Super Afiliados CEO on the Impact of Upcoming Regulatory Changes in Brazil

Super Afiliados CEO on the Impact of Upcoming Regulatory Changes in Brazil

Before taking the stage as a moderator at the 2023 SBC Summit Latinoamérica, Alessandro Valente, CEO and Co-Founder of the Brazilian affiliate network Super Afiliados, sat down for an exclusive interview with SBC Media.

In the course of our conversation, he gave us a peek into the inner workings of his business in Brazil, shed light on the typical player profile in the region, discussed successful strategies for fostering trust and customer engagement, and delved into the potential opportunities and hurdles posed by upcoming regulatory changes. Furthermore, he offered valuable guidance for affiliate businesses contemplating expansion into Latin American markets.

SBC: How can affiliates build trust with players in Latin America, and why is it particularly important in this market?

Alessandro Valente: Trust is a major topic when it comes to player acquisition and retention. When affiliates have to mostly rely on their own efforts, establishing trust becomes considerably more challenging — things are naturally a bit easier when they have support from operators with strong branding campaigns, fast and simple payment processes, and real-time customer support staffed with human agents.

The affiliate who steers clear of making deceptive promises of assured earnings or never asserts that gambling can be the primary income source is moving in the right direction. Unfortunately, such practices still prevail in the region, negatively impacting the industry’s image and the credibility of affiliates.

SBC: In terms of marketing and advertising strategies, are there any specific approaches that have proven effective when targeting the Latin American audience (aside from sports-related content)?

AV: Content is king! Long live the content. 

Seeing more and more ads lately only makes me wonder about the return on investment compared to producing content that is relevant to the audience and is created using simple language with a heavy emphasis on graphics, images, and video.

Low literacy levels in the region necessitate the use of better graphics (videos, infographics, etc.) to inform the audience about the benefits of enjoying the voucher or dedicated link provided by the affiliate.

SBC: Your business is big in Brazil. What unique challenges or opportunities do you believe the Brazilian online gambling market presents for affiliates compared to other regions?

AV: The booming industry in Brazil has attracted numerous companies eager to explore this market using advanced technology and improved techniques already tested abroad. While this represents one of the industry’s greatest contributions, it has also brought about significant consequences, mainly tied to the influx of money.

Money is flowing into the market at an unprecedented rate, resulting in an inflation of costs across all media sources. The cost per click has increased exponentially, and since Google allowed PPC campaigns earlier this year, we anticipate a significant increase there as well.

Influencers, once affordable, have suddenly become high-cost entities. As a practical example, one influencer with whom we previously had a monthly fixed rate of $1,000 and a 25% revenue share deal (RevShare) now demands a minimum fixed fee of $20,000, in addition to RevShare. This shift happened almost overnight, and we are uncertain about when this bubble will burst.

SBC: How do you expect the upcoming regulatory changes in Brazil to impact affiliates, either directly or indirectly?

AV: If it goes as proposed, and the Senate approves the bill, it will create chaos for the mass media, football clubs, federations, brand ambassadors, and others who won’t be able to display ads from non-licensed companies. Everything indicates that very few companies might consider obtaining the license, given the prohibitive nature of its requirements.

In the event that this scenario unfolds, we can expect an influx of companies turning to affiliates as the primary alternative for acquiring customers.

The government’s expectations are unlikely to be met if the regulation remains in its current form. It has little to no potential to attract businesses to Brazil. Some politicians seem to be under the illusion that they can block websites, as they did in the past with bingo halls, which were closed in Brazil overnight.

Black market activities may resurge. The market will resort to these alternatives to survive; it’s a natural instinct. Companies highly dependent on Brazilian traffic and players won’t simply shut down player accounts; they will change domain names, and IP addresses, communicate with their clients, and adapt. We’ve seen this happen in other territories, and it’s likely to be the same in Brazil.

SBC: What advice would you give to affiliates who are interested in entering or expanding their presence in the Latin American online gambling market?

AV: Hire locally, be local. Take the example of Better Collective, which recently entered the Brazilian market by establishing an office in Rio de Janeiro, acquiring assets, and hiring local staff to manage its operations.

While there are other, less localized and more global approaches, they are likely to be costlier and yield lower returns. By hiring an expert in the country, you’re taking a shortcut on the learning curve that can save you time and money.

The challenge lies in finding experts willing to work for your operation at a reasonable salary, considering that many of them are already involved in the affiliate model or, in the case of influencers, earning substantial paychecks.

If you opt for a more global or foreign strategy to enter Brazil, keep in mind that the language barrier is significant. You’ll need well-crafted copy aligned with strong skills to maximize your return on investment. It’s still possible, but time is of the essence, and the longer you delay, the higher the level of difficulty becomes. The industry is growing, evolving, and expanding rapidly, so seizing this opportunity today is already more challenging than it was just a moment ago.

SBC: What do you believe the future holds for affiliate marketing and player engagement in the Latin American online gambling industry?

AV: It’s uncertain, to a certain extent. Considering that legislation is about to be passed, and regulation with heavy taxes and other issues is imminent, it can be said that the road ahead will be full of curves and obstacles. Racing against the clock to position yourself is a fact that you will have to consider along the way.

Additionally, you can expect a high volume of players shifting from one operator to another, seeking the best offers in the market. Users are becoming increasingly discerning about how they spend their money.

For instance, a few years ago, an operator with a good user experience and a comfortable brand may have sufficed. Now, users are looking for the best value for their potential earnings. If the odds in the sports betting vertical aren’t favourable, users may realize that other operators offer better payouts, and it’s only a matter of time before they switch to another operator, possibly without your tracking link.

Users are bombarded with ads on TV, and some of these companies don’t even have affiliate programs to offer. Some local brands are far from reaching the same level as global brands, often offering deals that are impossible to work with. For example, a few companies in Brazil were paying RevShare based on gross gaming revenue (GGR) until they realized that this would harm their profits, leading to defaulting on payments to affiliates.

Alessandro Valente will be moderating the ‘Affiliate Leaders: Transcending the Traditional Affiliate-Operator Relationship – Building Trust in Latin America’ panel, which is part of the  ‘Affiliates and Advertising’ conference track at SBC Summit Latinoamérica

This panel is scheduled for November 1, from 11:00 – 11:45 AM. Valente will be joined by Victor Arias (VP of LATAM Operations, Pragmatic Play), Javier Troncoso (CCO, Futbol Sites) and Julio Bernabe (Head of VIP Latin America, Coolbet).

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