My take on the Party debacle

[beanie]

I love this forum. I run a fairly large sub affiliate group that represents a good percentage of online poker. My affiliates are network marketers and don't use many of the same techniques that we as poker players have had to become comfortable with. Please don’t PM me asking what or how I do things. I am not interested in gaining any business from my interaction on this forum. In fact, I don’t even recruit players my subs do, trust me, if you are a baller, you know who we are and likewise is the case. One thing that makes my group unique is that we actually ask people to not do all of the craziness that is common with setting up rakeback accounts. It reflects poorly on our group and it isn’t necessary for us to gain customers given our relationships.

Here is my take on the Party Poker thing.

UUUUUUUhhhhhhhhh Party Poker!!!!!

This was the best thing to happen to me (just thinking about it makes me smile), I would like to personally thank whoever came up with this plan. Party Poker single handedly gave every card room an opportunity to gain marketshare on them. As a person who gains income from changes in the market I welcome all change. For every room that thinks rakeback should go away, there are four rooms willing to offer 5% more to get customers.

Party Poker was built on the sweat of affiliates and skins that promote them, it is the single biggest reason they are who they are today. For them to turn on these groups because Party Poker created an inequitable system (with their skins) is ridiculous. This was a simpler fix. If they were going to do operator rake back, do it network wide. In fact, why didn’t that occur to them when they started these skins? Did it not occur to them that as long as you have affiliate income someone will figure out a way to give it to customers to gain business. Would anyone have ever left for 30% at Eurobet from some affiliate they don’t know if Party was giving 25% to VIP players? Of course not. Party created this problem themselves and turned on the people that made them who they are. Which brings me to another point, people play more because of rakeback incentives, they go broke less. The system Party created by accident that seemed to screw them actually increased their business in a massive way. What rakeback has proven is that rather than reducing the rake it is better to give back to VIP players and that will pay for itself in increased play by that player.

For all the affiliates that had armies of people promoting for Party/Empire/Eurobet, when Party screwed them guess what they are going to do. Those same armies will be turned on Party Poker. You just don't take millions of dollars from someone without them getting a little mad. Now I know what people are going to say, "but they took the money from Party Poker, it was tit for tat" and you know what, you are absolutely right, though they created this problem, when you have affiliate income that is an incentive and if poker players are anything they are value consumers. It doesn’t take any prodding for them to figure out how to get value.

Affiliate marketing has become so bastardized by everyone setting up 15 accounts in their nephews dogs names that it has created a nightmare for CS departments everywhere. You would be shocked at what affiliates don’t know about the complications these types of activities cause. That said, I will personally put my own money to a union of affiliates that will do whatever it takes to get rid of spammers and people recruiting at tables. Our players are playing at these tables it is so easy for us to police this and it is absolutely necessary. This is single handedly the reason that all of these problems exist. These companies spend millions of dollars to market for customers to have some numbnuts steal that guy. I have proven with my marketing techniques that going the easy route is not always the best route, with time and a plan you can do things the right way and do them well. And we wonder why they are mad at us?

Lastly, someone will mention that I have had a relationship in the past with UB and that somehow my comments are motivated by this. In a sense they will be right, I manage programs everywhere now, so UB and all of the other sites my subs promote will benefit from this debacle Party has created for themselves. I do not represent UB anymore than I represent any other company my group promotes. I have consulted for many card rooms, I am open to getting PM’s but if they are regarding getting rakeback somewhere I won’t even read them out of respect for this forum and the advertisers that pay money to promote here. Also, please don’t PM me about becoming a sub, my subs are quite large and it is usually a unique situation where I will take on new business and I most definitely will not take a sub from a PM at 2+2. I walk it like I talk it and I don’t think spamming is good for this industry.

[palman]

I was forced to buy a new wallet about a month ago and unfortunately I had to part ways with my beanie UB business card. If I knew it was a collector's item I woulda held onto it.

Glad to hear you are doing well.

I am going to disagree with you here beanie on one point. Party can't be friendly to affiliates. Inevitably, the rake on all major sites are going to gravitate lower and lower and just eat into the industry's profits. Once growth levels out, then you'll see more vicious price wars. Once one site offers 30%, someone will just come up with 50%, then 70%, then unlimited play with monthly fees, etc.

However inevitable this is, Party's move can only make it happen more slowly. As a market leader if they take this firm stance and don't budge, UB and PS won't feel the need to offer even larger rakeback deals to affiliates, in order to get customers, since it will simply be a discount or no discount alternative and those looking for the discount will go with that.

The thing is that the people who aren't looking for the discount are the players you want to play against. So as long as party has enough of those players to go around (i.e. they all don't go broke) Party has positioned itself very well.

Party will lose some market share, but in doing so this move increases the profitibility of all sites, at least in the short term.

[SinCityGuy]

[ QUOTE ]
For them to turn on these groups because Party Poker created an inequitable system (with their skins) is ridiculous.

[/ QUOTE ]

The inequitable system occured when the skins' affiliates started poaching Party's player base for rakeback deals. Party added the skins to attract new customers, not to steal their existing customer base.

[beanie]

I agree with you and I say often that there really aren't many new customers. Where sites will gain marketshare in the future and ironically where affiliates will gain a better place in the market is with services to the players. See PokerStars as a perfect example of this.

I think what you are saying about Party holding fast is not a given on what is correct for the industry. That is what someone believes was correct. What they created was a dysfunctional system and their reaction was equally dysfunctional. I could have had a pow wow with my 2 daughters and we could have come up with 5 scenarios better than Party came up with. But hey, its their business to lose.

Fact is every online company has capitalized off of this misstep.

The discount people get from rakeback often keeps them break even or lower but they keep playing. Assuming that all rakeback players are not fish is an incorrect assumption and I can prove it by the fact that I front over 100k to players a month in compensation for rake that my subs don't get paid for until the following month.

Rakeback affiliates have the power to move millions of dollars in business in days. Affiliates in general are a personal relationship with the customer, any card room that misses this point will be a blip on the map long term. I remember a day where Paradise was a giant. Poker is a social games and for better or worse affiliates are the link to that poker room for customers. Some affiliates don't take this role seriously, those that do, do quite well.

What they are gaining in profits from this move they have lost in trust in the industry. It is this uncertainty that will haunt them for some time. When you make arrangements with affiliates and players and those arrangements are broken just because you can that is messed up. I could see if they tried to honor previous deals but this decision was done out of greed. It was not well thought out. Why would any affiliate send a new customer to Party Poker after this stunt?

[palman]

Because right now most of the affiliates players cannot survive on the skins. Those using the rakeback to stay alive on the party skins before will be broke quickly if they were to stay on the skins (or switch to PS or UB with higher quality of play)

I played an 8 hour session the day after the skins broke up, 4 tabling 10/20 6 max. There was about a 3 hour stretch where I don't recall an opponnent making a huge mistake. That was enough for me, I was ready to go back to Party without any rakeback, and did the next day. With all the skins players off, the games are juicier than I can remember them in some time. Luckily, they offerred me the VIP rewards thing.

The fees party earned from its skins were 4% of their total revenue. It was essentially nothing. I'm speculating here but I think about 15-20% of the players on the network were on the skins. Party would only need a quarter of the skins players to go back to Party assuming all players equal. But since the skins players play more hands/month odds are they'll only need like 10% of the skins players to come back to Party.

They'll get more than that.

Affiliates have the ability to move their players anywhere (I'm the guy you met in Aruba who showed ya the remmy site) this I know. But any affiliates moving their players off the Party network will regret it in the long run, simply because the players using rakeback to break even will be broke. Other players will be less profitable. As long as Party has the worst players, this will always be the case. Jaded as the affiliates may be, it is in their own best interest to have their players playing in the easiest games.

And depending on how they go about their VIP rewards system, they could get back the skins players with or without the affiliates. The average player is more than willing to take out the affiliate out of the equation, ESPECIALLY after this. My affiliate was my best friend in poker, and he lost me after the VIP offer, I just had to take it.

This move helps Party's bottom line tremendously for the forseeable future. I couldn't agree more about the dysfunctional system and the way they attempted to remedy the situation. Of course we would all love to see a price war in the industry and more service. But it is in all the sites interest to prevent that as much as possible.

However, as it stood..... affiliates WERE the problem for Party. Sure their inept deal with the skins hurt, but without the affiliates, only a few would have been able to take advantage of that. As long as affiliates have the ability to move players, they will force the industry in a price war (i.e. who gives the most rakeback) The industry had to stop this in order to keep profits.

Party would rather have a 25% market share in an industry with 40% profit margins, than a 50% market share in an industry with 10% profit margins.

[beanie]

You are incorrect. Party created this system. Party took the skins money. Party allowed skins to offer more in percentage than they do. Party had no answer for VIP players so they went elsewhere.

As I mentioned in my original post if someone says to one of my affiliates "I play at XYZ room, do you give rakeback there" my affiliates say that they can not convert current players. Though they likely just sign them up to another room. That customer was happy at the room that they were at, they lost that customer because they did not have a system in place that allowed for that affiliate to gain from keeping that customer at that room. The way affiliate marketing is set up now is we only benefit from new customers. Why is it unreasonable for a card room to have a VIP program and that affiliate can now act as a casino host of sorts to earn a small commission for keeping that customer at that room and happy. Some will say that is exactly what Party is doing and they are correct but why did they have to cut out their partners and affiliates. Why didn't they work together with their partners? Greed is your answer.

Once the rakeback box is open it is difficult to shut and poker players are value shoppers to a large extent. I know of guys who gamble for millions that will not play somewhere if they don't get their rakeback. To turn back the clock and start yelling at the top of your lungs and hoping that rakeback is going to go away and one day all card rooms will not offer it from a competition standpoint is not reality. The reality is that affiliates used to bring new customers what affiliates need to become and what cardrooms need us to become is casino hosts. We need to help them as they require better service. Good customer service is not exactly the industry standard at this point.

I read this once and it remains a hallmark of my thought process regarding customer service. It goes something like this, if you look after your own needs your relationships with your customers will always be insecure. If you focus on their needs you will never have to worry about your needs. I have found this to be true in everything I have ever done and it is the guiding light I have in all of my negotiations.

[palman]

"Why didn't they work together with their partners? Greed is your answer. "

They are a publicly traded company, of course they were going to act greedy.

As per my other reply (but it seems more appropriate here) affiliates had power. They had the power to move mass amounts of people. This can only lead to a price war and decreasing profits for Party. Affiliates essentially unionized the players, and that is the last thing that Party wants.

[MyTurn2Raise]

so would it be better to set up a pay system for affiliates that contained incentives for keeping players at a room and for increasing that players monthly rake to the room?

Is party trying to skip straight to the player with this player incentive thing I keep hearing about?

[beanie]

You are proving my point. Party created a bad system and they are reacting to what they created.

You seem to be under the same assumption that almost everyone is, that is basically that there aren't any fish anywhere but Party. Party is counting on the fact that they can screw almost everyone and you guys will come back at a lower price point. And you are likely right, most people will. But you can not tell me that all of the customers they are gaining were initially Party Poker customers because its not true. So Party stole a lot of customers with this move.

All I am saying is this. A deal is a deal. When you change the terms of those deals mid stream that speaks of who you are as a company. If there were cheaters they should have been dealt with but to backstab the very people that helped you become who you are is wrong. Point blank.

I am not having an argument on profitability, I am having an argument on what is right or wrong. What the skins may or may not have done is not close to as bad as what Party Poker did to them and their affiliates. That is my point.

Whether long term this turns out to be a winning strategy remains to be seen. But as customers can we at least get out of the mindset that there aren't fish everywhere. I would say the fish factor is not near as high on Party Poker as is the case with any site connected with a sportsbook.

When a company disrepects the people that built them, who is next?

[beanie]

I think that is a correct read.