Is Cheap CPA Costing Operators Better Players?

I don't think AI will become a rescue plan for weaker players. Operators are still very, very focused on cheap CPA. They want to buy traffic as cheap as possible. I think that's a mistake considering the current circumstances.

Do you think streamers are taking over as the main channel?

If the $400 CPA player gives five times the player value over a period of time, which is more important to you? So I think operators have to decide what kind of a business they're building. Everybody can now produce a website. The ones who will use AI intelligently beyond just...

iGaming Real Talk is launching the next series. This is the fourth event out of the 11 events we are doing this year, and I'm very excited to bring you the insights from the expo floor. This time on affiliate and operator relationships, as well as what's missing in the industry. What's the trend? What are we looking at when it comes to 2026, 2027 and beyond in terms of the trends, AI and everything else? This series is brought to you by EvoWorks.

They offer custom crypto casino solutions, as well as source code. This series is also brought to you by Wicked Games. They create slot games that slap. Hello and welcome back to another episode of iGaming Real Talk. I have with me Prash. This is the second time for him on the show. We've known each other for a very long time, so it's great to have you here, Prash, again.

My pleasure.

Today we're going to speak about affiliate and operator relationships. This is something that we were thinking of venturing into more because I have covered more B2B providers and platform kind of discussions. So I'm like, okay, let's see what's on the other side, on the distribution side, on the affiliates, and how we can bring value to operators as well.

Considering that you have launched and sold your own affiliate business, from what I know, what do you think is the biggest mistake operators still make all the time when working with affiliates?

Very interesting question. It's been a while since I sold my affiliate business, but I've been on the operator side for many, many years.

Even recently.

Even recently. A lot of operators probably make the same mistakes I made as an operator. I can only speak from my own experience, right? One of the classic mistakes that operators make, and we're not talking about every operator because a lot of operators get this right, otherwise the industry wouldn't survive. Those who are not getting it right are probably treating every affiliate in the same way. I think the traffic channels have changed drastically over the last 10 years.

Do you think streamers are taking over as the main channel?

I'm not sure if they're taking over, but they're infiltrating the traffic market, right? It depends on geos. For example, it's very rife in LATAM, and I know some guys in Germany and Sweden are doing really well. But I think affiliation is still probably 65, 70, 80% of all traffic. Traditional SEO, even PPC. A lot of operators don't seem to understand that SEO is not the same as PPC. It's not the same as social. It's not the same as community.

Each one of those channels has its own ecosystem. They have their own model, their own cost base. When operators treat them in the exact same way, they're not personalizing their deals in accordance with their ecosystem. So you find that a lot of operators are missing out. You're getting low-quality traffic because they are not really understanding the channel's own ecosystem. That's a classic mistake.

One of the things that I still see everywhere is that operators are still very, very focused on cheap CPA. They want to buy traffic as cheap as possible, and I think that's a mistake considering the current circumstances. There's a big difference between landing a new player with a cheap CPA and landing a player that offers great value.

You'll find that a lot of affiliates might seem expensive at the outset, but they will be delivering huge amounts of profit, far greater profit, three or six months down the line. So player value down the line is much more important nowadays than cheap traffic. For example, let's say an operator lands a new player in Ontario for $200. Another affiliate will send a player that's a $400 CPA, right?

But if the $400 CPA player gives you five times the player value over a period of time, which is more important to you? So I think operators have to decide what kind of a business they're building and where their metrics matter most for them. It's a big mistake they make. One of the classic mistakes that I've seen happen, and this was relevant to me because I made this mistake myself, was having very poor communication with affiliates. Very poor communication.

At best, we might send out a newsletter every month. We don't categorize. We treat them exactly the same as everybody else. Sometimes we'll change deals on them without notice. Very little transparency. We are not really understanding their business model. So it's difficult to build a relationship with an affiliate. I think nowadays building a relationship with affiliates is probably far greater of a thing than it used to be. Traffic was cheaper back then. SEO was easier.

Now it's not so easy anymore. So I think building business relationships with chosen affiliate partners and treating them as partners rather than as just traffic sources is going to be much more valuable for operators going into the future.

So it's all on the affiliate manager?

Not necessarily, because the affiliate manager generally is executing on the direction that's given from the top.

Right.

So it really depends on the strategic view that the leadership has and really understanding the model ecosystem. It's not easy because an operator business has multiple moving parts. The C-suite has many, many things to think about. Generally, the commercial officer is in charge of bringing in acquisitions, converting players, retaining players, bringing back old players, having some form of CRM system in place that's really effective and also predictive.

There's a million keys. Not just one thing. They've got regulation, KYC. They've got finance. They've got legal. They've got tech. They've got a whole bunch of operational stuff. They've got a lot of things to look after. So leadership within organizations is really not where the decisions should be taken lightly.

Let's talk about AI. AI is everywhere. Sometimes it's overhyped compared to what it is. Do you think AI is helping affiliates at the moment? Do you think affiliates are using AI, adapting for creating SEO sites at scale? Is it working? Have you seen any from your experience?

I have actually, yeah. I think what AI is doing is it's kind of changing the value equation, right? Because now with AI, it's much easier to generate content.

Yeah.

It's faster. It's cheaper.

Is it working?

Well, it's working in terms of launching the site.

Yeah.

That's not really where the value is anymore.

It's the work we put in every day, right?

Yes and no. Again, it's kind of strategic. Everybody can now produce a website really quickly. There's a proliferation of entrants into the affiliation space because it's easy. They can do everything with AI. But then how do you differentiate from everybody else that's already in the space? It's becoming a bit saturated. I think where the winners will win are the ones that actually start understanding that they need to start building trust with their potential players.

Because the differentiator is going to be relationship and trust. Affiliates have to now take over the responsibility of really making sure that they are trusted. They do that by projecting a personality, having a brand, having rewards, having a community, some kind of relationship-building exercise where you're differentiating yourself from the crowd. Rather than, Here's a new casino. This is their best bonus. Everybody's talking about that.

But how are you really differentiating? I think trust and building communities is where the differentiation is going to take place. The smart affiliates are going to use AI because AI is for sure helping affiliates launch businesses. But it's not going to help them to build trust.

Yeah.

That's still a human interaction, right? That still needs human strategy and tactics. It still needs daily input, daily analysis. That's stuff that is probably not yet in AI's remit, that humanness. I think the guys that are going to be bossing the future are the ones who will use AI intelligently. Beyond just generating content, they'll use AI to effectively localize and personalize. They'll use AI to dynamically translate. They'll use AI in a much smarter way.

Those who use this in a smart way, AI will be a little bit this way. I think, and it's only a personal opinion, there's always the disclaimer.

Yeah, exactly.

AI will amplify the effectiveness of good affiliates. But I don't think AI will become a rescue plan for weak affiliates.

Okay.

I don't think that's going to happen. Really, the ones that use it intelligently are the ones that will lead in the future. If you look at affiliates five years from now, I'm not talking about the big monoliths that have been here forever and they're dominating everywhere. I'm talking about the smaller guys with ambition, the new entrants.

The ones that build a relationship and build trust with their potential crowd are the ones that not only survive, but thrive down the line.

You bring up a very important point regarding building relationships. I've seen some solutions, AI customer support, where you can keep chatting. Their messaging and marketing is very interesting. They're essentially saying that they help build relationships better than humans because there's no emotion behind it. I don't know if a human is emotion, but I don't really understand that.

Maybe they're right. I haven't seen this.

But is it human already? I'm not sure. Do you think that works? AI customer support in general, in your opinion, could work?

I think it can work at an initial level, but it's the escalation process that has to be tightly configured. When does your bot start to impact negatively on the person that they're chatting with, and how quickly can you migrate to a human interface? So it can work, but it depends on how it's used.

Yeah. I don't think anybody really knows. There's another thing that I discovered in one of the recent interviews. When the user knows that it's an AI or bot, they treat it differently. But if you mask it as a human, their approach is different and more open.

Quite possible.

Yeah. It's like when you're talking to a machine, you're going to be very short, right? Not very courteous. But when you're talking to a human being, you might have a different interaction.

I'm not an expert on support, but I expect...

Would you use it? Let's say you start an operator tomorrow. Would you use AI?

I'm still a little bit old school. I like people talking to people. Until there is an AI agent that can fool me, I'll probably offer a human interface.

Cool. Well, thanks for joining me again, sharing your experience from the affiliate business as well.

My pleasure. Thanks for having me.

That's it for today. Thank you so much for watching. Do give us a like and let us know your thoughts in the comment section. Do follow Prash. Thank you, buddy.