Making the switch from Affiliate to Operator

Making the switch to operator
Thinking of opening a White Label Operator site? Consider the risk.

It’s much easier now than ever before to launch your own white label operator site and for many affiliates it makes perfect sense to do so. Especially when you’ve got the traffic and potentially a good community to help you launch it. There are some things you need to consider before taking the plunge into becoming a responsible operator and we’ve listed the main considerations below:

Consider the fees plus obscure hidden costs

Setting up your own white label site has certain obvious costs associated – but make sure you account for all the additional fees and costs when working out your margins. The initial integration and white labelling and also the liscencing fees are pretty standard. Within your setup package, you’ll need to negotiate a fee with the operator and then also consider how you want the front end site to be built. Not all platform providers will offer to do this as part of their service.

Alongside this, there are some additional extras that you’ll need to be aware of depending on the software provider you choose. Things like your CRM or Marketing are considered as an additional cost. Some operators will incorporate the likes of SMS costs or direct mailing fees into the monthly service bill, for others this will cost you extra as an additional service for maintaining and retaining your customers once acquired into the platform.

As an affiliate, your mailing and data list is probably one of the most valuable assets you have. When you add on a cost for each communication with this list, it can mean a much larger bill than you originally anticipated. Discuss this with anyone that you intend to work with, as there may be room for additional negotiation.

There are also taxes and licensing fees to be aware of within the wagering and net revenue calculations. Depending on which region you are targeting, you can incur additional costs alongside the monthly management fees for running the platform. These additional costs could now have a serious effect on your bottom line, with a bonus tax and point of consumption tax to watch out for as well. The amount of bonuses that you give away will affect this margin of cost, so remember to factor this into your planning before signing on the dotted line.

Look for reputable companies to work with

There are a lot of companies that you can work with, depending on what kind of site you want to launch. Softer casino sites tend to come from the likes of Jumpman Gaming, whereas more in depth ones can come from Nektan and 888. We’re also seeing more Dragonfish sites launching which shows that the industry is growing at a rapid rate. If sportsbetting is your preferred choice there are software providers like FSBTech and SBtech which can provide reputable licences end to end solutions as well. Do your research; make a comparison and see what soft skills you already have available in your business to complement the offering that they give on the technology service.

This is where attending events helps. Talking to and meeting your software partners, having a look at the platforms and reports really helps to sway a decision. Whilst technology is key – having a good working relationship with the people that support your business operations is also important.

Defining the deal 

It’s very important to set out clearly defined roles within your white label relationship. You should be able to mark out these role responsibilities in one or two meetings, as the operator will most likely already have a structure set up. Again, this will vary according to the operator that you use, for example some of them will have a marketing plan set up, whereas others will want you to handle that aspect.

The Psychology of being an operator vs an affiliate

Being an operator is a bit different to being an affiliate, especially when you get down to the psychology of running a regulated operation that is bound by a host of legal and advertising requirements. Consider that the industry as fierce and over the past few months we’ve seen a number of fines being issued to brands that fail to comply with regional codes of conduct. The responsibilities are much higher and hold more weight under regulatory rulings than from an affiliate perspective. You now become responsible from everything marketing and money related to manage your margin of costs from acquisition through to conversion and retention. Managing compliance and fraud through to potential money laundering all forms part of the responsibilities that operators take on for their percentage share of the revenues.

As an affiliate, you’re mostly focused on acquisition metrics and getting the big numbers in the door. For operators, it’s important to consider conversion and retention too, as this is where the real player value comes from. This dynamic change requires a definite mental shift in thinking which is not not always an instant process.

As an affiliate, you’re accustomed to sharing your revenue and depending on the deal model, only getting a one off fee. If you become an operator, you’re getting that player’s lifetime value for good, but you do have significant additional costs and responsibilities.

It’s not all doom and gloom though and there are several successful affiliates who have become operators in recent years. Having an idea, thought process and a solid marketing strategy combined with a good software partnership can lead to significant success when making the switch. Operators are responsible for the actions of their affiliates, as an operator you might have a lot of learning to do in terms of complinace. This is where the partner you work with should be able to guide you though this transition, but this isn’t always the case. Where possible, defer to them on compliance issues and always do your due diligence before signing on the dotted line.