September 2, 2011
What’s the next market for Affiliates; Lottery, Forex or the United States?
With the US market teetering on legislative approval, the lottery sector showing major signs of growth, and then ever-looming Forex/Binary Option market growing at incredible rates, which is the best for an Affiliate to invest their valuable time and resources into?
I’ve been in the Gaming industry for many years, both as an Affiliate, Super-Affiliate and then as a professional SEO Agency acquiring top rankings for various major players and SME’s. One of the most frequent questions I get goes something like this,”I can’t compete with the big guys like I used to anymore so what’s next?”.
I answer this question like so,”…it depends on the risks you are willing to take; mainly your time and money.”
The US Affiliate Gaming market is promising…eventually. New Jersey couldn’t put it together and now Nevada is having a go at it with the introduction of BDR 41-657. Speculation is at an all time high because it is believed that once a single state approves some sort of legislation allowing online gambling, the end-game will become ‘follow the leader’. There is even talk that Federal regulation is nearing; providing guidelines for every state to allow limited gambling, which would eventually lead to what we all want, legalized online gambling. I wouldn’t discount this sector, but I would limit my investment to 10-15% of my overall investment. It’s too big to ignore, but potentially too over-regulated initially to invest full-time in. If UIGEA were overturned we would all be ecstatic, but I think that its going down to the state level now and the sector will become an overly policed nightmare for an affiliate.
You also have to consider that Google has fine tuned is algorithm several times recently and targeted ‘portal’ affiliate type gambling websites. Countless Affiliates have approached me for help because not only have they lost positions, but Google is seemingly penalizing their site as well. If you had good rankings and all of a sudden you are on page 3, then 5, then 9 (positions 30+, 60+ or 90+), then you are on your way. There are several ways to overcome this, but none are cheap or quick.
So do you put your money in this wish basket and start building your sites and link networks to target the US? or do you consider other sectors that eliminate the legal issues?
Lottery Affiliate Sector is growing significantly, much like ‘online bingo’ did a few years ago. The issue here is that commissions vary considerably, but all are smaller than we are used to – from 3% to 25% on a revenue share program, or a CPA deal of up to $100 per player. The drawback I see here is that the commission is minimal on a CPA basis but attractive to Affiliates that are wary of Vendors without cookies or tracking programs. The rev share is also a ‘faith-based’ program but most have sufficient tracking in place because they pay lifetime commissions on player deposits. The issue I see here is that although the organic ranking results on Google represent a soft market, the sector is awash with affiliate offerings that are the same vendors and the same offers. Additionally I do not feel like this is a good sector for an Affiliate, but it’s a great one for a successful Super Affiliate because end-user loyalty is typically very high if you have a good provider supporting you and plenty of good Affilliates.
Forex Affiliate Sector is, in my mind, the hidden gem. Much like the mobile gaming sector, it had high expectations in the past but was and is slow to fully mature. The fact is most Gaming vendors already have Forex properties or have already integrated them into their offering like William Hill. The forex market has a few significant and standout advantages to US gaming or Lottery offerings;
1. Less than 5% of the global audience is aware of the forex market is, or how it works
2. Competition in organic search results is soft
3. Competition in the PPC/paid arena is medium-soft and wide open for longtail terms
4. Affiliate offerings range from $100-$300 CPA and although 10%-25% seems to be the norm, I have found a few willing to offer up to 40% with lifetime commissions available at several brokers.
5. White labels, live MT4 platforms and even custom branded Smartphone apps are available – cheap
6. Lots of cross-selling sales opportunities such as Signal Indicators, Consultancy services and training materials are available to further monetise the traffic you create
7. The Middle East is limited on gambling due to religious beliefs, and although it is a highly debated topic, the results I will show you shortly will prove that it is currently the hottest market to enter as far as I am concerned – both from a PPC standpoint and an SEO standpoint
*While opinions vary as to what countries make up the modern definition of the Middle East, the various places that do come under it are Egypt, Israel, UAE, Saudi, Yemen, Iraq, Iran, Syria, Jordan, Kuwait, Lebanon and Libya. The northern African countries that border the Mediterranean Sea also come under it.
The forex market is on the verge of a major migration of both affiliates and punters in part because the profiles are so similar to gambling risks and that ‘attraction‘;
1) choose your currency/market
2) choose your leverage
3) win/lose or break even
The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. In the past you were limited to dealing with a commissioned stock broker or agent. The Forex market allows YOU to be the broker. Some refer to this role as that of a Day Trader or a Penny Stock Broker. The individual gets educated on market indicators such as employment/unemployment reports or other relative information and makes an investment in currencies, FTSE or DOW gains or losses, or even gold and silver price/value variances.
One of the major reasons I see this as the emerging market for Affiliates is the social and viral opportunities that most Affiliates have mastered in the Gaming sector. Because this is a fairly unknown market amongst Affiliates and the majority of the online world, this provides unique opportunities for someone that works from a social networking standpoint. The average investor, the Affiliate and the Super-Affiliate all have a place in the Forex market. Trading, training and forex investing techniques/tools all become hugely sought after and their viral opportunities are endless.
I can say that several years ago, after the Affilicon conference in Israel, I was approached but multiple investors looking to get into the organic and paid search Forex market. I had heard of it and have seen various companies at Affiliate and Gaming events but never paid it any attention. After meeting these potential SEO clients I actually entered the market as a punter to give-it-a-go. At the very lest I could learn the ins and outs. Initially I opened practice accounts and was marginally successful;which made me do the necessary research to make smart decisions while investing in a real money account. My first month of trading I achieved the #27th position out of the top 100 traders on a major site and made over $2300. The second month I lost about $1100. The last month I made up what I lost the second month and made an additional $4200. This really made me open my eyes!
So I started to tear apart the industry and came across everything from individuals willing to advise you every day on what to watch, signal indicator services that you pay monthly for, robots you can buy/subscribe to and more advice than you can find on playing poker – and almost all came at a premium and had an Affiliate program. Can you say ‘Cross-Sales’’?
So let’s say I have convinced you that this is something worth looking at…Let’s take a look at the existing (available) statistics on search volumes and some real stats from Google Insights (and some actual Forex PPC campaign tips).
Take a look at FOREX and BINGO interest over time;
So this should show even the novice Affiliate that the market is there and is growing on-par with bingo. The difference is almost everyone knows about bingo, very few know about Forex.
Tips for Forex PPC and Organic targeting;
* The top target are Argentina, Mexico, Italy, UK, USA, Middle East, Denmark, Sweden, Kenya, Mongolia, Pakistan in terms of search volume
* Top click throughs are the Middle East with ads in Arabic
* The top converters are the Middle East, Argentina, Mexico and Italy
* The demographic split looks like this;
o Male 23-33 40%
o Male 34-43 60%
o Male 44-53 40%
To help get you started, here are a prime keyword list for targeting my 2 picks; English and Arabic (let Google automatically set your geographic targets)
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And Finally…the cons
One more important detail to note is to be very careful when researching white label offerings. Many fall short. Either they have less-than-attractive call centre support which will cause you to lose Traders, they don’t offer the full package (like MT4), their commission structures are self-serving, or many other issues I have come across. Know what you are doing before you give your traffic to anyone.
As someone that intends on building Affiliate networks, the general rule in Gaming also applies here; 10% will generate 90% of your revenue; 90% will generate 10%.
I still recommend getting into a 2-tier program because of the anticipated future of the Forex market. Additionally there are also Binary Options which go alongside Forex. Most companies offering Forex and Binary Options and these are basically the same thing, down to the costs, clicks and conversions, but at ⅓ the traffic. These work like Forex except you invest/bet 100% of your chosen amount on a pre-selected time frame, and its all or nothing. You can either lose 100% or gain up to 91% in some sectors in a matter of minutes if you predict the rise or fall correctly; unlike Forex where you only risk the amount the funds decrease until you close it. In either you can predict that they will rise or fall.
Be just as careful and inquisitive as you would be in the Gaming Affiliate marketplace. There are rouge companies in this, as in every market. Test PPC and organic campaigns side-by-side and determine what type of traffic you are getting and what type is actually converting. Take a look at the stats for these conversions. Depending on your content (Ie. reviews, education, tools, pro-trader tips, etc.) you will get different types of conversions. Some will be great for a CPA deal, others will be good for rev share. Negotiate your best deal as the ball is in your court right now.
I found that compartmentalizing (especially on PPC and Social Media) first geographic targets, then language targets, then demographic targets individually, is the best way to split them up.
From here you will get vastly different conversions and because the Affiliate sector is so soft and vendors are scrambling to attract more Affiliates, you can get them to split up your commissions by any or all of these metrics to maximize you returns.
The only thing I haven’t mentioned is the main difference between Gambling (ie. Live Casino), Forex and Lottery – and that is that alot of people got rich from getting in the gaming arena early. Let’s say there were 1000 affiliates making 6 figures. In the Forex arena there will be 1,000.000+ millionaires. It only takes one punter wagering 25k per month for you to start receiving over 60,000 in commissions…and they are out there.
The average punter wagering 1000 to 5000 per month as I was is common. Get yourself five or six of these types and your making the same. Offer them their own personal iPhone or Blackberry app with MT4 (live trading – even better than the web-based desktop versions) as an incentive. Offer them free SEO. Offer them something to switch to your platform. Once they become re-adjusted to your user interface they will stay with you.
Alot of people are going to get rich in the next few years – are you one of them?
If you have any questions regarding the Forex market, free tips and advice on organic or paid campaigns, or the best mixture for your situation feel free to contact me at Gary@BlueClaw.co.uk or at 07872 447 452.