Affiliate and performance marketers are increasingly targeting Asian markets, with both local start-ups and established European firms chasing after a slice of the fast-growing online sector.
At February's London Affiliate Conference (LAC), a typical grumble among delegates was that Europe’s major operators no longer value their affiliates, instead preferring to direct the majority of their marketing spend to television and other digital channels.
While a number of prominent Asia-facing brands have invested heavily in high profile sponsorship deals, particularly with European football clubs, they tend to be locked out of local television marketing in a way operators in Europe’s regulated markets are not.
As such, a greater portion of marketing spend is directed to digital channels, and affiliate marketing remains a critical part of the mix. Most major Asia-facing operators run substantive affiliate schemes, including Dafabet and 138.com.
“The opportunity for igaming affiliates in Asia is very promising,” Jonathan Casuncad, founder and chief digital marketing strategist at digital marketing consulting firm 88 Interactive, told AGB.
“In Asia, igaming affiliates have more free reign as compared to their European counterparts since Asia is an unregulated territory. I don't see it changing in the near future.”
Most affiliates use a mix of content and SEO techniques to attract users to their websites. The affiliate model, where websites take either a one-off payment or a share of lifetime spend from each player they refer to an operator, is almost as old as the online gaming sector itself.
However, new opportunities in Asian markets contrast with a sense that the golden age of affiliate marketing has come to an end in Europe. A period of consolidation has seen the emergence of a handful of large affiliates, including listed companies such as Catena Media and XL Media, that dominate many European jurisdictions.
Meanwhile several major operators have scaled back affiliate programs, including GVC Holdings, which announced it was shuttering its Cashcade affiliate program in January.
Faced with tougher competition and less lucrative programs, several small to mid-sized European-facing affiliates have told AGB they are exploring opportunities in Asia.
However, to succeed, they will have to adapt to a unique set of market challenges, that tend to differ between jurisdictions.
“The major challenge for Asian affiliates is primarily in traffic generation,” said Casuncad. “This is magnified even more so for affiliates who target China, because they have to deal not just with the technical challenges but with the Great Firewall of China as well.”
While European affiliates may not be used to such restrictions, Shino Besson, Japanese Operations Manager at Game Lounge, a leading affiliate owned by Swedish gaming giant Cherry AB, said that those entering Asia are well placed to capitalize on the opportunity.
“As long as European affiliates understand the local challenges, they are well positioned to succeed in the market,” said Besson.
“Game Lounge can draw on years of success in affiliation across Europe. We clearly have an advantage when it comes to experience against local competition,” she added.
Game Lounge is looking to leverage its experience in mature European markets within emerging Asian jurisdictions.
It manages thousands of affiliates websites primarily focused on Finland, Sweden and other northern European markets, and launched its first Japanese affiliate website, www.japanesecasino.com, in December, with CEO Jonas Cederholm saying at the time that the company had “high expectations that we will be able to grow quickly in this market”.
Since launch, Besson said that the site has performed strongly, and that Game Lounge has plans to launch around 100 further affiliate websites in Japanese.
“The Japanese affiliate market is growing extremely quickly. The lifetime value of a Japanese player is higher than the Nordic region, and average deposits are also higher, so it is clear the opportunity is there,” Besson said.
“Japan has been making some encouraging steps in recent months when it comes to regulating the gaming sector, particularly the land-based side, and this will have a positive impact on the whole industry,” she added.
Despite this, Game Lounge, and other European affiliates who have entered Asia, need to adapt their model to succeed.
“Game Lounge has been extremely successful in European markets, particularly in Scandinavia. While the Japanese affiliate market is not as mature as these European markets, it is not enough to simply apply the same approach and expect success,” said Besson.
She said that while most successful European affiliates combine content creation and SEO strategies to attract new players, in Japan few have been able to replicate the model.
“What we wanted to do was take the best of the European-style affiliation and localize it for the unique demands of Japan,” she said.
This meant hiring experienced Japanese casino writers to produce content, as opposed to translating content from other jurisdictions. Meanwhile the site was built alongside local graphic designers.
The result, said Besson, is a European-style affiliate site, but tailored to the tastes of Japanese players.
It appears likely that the Game Lounge approach will be replicated by other affiliates and across other territories. Game Lounge said that while its current focus is on Japan, the longer-term strategy involves exploring other opportunities in Asia.
But Casuncad at 88 Interactive cautions that major challenges remain, not just in the form of language and cultural differences, but also the need to master local channels, such as Baidu in China.
Despite advantages of scale, European affiliates looking to expand in Asia, will still require a local touch.
Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.
ASIA GAMING BRIEF
PO Box 1139, Macau SAR
Tel: +853 2871 7267
Fax: +853 2871 7264