Is the Affiliate Industry in Crisis? Experts Weigh In on the Future

What’s Behind the Troubles of Affiliate Companies?

The affiliate market has recently experienced quite a shake-up, with layoffs, reduced financial forecasts, and asset sales grabbing attention. At the forefront of these issues are changes in Google’s policies—an influential platform that affiliate companies rely on heavily given the nature of their business.

“Definitely, the most important factor has been changes in Google. Most affiliate companies—both large and small—simply rely on traffic from this channel. Content sites, comparison sites, rankings—the model is very simple, but the path to the top isn’t easy. In the past, you would just create a website, add content, buy links—SEO was simpler. Now, there are no straightforward answers, and it’s evident that many experts are trying to move forward through trial and error,” explains Maciej Akimow, CEO of iGaming Dragon.

However, solely blaming Google for the affiliate sector’s issues would be oversimplifying things. “The market is becoming increasingly saturated, particularly in Europe and North America, heightening competition and limiting growth opportunities,” notes Mihail Criclevit, Founder of OnlyiGaming.

“Additionally, some affiliates have pursued short-sighted growth strategies, expanding too rapidly into new markets without fully optimizing their core operations, which has resulted in operational inefficiencies and financial strain,” Criclevit adds.

The U.S. market has seen the most stumbles and abrupt decisions, with companies focused on the American market facing the most pressure. Why has the U.S. market recently experienced a slowdown?

“The overarching factor is that there have not been many major state launches in the last two years. Since many US-based affiliates work on a CPA model, they get paid when people sign up. Much of the customer acquisition spend and signups come in a flood early on and around tentpole events—like the start of the NFL season and Super Bowl. So you are currently seeing diminishing returns on existing markets,” explains Kyle Scott Laskowski, former SVP of North America Sports, XLMedia.

“To complicate all of this—no big launches, less spending—the major affiliates are deriving substantial and probably a majority of their revenue through publisher partners. This can be a great cash-flowing business, but it also means lower profitability (since they generally split the earnings with their partners) and that they don’t own the producing asset. So all the money they spent on acquisitions, generally speaking, isn’t having the expected return since those sites are competing with much larger brands in Google from whom they have to rent space,” adds Laskowski.

Despite recent challenges, speculation around a crash or collapse of the affiliate market seems overblown, as experts assure.

“We must remember that we’re not talking about a crisis or collapse but a situation where we need to adjust our results and growth. These companies are still making and will continue to make huge amounts of money,” assures Maciej Akimow.

The Troubles of XLMedia, Better Collective, and Catena Media: Where Did They Come From?

Better Collective’s CEO, Jesper Søgaard, openly discusses the need to cut costs and adapt to evolving market conditions—a sentiment echoed in financial reports from other companies as well.

In October, Catena Media announced asset write-downs amounting to €40 million and cost-saving measures totaling €2.2 million, resulting in 29 layoffs. This wasn’t Catena’s first workforce reduction, either.

XLMedia has also faced financial strain and decreasing market value. As a result, the company was forced to sell assets, beginning with its European and Canadian assets, which were sold to Gambling.com for $43 million in early 2024. Last month saw another shift, with Sportradar announcing plans to acquire XLMedia’s North American assets for up to $30 million. These assets include popular sites like Sports Betting Dime, Saturday Down South, and Crossing Broad.

“All three companies are heavily dependent on search engine traffic, which makes them susceptible to fluctuations caused by algorithm updates. Each has also engaged in significant operational restructuring, including layoffs and cost-cutting measures, highlighting that their initial growth strategies may have been unsustainable. They’ve faced challenges adapting quickly to changing regulatory environments, especially in key markets, which has impacted their ability to maintain profitability,” explains Mihail Criclevit.

“Apart from the changes in Google, I’d say it’s strictly business decisions,” notes Maciej Akimow. “Most companies heavily invested in the United States. If you grow through acquisitions and spend large sums on additional assets, you have to account for risk, which was the case with Better Collective,” he adds.

Another factor driving shifts in the affiliate market has been the decline in the value of acquired assets. “Buying Action Network was supposed to strengthen their position, but no one anticipated the future changes. Look at how Google operates now; for Better Collective, partnerships with large media entities are working much better than their own assets, which have lost not only their positions but also their brand value. After being acquired by Better Collective, readers often comment that the quality of the services has significantly declined,” says Akimow.

For Catena Media, their focus on the U.S. market involved certain risks, and now the company is facing the consequences of those past choices. “Catena Media got rid of their flagship product, Ask Gamblers, to streamline their business and focus largely on the U.S. They made a decision that at the time was supposed to have a beneficial long-term effect: cutting off traffic from unregulated markets because they believed the U.S. was the future. However, Google has significantly challenged some of these ambitions, serving as a warning for many companies about how external factors can greatly impact your business,” Akimow explains.

Experts suggest that moves by Catena and Better Collective are largely aimed at calming the market and reassuring shareholders. Ultimately, however, it’s the rank-and-file employees who are bearing the brunt of the consequences of misguided decisions made by these companies.

“In the case of Better Collective, which employs thousands of employees, a reduction of 100 jobs is simply a cut to balance the lost predicted growth of the final result. That’s what investors demand,” Akimow concludes.

Will the Slowdown in the Affiliate Market Impact Operators?

Mihail Criclevit notes that the challenges facing affiliate companies could significantly affect the sports betting industry, compelling operators to incur higher expenses. “Affiliates are a crucial channel for acquiring new customers, so their challenges could lead to reduced traffic and fewer new sign-ups for betting operators. This may force operators to increase their own marketing expenditures,” Criclevit states.

If the current situation in the affiliate market continues and Google’s policy changes continue to drive specific decisions for companies, we can expect the landscape to undergo some transformations. “As some affiliates struggle, smaller or more agile companies may fill the gap, leading to a more fragmented but potentially innovative affiliate landscape,” Criclevit concludes.

Maciej Akimow is optimistic, viewing recent disruptions in the affiliate market as temporary challenges. “In many cases, we’re talking about adjusting EBITDA results, not about saving the existence of companies,” he explains.

He also adds that operators are unlikely to experience negative effects from the current situation, as affiliate traffic will likely be redistributed across different channels.

Which Companies Can Succeed in Today’s Affiliate Market?

To succeed in today’s highly competitive affiliate market, companies must demonstrate flexibility and innovative approaches, despite their heavy reliance on Google and other external factors.

“It’s not easy,” admits Maciej Akimow. “The key to success is creating unique products—not just another site full of descriptions and reviews, but something that makes users come back. Something that sets the product apart from the competition. Let’s call it innovation.”

In Akimow’s view, the affiliate market is distinctive for its rapid growth potential—small changes, like moving up a few positions in Google’s rankings, can translate into millions in additional revenue. “What unfortunately characterizes the affiliate industry is the lack of medium-sized companies. You’re very small, and suddenly, you turn into a giant. Jumping up a few keywords in Google can bring you millions in additional revenue. It’s hard to find another business like this in any other industry,” he observes.

While recent years saw a trend of massive spending on content and links, this alone is no longer enough. Companies able to offer more—truly valuable products tailored to user needs and distinctly competitive—are better positioned for success.

According to Mihail Criclevit adaptability and a strategic approach are essential for growth. “Companies that show adaptability and a strategic focus are more likely to succeed. Those who diversify their traffic sources can reduce their reliance on Google and better weather algorithm changes. Focusing on high-performing niches or underserved markets, such as Latin America, provides an opportunity for growth in less competitive spaces,” Criclevit explains.

However, he acknowledges there is no single recipe for success. “The market remains heavily influenced by external factors like Google algorithms and regulatory changes. However, a combination of diversification, technological innovation, and a long-term strategic vision increases the likelihood of sustained success. Flexibility and the ability to pivot quickly in response to market changes are crucial.”

Companies that rely solely on Google can’t expect stability, making investments in alternative traffic sources a fundamental aspect of sustainable growth.

Kyle Scott Laskowski points out particular challenges within the sports betting sector. “There is still a huge dependency on Google, especially for gambling affiliates. Signing up for a sportsbook (or bank account, or insurance) is not a passive process. It requires someone to be in the right mindset and to have KYC items ready, like Drivers License, social and bank account,” explains Laskowski. This makes traditional affiliate methods, like influencer marketing or media partnerships, less effective than targeted ads driven by Google search traffic.

Laskowski suggests that an ideal model would involve affiliates being compensated not just for sign-ups but for boosting user engagement. “This doesn’t necessarily mean rev share on losses, but compelling people to bet more. This is where influencers and streamers could do really well. But that would require some regulatory work and deeper integration with bet slips. Again, unlike other forms of affiliate marketing where you can deep link directly to products, there is like a firewall of KYC and geolocation between the affiliate and the bet slip, making it harder and more cumbersome to track,” he proposes.