On Thursday, lead 4Flush writer John Mehaffey wrote an excellent article at USPoker.com titled The Rise and Fall of Rakeback. Among other things, John argued that the secret, unregulated, rakeback deals (which leads to player poaching and other affiliate on affiliate crimes) is creating problems for online poker rooms and affiliates, and while I agree that this is a serious issue I don’t think it gets to the heart of the problem with the current affiliate model: It simply doesn’t appeal to casual players.
The problem with rakeback as I see it is that the reward is marketed as being small and infinite; it’s meant to appeal to high-volume, winning, players who understand the value of these tiny incremental rewards. Players who can envision the value of a 30% rakeback deal because they are in poker for the long haul. Unfortunately, like many other trends in poker, casual players scoff at the idea of receiving a penny for every hand they play.
In the early days of online poker it was deposit bonuses (which cleared much, much faster back then) that pulled in players, as they appealed to everyone from high-volume grinders to new players. The rakeback model that affiliates developed just doesn’t appeal to the casual player in the same way, and neither do the slow, prodding, clear $10 at a time, deposit bonuses that are mapped out to the penny as to how much a player receives per hand. These “perks” simply don’t do anything to hold a casual player’s interest.
What I mean by this is that a casual player who receives a straight $500 deposit bonus has something to work towards –not the $10 at a time bonuses that are commonplace in today’s game—when the mission is complete they have a cool $500, so what if it cost them two weeks and $1,500 to get.
Why this model works is that if they go bust before they clear their bonus they are more likely to redeposit than a player who goes bust and receives $1.45 in rakeback payments. Behavioral scientists would call this the “Endowment Effect”, where people place a higher value on something they already possess, the bonus. These players already have the bonus money; they just need to meet the requirements to use it!
To me, a better affiliate model was the one used by PokerSource.com, where players would earn points for reaching certain playing requirements and these points could then be exchanged at the site’s store for decent prizes like chip-sets, gift certificates, or even software like PokerTracker. These fixed goals made it far more likely that a casual player would redeposit if they went busto. It was a case where they would be 75% toward reaching their prize, so they would never simply say, “oh well, didn’t play enough hands for that $100 gift card.”
Most casual players aren’t going to stick with the game, so we shouldn’t be trying to appeal to them by offering them long-term benefits; we should be trying to get as much out of them as possible in their time online –I understand that this sounds callous but this is how the poker economy survives, through new money, and I’m not saying bankrupt these players or turn them into problem gamblers. I’m simply saying that we should give them a carrot to chase instead of leaving a trail of peanuts that they can stop following whenever they want.
Think of it this way:
Player A deposits $200 and receives a 30% rakeback deal. Player A’s money lasts about two weeks after he plays roughly 1,200 hands of $.10/$.25 No Limit Holdem, which means he gets weekly rakeback payments in the neighborhood of $5. When player A busts what are the chances he redeposits? Not very likely in my experience, and the reward he is receiving ($5 a week) isn’t going to sway him to redeposit.
Player B deposits $200 and needs to rake 2,000 hands to receive a $50 gift card. After the same 1,200 hands he is busto. What are the chances Player B redeposits? Chances are he will at least redeposit to clear his reward.
Player A received a bunch of peanuts one at a time: Player B has yet to receive anything, but he is more than halfway to his reward: A whole bag of peanuts.
My feeling is that poker sites should want two things from affiliates:
· New players
· New deposits
What they are getting now is neither, as most affiliates try to bring in winning high-volume players, not casual players who constantly redeposit –because the current system rewards them more for these players.
People will argue that high-volume players are incredibly important to poker sites (and they are) because they keep games going and create more rake at the site. But I would argue that they are going to be there anyway, they don’t need an affiliate to steer them to the sites! Poker Sites are paying affiliates to bring them players they already have access to.
The current affiliate model in poker is along the lines of a health club offering bodybuilders a 10% discount on a protein shake they already buy every day. Believe me, the serious bodybuilders are incredibly important to a gym (they buy drinks, protein shakes, supplements, and all the other heavy markup items health clubs sell) and while they should, and do, receive preferential treatment since they are worth more to the gym (a membership may run you $30/month, or about $1/day, and many of these people spend $5-$10/day on the above mentioned items) these are not the people you should be marketing to; you already have their business.
In the above example it would be better to give away 10 free shakes to people who don’t buy them since you might get one or two to start buying them. There is a major difference between customer drives and loyalty rewards, and it’s in this area I feel poker sites and affiliates are missing the mark.
Given their choice of the following options which do you think a casual player would choose upon joining a site?
· A 30% rakeback deal
· A $100/$250/$500 gift card with play-through requirements
So let the high-volume players have their rakeback deals, but let’s get the casual players a rewards system they want, and one that will keep them interested for a specific period of time. Until online poker sites realize the way they are currently using affiliates has turned them into unnecessary middlemen I’m afraid we are stuck with cookie-cutter rakeback programs, and affiliates that are content with cutting back-room deals with players who don’t need them to begin with.
Now, I’m not arguing that there is no place for rakeback; I’m arguing that rakeback shouldn’t be the foundation of the affiliate system. It should be an option for players when they signup through an affiliate, and not as it is now, the only choice. Poker affiliates shouldn’t all be the same; they should be unique and offer different promotions and prizes. Affiliates are the advertising executives and poker sites should demand they earn their commissions by coming up with appealing and creative ways to market their product.
Author’s note: This article may come off as an indictment to current poker affiliates, which it most certainly isn’t. Affiliates are simply using the tools and methods that the poker sites have given them to work with. This article should read as an indictment against stale marketing ideas from the poker sites themselves, which has left us with the current system.
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