Part 2: The changing affiliate landscape
A different tone
Such is the switch in focus at the
foremost consolidator in the sector,
Catena Media, that (as discussed
elsewhere in this report) the company
has indicated that its own buying
spree will moderate from this point
onwards and it will be concentrating
less on M&A in the years to come.
A similar refocusing appears to
be taking place among other sector
constituents. Jesper Søgaard, chief
executive at Better Collective –
which listed in the summer on the
Nasdaq First North exchange in
Stockholm – believes the slowdown
in M&A activity in the past few
months is partly caused by many of
the leading names adjusting to their
new listed status.
He adds that the decline in the
share prices of leading affiliates – in
part in sympathy with the share-
price performance of the leading
listed operators – has also been the
source of a degree more caution.
Søgaard insists that Better
Collective remains “very active” in
M&A and has a “strong pipeline” of
potential deals in the offing. But as
with Catena, it is hard not to come
to the conclusion that, with the
pace of deals visibly slowing down,
the largest of the acquisitive super-
affiliates have become pickier, as
Raketech chief executive Michael
Holmberg suggests.
“The Raketech M&A team holds
regular discussions to go over all
of the pitches,” he says. “But we
are picky and want to ensure that
the business, the people behind
it and future growth projections
meet our expectations.”
Though the calls are still
coming in to the business from
the M&A brokers and the smaller
affiliates, he suggests the “gold
rush” of people being able to
build a site very quickly with the
end-goal of ‘flipping it’ for a quick
There has been such
a flurry of activity
that those companies
investing now need
to take the time to
consolidate their assets
Ryan Henderson,
Kindred Group
sale are now long gone.
“With fewer smaller businesses to
buy, the bigger affiliates need to focus
on new product development to gain
market share, target new regions and
enter new verticals,” he says. “We could
also see more affiliates branching out
into new areas like financial services,
esports or travel to try their hand at
something outside of igaming.”
Future deals
The move into adjacent sectors
is certainly a preferred angle for
Catena Media, XL Media and others.
Indeed, the latest deal announced
by Raketech was the buyout of
Norwegian-facing consumer-finance
affiliate assets, including the site
Norskkreditt.no.
Such moves away from
the gambling sector and its
attendant regulatory scrutiny
are to be expected, suggests
Sarah MacDonald from Wiggin:
“Some of the listed marketing
affiliates have rightly looked for
acquisitions in other sectors, in
part to leverage their technology
and marketing expertise, but no
doubt also with an eye on negative
gambling regulatory developments
around both affiliate activities and
advertising more generally.”
Generally, however, there is a
belief that even when it comes
purely to the gambling sector, a
renewal of M&A action is only a
matter of time. Galanis certainly
believes the slowdown in recent
months is seasonal and that a pick-
up will take place in the spring.
But he adds that the source of
the deals might differ from the past
few years. “This may come from
outside of the industry’s current
sphere of super affiliates, many of
whom are focusing on optimising
activities and embedding recently
acquired assets and businesses,”
he suggests. “My prediction is that
we are likely to see further moves
from the likes of Racing Post and
perhaps an even larger media group
entering the market.”
Claire Wellard, founder at affiliate
marketing consultancy iGamingXL,
says the basic dynamic of “many
affiliates” simply building their
businesses in order to sell holds
and that the regulatory changes
continues to exert an influence.
“Affiliation is becoming harder and
more competitive so a sale is in a
lot of minds when building their
businesses,” she says.
A harsher business environment
Nick Garner, chief executive at
Rize.Digital and a longstanding
Under pressure: Regulation and the evolution of affiliate marketing
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