[WATCH] The Big Debate: Regulating the Affiliate market – AGS Europe

In an AGS Europe 2021 panel which was held in Malta, the moderator Clemence Dujardin, Managing Director at MyAffiliates, and the panelists Debsena Chakraborty, Business Development at mFilterIt, and Lee Gwilliam, VP Commercial at Gambling.com Group discuss “The Big Debate: Regulating the Affiliate market”.

Clemence Dujardin

This panel meets to talk about regulation in the affiliate market. Dujardin asks both panelists what their opinion about regulation is, both positive and negative. Chakraborty says that especially in a scattered market like affiliation, it’s good to have some regulations which everybody can follow and nobody can bypass. According to Gwilliam, it’s inevitable to have regulations. Affiliation is a maturing industry and as in any other industry that matures, there will be regulations; so, it’s better to get it done. He adds that affiliates shouldn’t be scared of regulations. This is because if affiliates get involved at an early stage, they will have a voice on the table. Even though affiliates are an important part in the ecosystem, they don’t often have a voice. He says that since at Gambling.com they only work in regulated markets and they only have clean traffic, from a competition standpoint, it’s beneficial for them to eliminate those who don’t do the same. As long as affiliates have a voice on the table and as long as those regulations are applied across the whole ecosystem, they are welcomed, he says. It’s important to regulate all affiliate marketing and not only affiliates.

Debsena Chakraborty

Lee Gwilliam

Chakraborty adds that the big players like Gambling.com, have much more access to clients than the smaller ones. With proper regulations, it can be easier even for smaller affiliates to compete in that particular space. Dujardin asks Gwilliam whether regulations will really give a level playing field for everyone. Gwilliam says that in his opinion it does. He adds that it’s common for him to hear from smaller affiliates that regulations are a threat from the big ones because they have the technology and the resources. He thinks that “the opposite is true”.

He says that if the top dozen companies in the industry on the affiliate side get together and agree on a standardised set of rules and data by which everybody will abide, the small affiliates will then also be in the same level playing field and in the same ecosystem. They don’t want to exclude competition from the market because for the business model to continue working, they need new ideas coming in. In addition, competition keeps them honest. However, what they need to do is to give smaller firms the ability to do this.

Follow the whole panel discussion here:

Dujardin asks Chakraborty whether once regulations are implemented, there will be some affiliates who will stay on the gray market and therefore push players there. Chakraborty says that in her opinion this will happen. At the moment, there are affiliates who are playing in the grey area and if there are regulations, there will be those who will prefer the grey areas because it’s easier and the money is quick. “At the same time”, she adds, “the operators will realise that there are rules and regulations which they would want to follow that will help them in the long run.”

Gwilliam says that, as has already been seen, some overregulated markets led to either a gray or a black market. He adds that this happens because of regulation without enforcement; it’s one thing saying that everyone needs to be licensed, and another thing is enforcing it. He continues saying that the ones who are being audited by regulators are the ones who have a license and who try to be compliant; whereas the non-licensed and non-compliant ones don’t get audited. The regulatory body needs to go after the people who don’t have a license and aren’t playing by the rules.

Chakraborty asks Gwilliam whether he thinks that the lawmakers aren’t equipped to bring in regulations because they don’t understand the regulations that they are bringing in; it’s either over-regulated or absolutely under-regulated and they don’t know how to enforce it. Gwilliam says that this is fair and that in his opinion it’s “political, because it’s laws that are passed. And as with anything, if you want someone to make a mess of it, give it to the government to run it.” He adds that they need to get an industry body together, to have a voice which is the voice of the ecosystem in this conversation.

Dujardin agrees that this “is the voice of the ecosystem”. She says that there is no lobby, no representation, and the discussion isn’t actually happening. As a result, everything is falling on the affiliates who never know what to expect, which is the biggest problem. Gwilliam adds that it’s also not helping the regulator or the industry. He says that if they “had proper regulations, if there was standardization, if [they] were actually on common platforms, if [they] had a voice in the conversation, then [they] would have something sustainable [and] scalable that provides good player protection”.

Dujardin asks if they think that operators are willing to help. Gwilliam says that he thinks that they only pretend to support and that it’s forced, and sometimes it’s just a PR exercise. Operators have to accept that the streams from where traffic is coming is changing all the time. The affiliate ecosystem isn’t going away and the models change all the time. He says that at some point, operators will have to treat all affiliates like business partners and not only the large affiliates who have the leverage to force it.

As for the regulations, Chakraborty says that a regulation isn’t complete unless both parties are in it together. Therefore, if affiliates are going to be penalised for certain regulations, operators need to face the same penalty. If operators work with affiliates who bring traffic from gray areas, they need to face the same consequences.

Dujardin asks whether they believe that affiliate marketing platforms should be part of this regulation, whether it should be the whole ecosystem, and whether there should be data audit. Chakraborty says that data standardization is required and that there should be a certain set common for every platform. She adds that this is very important; “if you are going to look to set up rules, set up regulations, then your idea about having that same data set across all these forms should be there.” She says that everybody, including the platform players, should be part of it.

Gwilliam says that this isn’t a new issue and it has existed for many years. He agrees with both of them and says that affiliates have reached the level of understanding and maturity within the industry and they fully understand that every potential data point is available in the third-party platform provider, if the operator chooses to provide it. Operators who say that they don’t have that piece of data are lying and this way they neither build trust nor transparency. He adds that this isn’t only about regulating affiliates, but about regulating the affiliates’ ecosystem and the third-party software is part of that ecosystem. Ideally, they should get ahead of the game and do it before it’s forced upon them. This only works if all parties are involved in the discussion and are all part of the regulation.

Chakraborty says that she has often seen mature operators and affiliates sharing data but this isn’t the case with smaller affiliates. Operators need to understand that the sharing of data needs to be done the same with all types of affiliates. She adds that rules need to be the same for both small and large affiliates, there cannot be a separate set of rules. Even affiliates need to have common rules. It’s important for everyone to have a common voice. Gwilliam says that this isn’t an easy challenge and it’s important that both small and large affiliates take part. One must think about the overall health of the industry in the long term.

Dujardin says that this is a challenge because who is going to take the lead and start the discussion. There is no proper representation or associations. She asks Gwilliam how he sees it working. Gwilliam says that in his opinion what they have been missing might be the third-party platform providers, because they have interest on both sides. Their clients are the operators but they also get complaints from affiliates asking for their data.

He says that there are fewer platform providers than there are operators or affiliates so it would probably be easier and it would be probably more sustainable if the platform providers were to lead. Chakraborty adds that if the top 10 or 12 affiliates were to come together and agree on this point, it would help to take these regulations much further ahead than the platform providers alone trying to convince both parties.

Gwilliam says that it isn’t about platform-providers convincing everyone, but rather drafting a framework. Moreover, this isn’t only about regulating affiliates so there is nothing stopping platform-providers from talking to the regulator, explaining the regulatory ecosystem as it currently exists, and telling them that they should also look at them. They need to volunteer themselves.

Dujardin says that they are late in this discussion, a discussion which should have happened 10 years ago. She asks the panelists how and how fast they can catch up? Chakraborty says that if you don’t catch up there will be one lawmaker who will come up with rules and regulations that will cause problems to the entire ecosystem.

Gwilliam says that in many markets, the changing nature of technology and the way that we actually have to market two players is driving change in the platforms which naturally increases transparency. The other is the “consolidation on both sides of the industry, where you’re just getting progressively fewer partners on both sides and it becomes much easier to have those conversations”. In his opinion, at some point it may happen organically. However, he would prefer it if they got ahead of it. From the examples that we have, panic regulations aren’t ideal.

Dujardin says that as in the case of Germany, “10 years into your German market and all of a sudden you stop earning money out of it. The operator is still making money out of these players because they’re still there.” She asks how to create a balance so not only the affiliates are affected, but also the operators. Gwilliam says that it depends on the market because, as in the case of Australia, both sides were affected. He adds that this is about the regulators understanding the ecosystem and also understanding that if this changes for the operator, it’s also changing for the marketing companies.

To conclude, Chakraborty says that this industry is lacking representation in government bodies and there is the need for someone who understands this ecosystem in the government. Gwilliam says that what is working in the United States could be carried over to other markets. Dujardin summarises everything by saying that “the message is basically [to] take the future of affiliate marketing into our hands and [to] pave the way ourselves before someone does it instead of us and does it badly”.

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