Rakeback and Full Tilt: other poker sites will lean too

FULL Tilt Poker recently announced to their rakeback affiliates that they would be capping the margin on rakeback accounts to 3%.

For some turnkey site operators that means the margin effectively became 0%, and for other rakeback sites they just saw their payout drop from 8% to 3%.

It would appear that what Full Tilt is trying to accomplish is to throttle the amount of rakeback players. If they make promoting Full Tilt rakeback less profitable, fewer rakeback affiliates will promote it.

The first assumption that one can make from this is that Full Tilt has looked at the revenue model from rakeback players and concluded they aren’t worth as much due to the fact that they tend to be net withdrawers from the poker ecosystem, because rakeback players are more heavily weighted in winning players. However, it could also be a trial shot across the bow to affiliates in general indicating that Full Tilt believes that their brand is strong enough that they don’t need to pay as much to affiliates.

Full Tilt may be testing the waters with a smaller segment of their affiliate base to see how it impacts signups. If signups only drop off slightly it might indicate that they may start looking at regular affiliates as well to see if the same can’t be done there.

As much as affiliates hate to hear this, from a business perspective this makes perfect sense. Full Tilt has built a strong brand. They spend heavily on marketing in other media. They need to look at what value affiliates bring to the table and whether they’re paying the right price for it.

Most larger affiliates wouldn’t be impacted too greatly by a change in payouts because they’ve negotiated exclusive deals. But that’s a small segment of the affiliate world. Most affiliates would be forced to decide whether to keep promoting Full Tilt or to promote another room with a higher payout.

The problem for many affiliates is that they’ve created Full Tilt specific sites. Someone who has optimized for “Full Tilt Bonus Code” can’t just put up Ultimate Bet banners and hope to get any conversions. So those affiliates will likely need to swallow the pay cut.

From Full Tilt’s perspective the fact that they were searching for “Full Tilt Bonus Code” means they’ve already done all of the heavy lifting getting the customer familiar with their product. Why should they pay top dollar for a customer that they’ll eventually get anyway?

And don’t expect this to be an issue specific to Full Tilt. Most poker rooms are feeling the heat on their balance sheets from the high cost of customer acquisitions. If poker rooms can find a way to get the same number of players at a lower cost it’s in their best business interest to do so. And the more well known the brand, the more flexibility they will have to do just that.

For more from Bill Rini, click the tag below.