Opinion: Poker- the end of revenue share?
Life-time revenue share is a commission model specific to the gaming industry and is often praised as the perfect 'win-win' between operators and affiliates. However, LTRS suffers from major disadvantages which threaten its viability for both operators and affiliates, says John Samson, director of egaming ad agency Snoopy.
LIFE-TIME REVENUE share (LTRS) is a commission model very specific to the gaming industry and is often praised as the perfect “win-win” partnership between operators and affiliates.
Casino affiliates are commonly happy with the LTRS share model as their commission can grow rapidly.
However, LTRS suffers from three major disadvantages, which threaten its viability for both operators and affiliates:
1) As they have to share each penny of player-value increase with affiliates, revenue share can jeopardise margins for operators, especially those already sharing their rake with software or network providers. With LTRS hanging in the ‘lost’ column of the income-statement, investments in CRM become more difficult to return.
2) LTRS is unfair for affiliates in many cases. Big players make the model profitable for affiliates. In poker, when a random player becomes a heavyweight rake generator, he will often turn to a rake-back solution (for the poker rooms authorising it). As a result, content affiliates loose a part of “their” most profitable players.
On the other hand, because of LTRS, affiliates educating players at a later stage of their “playing cycle”- thus increasing their player value – can hardly be rewarded by operators (which already have to pay the affiliates which originally sent the players, thanks to LTRS).
3) Affiliates working on a LTRS can’t really measure the profitability of their advertising spaces, unless they use a specific link, isolate the stats and wait a few months. Instead, other commission models like fix fees, CPM, CPC, CPL or CPA allow the affiliate to measure the return on exposure of an operator on a specific advertising space quickly.
Higher earnings, especially on casino players, have often buried the disadvantages of LTRS. In other gaming activities LTRS doesn’t seem as rewarding, and is logically loosing ground to other models like CPA. For the above reasons, we can predict (and hope) this trend will continue.