True.

From my point of view, there are several things that indicate cannibalistic behaviour:

1. No other offers
If an affiliate seriously tries to offer some content or services, e.g. news (PokerNews.com) or content (CardRunners.com), chances are they are not cannibalistic in that sense.

2. Exclusive offers
If an affiliate tries to offer "the best deal" as a unique selling proposition, the idea behind this is most of the time attract players that do just look for this best deal.

3. Presentation
If an affiliate presents his deals clearly geared towards people interested in the best deal & even indirectly implying the player should open a new account (on his grandmother or the likes), chances are he has the clear goal to poach players.

4. Marketing Strategy
Of course not always easy to see - but most of the time you can guess it pretty well: does an affiliate (or skin) has any other marketing strategy / way to acquire customers outside targeting high-volume players with his "deals"?

It sounds like you agree with my statement that "most rakeback providers are involved in other sites that you would certainly consider to be adding value". You and I might draw the line in a different place, but generally I think we're on the same page...But in the OP you say:

Why not say "Theres a breed of rakeback affiliates that offers illegal deals and / or suggests that players break poker room and network multi-accounting rules. These guys are leaches on the community and should be torched." The generalization your making isn't fair to a large portion of the poker world that both contributes value to the community and offers rakeback.

Hey muckthenuts,

to be honest, I do not care too much for the shareholder structure of rakeback affiliates. It might be that some of them also are building different business models - inside and outside of online poker - that I would not call 'cannibalistic' or 'parasitic'.

Especially the big rakeback sites we do not need to specifically mention here are based upon 90%+ cannibalisation. They have no other business model than trying to squeeze 'exclusive promotions' out of a poker room's affiliate manager [i.e. a rake race] so that people that ask for a 'good deal' on poker room X in huge communities like 2+2 will be advised to go to them for purely monetary reasons.

Even a lot of small stakes players are lured to those 'best deal / exclusive deal' sites, as they think: "Well, better than nothing - and maybe some day I will get my share of these races".

[Worse of course are under-the-table deals by illegal rakeback affiliates that do shady stuff - we're surely of the same opinion here.]

These rakeback affiliate sites do not add value to the poker industry - but harm it in the long run. This is also true if you take the view of winning players as a whole - and ignore the fate of operators / other affiliates.


It might very well be that some of these affiliates take some of the millions they earned with their cannibalistic business models to go into other areas of the online poker affiliation market and build up sites there that are not to be considered parasitic. But that does not make the former business model any better.

Best,
Lutz

Lutz/Dominik,

From my perspective it seems you are essentially posting this rhetoric, as well as emailing your thesis to the major rooms/networks, to curb your competition. You are the biggest poker affiliate in the world and are trying to throw your weight around to get even more market share.

I find many of your points to be hypocritical. The biggest one being that rakeback affiliates cannibalize traffic by offering something the room doesn't have in house. Well, you do the same thing.

Most rooms don't offer players free bankrolls to play poker with. Therefore, new players must go to your site to receive free poker money. Sure, you bring in fish and liquidity. But you do so in the same fashion that you are scolding rakeback affiliates for. You are offering something that is exclusive and can't be obtained from signing up with the rooms direct.

Your company indeed has a lot of power in this industry (i believe you claimed your revenues are higher than Party Poker). However, your recent actions are NOT in the best interest of this industry or in the best interest of poker players. Your arguments and actions are in the best interest of YOU and your bottom line.

We obviously disagree on several basic theories when it comes to marketing and poke ecology. You have every right to state your opinion publicly on this forum and others. Having a fair and professional discussion is what this community is all about.

Bevo54

POTD

We could not agree more.

Hey Bevo54,

The reason why we do all this 'lobbyism' is that we believe a healthy poker market is important for everyone who thinks in the long run:
• winning players
• poker operators / networks
• affiliates / other businesses

I think you noticed that the year over year growth of the poker market has gone done to below 10% by some indicators [namely PokerScout.com].

We strongly believe that one of the big reasons for this are market flaws. Big marketing campaigns often bring in a lot of new net deposits - but not a lot of rake, as the rake is generated by another type of player.

Thus, big marketing campaigns don't bring a good ROI if you calculate by rake. A stand-alone room can ignore that or calculate differently - which is why PokerStars and Full Tilt, who do big-time marketing, still took market shares.

But if you are a skin in a network - say a sportsbook on iPoker or Ongame - you cannot calculate differently, as you are contractually paid on rake. If now parasitic skins/affiliates use monetary incentives to concentrate high rakers on their sites, they will never regain their investments into big marketing / cross-selling campaigns.

So yes - we do all this in our best interest. But also in the best interest of thousands of winning poker players, hundreds of small affiliates who cannot compete with these monetary incentives and dozens of operators.

So why don't you give out free bankrolls? I guess no poker room in the world would hinder you from doing so. You can even start to give your players $1,000 - and we won't care. So one question by me: why don't you give out free bankrolls?

There is just a big difference between "monetary incentives designed and used to poach high-rakers" and any stuff that helps converting loads of recreational players such as free bankrolls or - more widespread - some smaller freerolls.

We also get this argument a lot when talking to affiliate managers at poker rooms. They hear this all day from rakeback affiliates [again, I'm just referring to affiliates that do nothing else than rakeback and try to offer "the best deal" to players] - as rakeback affiliates have little arguments left to defend their cannibalistic business models.

It might very well be true that our bottom line will be hurt in the short run. But still, this is absolutely necessary in the long run. Only an online poker industry with healthy market rules will prevail and grow in the long run. That means: ceasing to incentivise cannibalistic business models that do not add any value.

I'm not too sure if you really disagree, but you certainly argue against us. And this is absolutely understandable - as I guess your business model depends on it.

I also understand that you need to lead this "counter attack" of implying that PokerStrategy.com is also evil and just argues from an egoistical perspective. But this does not curb the logic behind our arguments. It's not rocket science - it's a comparably simple economical model.

Best,
Lutz

To add one thing:
Whoever built up a successful rakeback affiliate is probably a smart person business-, Internet- and industry-wise.

Heed my call: use your expertise and skills to find ways to deliver real value to the poker industry.

Popuarise poker. Bring in genuine new players. Optimise cheap ways to acquire traffic. Realise content and services the operators cannot offer to the players themselves.

I'm absolutely sure of two things:

1. The industry will move towards better market rules - or shrink further. Both would mean the cannibalistic rakeback affiliate model would work worse and worse.

2. There are a lot of opportunities to deliver value to both operators and players and be paid fairly for it.

Hi Lutz:

I just want to challenge what I bolded in your statement a little bit. Winning players do start games and keep games going, and it's my experience, mostly from live poker, that winning players help a poker room to be successful. I assume this is also true on the Internet.

Best wishes,
Mason

Hey Mason,

I completely agree. Winning players are crucial for a poker room. What I meant is: "it is in the best interest of a winning player to have a poker market without big market flaws."

The reason is that the current market flaws lead to business models that de-tour a lot of rake through themselves that would be generated anyways.

Especially on networks like iPoker this lead to a situation that iPoker skin A poaches players from iPoker skin B by offering them a few % rakeback more.

The consequence is:

Option 1: skin A joins the fray and increases it's bonus costs
=> a vicious circle at the end of which no skin has money left to do marketing to bring in genuine new players.
=> without new recreational players, winning players lose - no matter if they now can have 70 or 80% rakeback.

Option 2: skin A does not join the fray and continue to do marketing.
=> the marketing will bring in new recreational players
=> the high rakers amongst these will wander off to skin B
=> skin A will not have a positive return of investment on their marketing campaigns and need to stop them. [reason: they are just paid for the low rake of these players - not the high net-deposits]
=> without new recreational players, winning players lose.


The problem is the short-termism of a winning player - that is completely understandable. If skin B offers 10% more rakeback and all else is equal - it's logical for the winning player to wander off. So the system needs to be changed to regulate the behaviour of skins on the network.

The same applies - as was the main topic of the thread - to a stand-alone poker room and it's affiliates - especially if the affiliates encourage opening a new account through your grandmother

Best,
Lutz

Hiya Lutz,

Will you concede that if poker rooms were to start centralising promotions (such that affiliates couldn't offer any added incentives) then that would mean the end of the free $50 bankroll that you offer also?

Kind regards

Me

Hi Jessica,

it's not about affiliate based promotions per se, but about cannibalization.

Now, in poker, cannibalization by affiliates is done through exclusive promotions that are targeted at high rake VIP-players that lead to direct or indirect cannbalization ("de-touring") [rake races, rake chases, addiontal rakeback, etc]

Special initiatives by affiliates that are designed to generate new, recreational players are absolutely fine as they are non-cannibalistic.

Good Example:
- Affiliate raffles a trip to Vegas between all players that make a deposit at room XYZ

Bad Example:
- Affiliate gives 5 trips to Vegas to the 5 highest rakers and offers straight cash as replacement if they don't want to go.

Of course, there will be many "grey areas" and also, if an affiliate offers hundreds of those trips per month, it again becomes cannibalistic. At the end of the day, it's the task of the poker room / network to regulate in such a way as to reduce cannibalization and encourge contribution of new liquidity.

Interesting read, gives a lot of insights to someone who isn't into the affiliate business.

All of you made decent arguments, are often right in your assumptions.

But do you know how all this looks like to a player who knew nothing about all that?

People are arguing about money and how to spend/keep it that isn't even theirs.
Some might be better and take more effort/cut their profit in order to keep the poker ecology in a good shape.

What none of you states is that online poker would be better off without all of the affiliate based stress and costs.
You're investing our money in order to try to fix a problem that wouldn't exist without your existence.

It's really that simple.

@wellju:
With your view, you are putting all affiliates into one bin based on your assumptions that come from experiences with rakeback affiliates.

Take PokerNews.com: they do a fantastic job in covering big poker events & the live tournament scene. This speaks to thousands of recreational players. Exposing these to online poker rooms is perfect for any winning player.

Conclusion: a lot of affiliates are absolutely valuable even from the most very egoistic point of view of any winning players. But only if they bring in genuine new players and popularise poker to new players instead of just de-touring existing players from room A to room B.

At the end of the day, the core principle is as follows:

Every dollar that is made with poker - by winning players, affiliates or poker rooms - has been deposited and lost by a recreational poker player first.

For poker to stay attractive for those who benefit from it (winning players, affiliates, poker rooms) the business dynamics need to realize this. The focus must shift from generating rake (with all the negative side effects such as cannibalisation etc) to generating deposits from new recreational poker players.

For this to work, new recreational poker players need to be valued more. I.e. affiliates / skins in networks should not be paid on rake alone, but on a combination of rake and (deposits - cashouts).

In addition to that, cannibalisation that's aimed and attracting high rakers only while not seeking to generate deposits from recreational players needs to be reduced or stopped.

When this happens, we will see growth in poker again and softer tables overall.

Come on Xantos. You of all people should know that the bankroll model has an extremely high barrier to entry for affiliates. Not only do you need to properly screen players for fraud but you also need to get the ok from the rooms (especially if you are working on a CPA). You're implying that your run of the mill affiliate can offer bankrolls. That simply isn't true due to the logistics and risk involved with the model.

Truth be told, we do offer bankrolls. We are one of your biggest competitors. We are also one of the largest rakeback affiliates in the industry. We send thousands of "fish" or new blood to the player pool every month. So please don't lump every rakeback affiliate into the cannibalistic group you referred to in your white paper.