GPWA Times Magazine - Issue 29 - July 2014

Today, social gamingprovides significant revenues for real-money operators like Caesars Interactive, which recently an- nounced that its social brands played a largepart in the82percent year-over-year rise in its Q1 revenue to $124.2 million. Social gaming’s importance for the real- money online gambling industry is only set to increase. Indeed, Eilers Research forecasts that the social casinomarketwill beworthmore than $3.3billionby 2015. In response to increased competition and rising player acquisition costs, social gaming operators are looking to ensure growth by identifying new sources of player acquisition. Many operators are now eager toworkwith affiliate partners and A/B-test traffic conversions across retail, gambling and beyond. Not only have operators begun launching affiliate programs for social brands, they’ve also been enhancing themwith more flexible commission structures, allowingCost Per Install (CPI) andhybridmodels aswell as revenue share. In turn, the more visionary iGaming af- filiates are starting todiversify thebrands they promote to include social gaming brands. They’re realizing that social casi- nogames’ loweraverage revenueperuser (ARPU) isbalancedby thehighplayervol- umes. The social casino market exceeds 173millionplayers globally, according to Payvision.Like theoperatorsbefore them, affiliates are beginning to understand the revenue value of diversifying their offer- ing to include social brands. Convergenceandmonetizing U.S. trafficaheadof regulation While iGaming affiliates and operators alike are using social gaming as an addi- tional revenue stream, social brands also offer bothparties the tantalizingprospect of convergence. This is the ability to con- vert aplayerof free-playsocialgames into aplayerwilling towager realmoneywith anonlinegamingbrand. iGaming researcher JasonPrasadsuggests that while there are players who already play both social and real-money brands, and, at the other extreme, social play- ers whowill never play on a real-money site, there is also a significant proportion of purely social playerswho couldpoten- tially transition to real-money iGaming. Prasad argues that well-calibrated mar- keting communications could persuade this latter group to change their activity. There’s therefore great potential for affili- ates to develop and implement amarket- ing strategy that successfullydrives social players to the real-moneybrands theyad- vertise, andviceversa. Of course, not all the traffic driven to an affiliate’s site can be forwarded to real- money brands. Players residing inunreg- ulatedmarkets such as all but three U.S. states may be able to access an affiliate’s site, butmany iGamingproperties donot accept U.S. players that live in states that donot regulate the industry.Unable tobe converted and therefore monetized, this U.S. traffic appears to be essentially idle to the affiliate. Nothing, however, restricts players’ ac- cess to social gaming brands. As a result, promoting such brands finally offers af- filiates the chance tomonetize traffic they receive from unregulated U.S. states. There are currently approximately 35.4 million social casinoplayers in theUnited States, according to SuperData Research. Affiliates who are not promoting social gaming brands are ignoring a huge rev- enueopportunity. Of course, any discussion of monetizing traffic from unregulatedU.S. states leads to the question of the future of regula- tion, given that Nevada, New Jersey and Delaware have now legalized some form of iGaming. The future of real-money on- line gaming in the U.S. looks promising. Legislators in California, the most popu- lous state in the union, are considering two bills to legalize online poker, while Pennsylvania lawmakers published a fa- vorable study inMayon thefiscal benefits of regulation. Although these are encour- aging signs, they suggest thatU.S. regula- tionwill proceedgradually, ona state-by- statebasis. Before other states join Nevada, New Jersey and Delaware in legalizing real- money online gaming, forward-thinking affiliates can play a vital role in U.S.- facing operators’ acquisition strategies bypromoting their social gamingbrands. While proposed regulations in states like California and Pennsylvania progress, affiliates can leverage social gaming to acquire players for operators and assist 12 The rise of the social gaming affiliate