Our step by step guide to turning €2 million into €200 million
While everyone has been focused on the consolidation among operators and software providers, what has gotten a lot less attention is the consolidation among affiliates. We feel this is where the real action is and to show you why here is our step by step guide as to how we could easily turn your €2 million investment into €250 million.
What we already have in place:
Step 1: Bring together a group of digital marketing and tech experts with an excellent track record and significant eGaming experience.
Step 2: Develop in-house tech to allow easy scaling of platforms (websites, social media profiles, apps) as well as easy management of all marketing channels.
Step 3: Create deal flow with a range of smart hardworking affiliates who wish to exit or become part of the business.
What we would use the investment for:
Step 5: Buy the right affiliates assets from the deal flow.
How We Unlock Value:
Step 6: Consolidate the affiliate assets onto the propriety platform and scale the business. This means we can grow revenues with no additional headcount or operating costs
Step 7: With the assets consolidated begin renegotiation of deals with operators and unlock significant incremental revenue per player referred.
Step 8: Use the cash flow to re-invest and repeat steps 3, 4 & 5
Step 9: Sell to an operator, other affiliate group or IPO
How is this even possible?
Let’s take a step back and look at why the affiliate industry is able to exist.
Due to the low barriers to entry anyone can become an affiliate. Which means if enough people try their hand at affiliate marketing, a small percentage (the winners) will either through skill or luck start to make money. They then take it more seriously and grow their business by repeating whatever it is they have done previously that works.
There are three key advantages to operators for working with affiliates:
Operators can focus on what they are good at which is running an eGaming business and not the difficulties of online marketing
Secondly is that affiliates only get paid for results, so the cash flow and risk to operators is minimal, this then creates a scenario that makes other marketing channels look expensive or risky.
The final and most over looked is not having to pay for the experimental trial and error of the vast majority of affiliates who fail. This trial and error in our view is extremely important to unlocking new channels in a highly regulated market such as eGaming.
As we can see by effectively out-sourcing a huge chunk of marketing to affiliates there is a symbiotic and mutually beneficial relationship between parties. This means in our view affiliates are not only crucial to every operator’s business model but the industry as a whole.
So how do you extract greater value from an affiliate business? Again if we look at how the vast majority of affiliates companies have evolved they are typically subject matter experts with deep expertise in one marketing channel, product vertical and country. This deep expertise at some point will become a limiting factor and put a constraint on the growth of their business.
By being able to use our expertise to identify the constraints and fix them relatively quickly you can easily unlock incremental growth. This additional growth coupled with the consolidation of a number of affiliate assets brings bargaining power, which is where the real magic is. By being able to take an existing affiliate deal and renegotiate for a better one you are effectively creating free money for the business.
While the steps all seem relatively straightforward and we are more than happy to openly discuss them, apart from ourselves at Revenue Engineers we believe there are only a handful of people globally who could execute the strategy. Feel free to contact us if you’d like to discuss further.