The first of the gambling IPOs, PartyGaming (which are in the UK because it is illegal in the US) is about to go out for $9 billion (5 bn GBP).
As I wrote before, I noticed that a large percentage of comment spam was coming from affiliates of these companies with pending IPOs.
I suspect that, like porn, conversion rates for gambling affiliates are such that they can’t afford to advertise on Google and therefore resort to things like comment spam to scam Google.
In other words, because CPA affiliate programs like the poker sites’ don’t appeal to sites with any readership (a medium traffic site can go for Adsense CPC advertising and a big brand site will opt for CPM revenues with guaranteed income based on readership) their affiliates tend to be low end sites. Low end sites would normally have to buy traffic, but if the cost of buying it through a normal channel such as becoming an advertiser on Google is higher than the CPA revenue, then sites will often use illegal means to boost traffic for free – e.g. spamming.
TripAdviser very successfully arbitraged this difference by putting non contextual fixed links on sites with abnormally high Pagerank to traffic ratios, getting high up in Google search results and making money off CPA programs for travel which pay very highly. They could buy these links cheaply on scientific sites, where the blog-like culture of linking abnormally boosted Pagerank, but whose normal traffic and demographic readership meant that they were happy to be offered decent cash for links (which did not even need to be contextual like Google ads, since they were designed for robots to click on, not people).
The difference is that what Trip Advisor did was legal and temporarily exploited real opportunity for arbitrage. There are poker site affiliates who are operating illegally, and there may be no arbitrage opportunity for a significant percentage to be viable otherwise.
So the question remains:
If the sites which are about to IPO don’t know that they have affiliates that are illegally spamming people, how much of their revenue would disappear if one takes those illegal affiliates out of the equation and how much would that affect the IPO price?
I am amazed that no journalist has picked this up.
(Most gambling sites offer CPA (Cost Per Action) affiliate programs – i.e. you only get paid if someone signs up and pays, on the advertiser