their revenues and costs and I would not be surprised to hear that they’ve looked at the number of small affiliates that are being serviced and found that some are cost negative.
It’s too simplistic to assume that if an affiliate makes a small profit – that it is also profitable for the affiliate program. If an affiliate also needs weekly help, and a monthly payment, then they may not actually deliver a bottom line profit after staff costs and banking transaction fees are considered.
Certainly from my banking days, I remember that the top 20% of customers actually delivered 120% of the profits – and the other 80% were actually a net loss. Yes the bank would be better off without them – UNLESS they could upgrade them.
Also, let’s remember that many of these programs are 3rd party programs, they don’t actually get the full profits that the casino makes, they are running the affiliate program as a service to the casino and also taking a small slice of the profits – almost like a master affiliate situation.
If an affiliate program is not making a profitable return then they do have to make changes to the cost structure.
OPTIONS GOING FORWARD FOR PROGRAMS:
Right now some programs are trying to enforce these minimum quotas, but simply looking at raw new player numbers is such a poor metric that I do wonder at the experience levels of the people making decisions.
Inserting predatary quota clauses and saying that “they’re not intended to be used” is obviously a complete nonsense – if that was the case then we would not see then inserted in the first place.
So programs that have these clauses obviously see cases where they will use them – and that is legally acceptable where it is for new affiliates going forward – although I believe that programs that have these clauses will be viewed as less desirable by many affiliates and so the programs will get less exposure.
But if you have reduced staff to only have 1 affiliate manager and a couple of support staff then perhaps 500-1000 affilaites is all that you can adequately support? And in this case – affiliate programs do have the right to be selective regarding new affiliates and existing affiliates – GOING FORWARD.
BUT BEWARE …
Cutting acquistion streams broadly with a crude metric like raw player numbers can be a very expensive decision …
Some low volume affiliates still attract high value players with great service, and programs that ignore this are simply going to lose some of their sources of highest value players and profits.
:Cry: