Affiliate marketing
Affiliate marketing is a form of marketing whereby a third party receives a commission for promoting a company’s products or services, typically paid per customer referred or with a share of revenue generated by referred customers. Affiliate marketing is predominantly online and widespread across many sectors, with common forms including influencer marketing on social media and ‘advertorial’ content on news sites and blogs. CAP/ASA have produced detailed specialist guidance for affiliate marketing.
In the gambling sector, online affiliate marketers range from large and well-established sites to individual ‘tipsters’ working on social media. The industry body Responsible Affiliates in Gambling (RAiG) estimates that there are tens of thousands of gambling affiliates working in the GB market, the majority of which are individuals or very small businesses, and that they drive up to 40% of customer acquisition for remote operators.
The Gambling Commission holds licensees responsible for the activities of their affiliates. This means that any breach of licence conditions by a third party contracted to promote an operator’s business will be treated as a breach by the operator. New licence conditions were introduced on operators and their affiliates in 2018, following a series of cases (LeoVegas, Lottoland, and BGO) where the Gambling Commission took action against an operator for failings by its affiliates.
Nonetheless, some submissions to the call for evidence argued that affiliate marketing presents particular risks in the gambling sector, mainly citing concerns that they are less compliant with the advertising rules than operators themselves. A particular issue which has been highlighted is affiliates’ failure to comply with the requirements to cease direct marketing to self-excluded customers. These have led the House of Lords Select Committee and others to argue that affiliates should require their own licences from the Gambling Commission to operate in this country.
Alongside regulatory efforts from CAP/ASA and the Gambling Commission, industry submissions also highlighted efforts to improve affiliate marketing standards, such as the formation of RAiG, who require their members to undertake an annual social responsibility audit, and a review scoped by the BGC on the use of affiliates in the gambling sector.
Our conclusions
We recognise the importance of affiliates to operators and customers, and that the growth of affiliate marketing is by no means unique to the gambling sector. We also know that issues relating to how affiliate marketing is conducted can have serious consequences.
We are not persuaded by arguments for affiliates to be licensed by the Gambling Commission. Affiliates’ marketing activities are already regulated by the ASA under the CAP codes, meaning that placing additional duties on the Commission would lead to duplication. In addition, the distinct responsibilities and activities of affiliates would require an entirely new licensing regime to be created; and the size of the sector means that it would distort the Commission’s remit, which concentrates on gambling operators themselves.
While we welcome efforts from industry to raise standards for affiliates, this does not dilute the clear responsibilities the Gambling Commission will continue to place on operators for all activities undertaken in their name. We believe this is the best way to guarantee strong compliance and maintain clear responsibilities. In particular, we are already clear that any direct marketing to self-excluded customers by affiliates will be regarded as a breach of licence conditions by the licensee on whose behalf the affiliate is contacting the customer.
The Gambling Commission continues to keep this area under review and will not hesitate to take action if there is evidence of standards slipping. The Online Advertising Programme will also take a wider look at regulation for online affiliates.