AI, Fraud & Affiliate Marketing: What Operators Need to Know | Levon Nikoghosyan | AffPapa

And we had an operator who was scammed three times during one day. We were like, "Man, stop paying."

Is there a solution to the problem for both the sides?

They send you a fake screenshot of their Google Analytics with AI. It's super simple to create.

What's your take on listing fees?

The prominent affiliates with serious traffic, they wouldn't do it for free.

You have competitors in this area.

We started doing all that in order not to allow any competition near someone with a lot of money to capture the remaining markets. --- Behind every license is a person betting on themselves. At My Gaming License, real people carry your application through. From jurisdiction to bank to launch, we do the work so you don't have to. 300 plus clients, a perfect approval record. My Gaming License, your licensing partner. ---

Hello and welcome back to another episode of iGaming Real Talk. I have a very special person with me, Levon from iGaming Club as well as now AffPapa. So we're here in Madrid just before AffPapa and I'm very excited to get into some of the things that I think that they do really interesting way as well as different. So Levon, welcome to the show.

First of all, thanks a lot for this invitation, Surya, and for being with us at the conference, hosting your iGaming talk at the conference and also inviting me to this wonderful podcast. Love to be part of your community that you are building and looking forward to having an interesting conversation.

Thank you. I mean, you almost talk like how you talk online as well.

Yeah.

I watched your video. I think you did the video recently. It was really good. It was like when you were explaining the dashboard, it was really good.

Yeah. Yeah, I mean, you practice of course. In the very beginning when we started the video content because you know it's important for the business and doesn't matter what kind of business specifically in iGaming at the B2B niche like video content is something that is really becoming a major part of all the campaigns and when you are running a conference or a product, it doesn't matter really, it's always important to pay attention to that part.

And in the beginning when you start doing the videos obviously you feel a bit awkward, you need to learn, you know, you are having all these hiccups and stuff, and you have just to practice. There is not a single solution to have a fluent flow.

And I mean even now when we are having a conversation obviously afterwards when we look at the footage probably each of us will notice some things which you would like to have said differently, reacted differently, but it always gives a room to improve, practice and to become better at doing that. And I think video content is very important today for any business in our vertical.

Yeah, absolutely. Sometimes I look at my first videos, I was like, "Wow, this is so cringe." I mean, this is like... But anyway, I mean, I started somewhere. I think everyone needs to do that as well. I have known you only from AffPapa because of all the amazing marketing you do online and also because I was a head of marketing in B2B. So that's how I was able to know about your brands. But I'm curious to know, like, how did you start in iGaming?

Like no one grows up thinking, oh, I want to become a business owner in iGaming. I didn't know anything about iGaming when it was my childhood. So how did it all start for you in iGaming?

Yeah, I mean, as you said, you know, you cannot plan to end up in iGaming. And I don't think that you even can end up planning to run a specific type of a company that you really like. Somehow through your path or through your journey in the companies or throughout your career, somehow it takes you to the place that you belong to or you feel comfortable. And then you really feel and realize that this is the thing I love doing.

And that's the most important thing about any business or any job, that if you enjoy doing that, you can do that with more energy, with a lot of effort, and not getting tired from the process. The same was again with me, and I started first time in the iGaming, like a position in the industry, as a developer.

Oh, okay.

Yeah. Then, in a very short period of time, I became a team lead, created a team around me to build affiliate system. Afterwards, we managed to get an investment from an iGaming B2B company, EveryMatrix, to establish an office in Armenia and to launch the PartnerMatrix brand as an independent affiliate solution.

Mhm.

And that's when the part of my CEO role began when I started running the company, not just the team. I was not just responsible for the product but I was responsible for the revenue and the growth of the team. So yeah, I mean, I'm coming from a technical background, you know.

You started in iGaming straight away?

Yeah, as a developer I was doing some projects but just for a freelance or for myself, like I had an internet shop, I was selling watches in our country. But I built the site, I ordered some watches, I started selling them.

But you wanted to be a business owner, like while you're growing up?

I always had that, you know, entrepreneurial mindset when I wanted to build things, like I would think of a project, try it, wouldn't work, then I would try something else within my budget, whatever I could afford. So starting a website to sell watches didn't cost much. Basically you buy the domain name, you get the server, you write the code, and you order maybe watches worth of $200, you start delivering them and then you growing it. And I was trying different things.

Then when I was a developer at that point, I went to work for a corporate and as a developer, and my first experience was in iGaming.

Oh, that's good.

That's why, like, I would say that my first office job was iGaming.

Mhm.

At the age of 17.

Oh. Oh, 17. Yeah.

Yeah.

Yeah. Okay. So that's a long time already.

It has been a while.

Oh, cool. So, you know, let's look at the moment. What was the moment when you wanted to do something of your own?

I always wish to start something of my own. I mean, I always had the ambition, you know, to run something from scratch or to build something that I would be 100% in charge of and responsible for. And just to try it to see whether I can, 'cause you know, it's kind of you challenging yourself. Taking some risks, and it's kind of a thing that I like to do, you know, personally. And in PartnerMatrix I have been there for a long time. But in our industry it's long. Yeah.

8 years is long and the interesting thing is I never considered to move to another company. So I had this thought to myself that my next project is going to be my project, because if I move then maybe I will just keep doing that. I can get more appealing offers, grow within the career, maybe move to a larger company, run bigger operations, but still I will be left in that. And since I'm still young, I can invest my energy and time into building something.

And getting older, I'm not sure if I will have that chance again. So I thought that, yeah, right after PartnerMatrix, if I do something, it should be something of my own.

Yeah. Was it like a specific moment which led you to the creation of your own company? Or by the way, is it your own company or you're only the CEO? Because I don't know if you were the founder or co-founder, it doesn't say on LinkedIn.

Now I am the co-founder and the CEO. And I've been acting as a CEO right after I left PartnerMatrix. And yeah, I mean, when I was in PartnerMatrix, there were different projects that people were approaching, you know, to get involved in, all the offers to be hired for other companies. Like I was declining, but I was always interested in investing maybe in some startup, in a business that is solving an interesting issue or covering a gap in the industry.

But the AffPapa idea was generated through us. So it generated from the fact that we heard a lot of operators complain about not finding affiliates and not having channels to talk to them, discuss some deals or get in touch directly, because either you do it through networks and you pay middleman fee to these networks, or you use Google and you don't have any contacts of the person behind. So that's how the idea was born.

You saw a clear gap in the industry. I was like 100%...

Again and again, you saw the pain, the problem. Like, okay, something needs to be done here to assist these people, you know.

Exactly.

And the problem was that whoever tried to solve that, they were solving it through different angles. So they were becoming a network in the end, because you start introducing them, then you are like, okay, I can earn more from their partnership, so let's charge the middleman fee. Usually it's one or 2% or 3% depending on the deal. Then you stop being a connector really. You are becoming like a one-stop marketplace where people can find different campaigns for their offers.

And our mission was like, if we do this, we have to purely do it as a directory. It should be without middleman fee and it should be based on subscription so that people can get in touch and interact with each other directly without us being in the middle. I said it earlier today, the idea of AffPapa is to be around affiliates and operators, but not in between them, you know.

So it's more like a marketplace.

Exactly. It's a marketplace.

Nice. Okay. So that's good. So initially it was started as a directory. And then you went into events. When was the time you started events?

I think it was maybe a year or two after the project was live. So when we got around 100 operators and about 200 affiliates in the directory, we were like, okay, what's the next step? How can we extend our business? Where can we grow? And usually when doing business and if you want to grow it, you should think of the ways that go alongside with your main idea, the main purpose of the project. If the purpose is to connect these two sides, what extra can you do to connect them?

Obviously it's the offline meetings, right? If they meet online, they can meet offline as well on specific dates, because online website works like 24/7 throughout the year. And the offline events came naturally as an extension to what we do online already. That's when we basically did our first networking event.

Yeah. Because, you know, I was always wondering, just recently, start of this year, because our iGaming event space is super crowded, the calendar itself, we have events almost every month. But I was impressed that you have a little niche carved out for yourself for AffPapa and iGaming Club events. And I was wondering, I think it was super impressive. But from what you're saying, it's the backwards.

It's not that you wanted to do it, it's just because you wanted to extend something to your existing products and offering.

True. Yeah. That's why it naturally grew. We didn't try to artificially bring together thousands of people from the industry. We had our community, we brought them together, and on the next event it was a bit larger, then larger.

As the community started growing, your event started growing as well. When was the first event you did and how many people it had?

The first one was in Amsterdam in 2022. It was a side event of IGB, you know, one of the most prominent...

IGB Amsterdam was good. We miss it there.

Yes. Everyone missed it. Yes. Yeah. And it's a pity that they moved from that beautiful city.

I think SBC's announced something in Amsterdam.

Yes. Probably next year around these dates they will be doing their own show in Amsterdam. But yeah, I mean, it was a great location and at some point we also were thinking maybe it's a good location.

But were you afraid, too many events, too many big dinosaurs in a way?

That's why, can we do something or no? Yes. And we have limited options. So we went for the option of extending our event in Latin America. That's why we did the first iGaming event in Cancun, like iGaming exhibition as such, international English speaking, it was the first one in Mexico. And yeah, last November we gathered our LATAM network and also European network who were interested in the market. But yeah, I mean, we grew since Amsterdam. The first event was 160 people.

And from that, it went on like a snowball effect. So it just grew like 200 people, 300 people. And we had a networking event in Barcelona. This year for 500 people, last year it was 800. Like it depends, the size you can manage depending on which is the main event where you do the side event. But yeah, I mean, and then it extended into the conference.

And do you work with any big organizers in terms of organizing these events or mostly?

We are in touch with each other with most of them. We are in good relationship. I mean, but I wouldn't say that we have a project to work around. We might give each other free passes to each other's events and stuff like being very friendly. But the industry is tense in between because we are not playing in that league and it's a different league.

This is what I was thinking actually. It's very interesting to know how you grew from community to events, not the other way around.

Yeah, it is the other way around.

But it's good because that way you don't have the competition in a way, right?

You do and you don't. Like, you have indirect competition. Sometimes people will compare your event with another major event and when they choose between them, probably they would go for a larger one. But the ones that are interested in the vertical and in the people that are coming to our events, they might find ours more productive, more boutique as it's called. And people would love the intimacy.

And we heard a lot of feedback obviously from our delegates asking not to try to expand it further than thousand people, because then it's becoming like an expo. But on the other hand, we're not really striving to go there, but that's also the organic way of growing your business. You can't just artificially limit it to some number of people.

Okay. So talk to me about the other areas of your business because I know you also have Gamblist. I remember doing some business in my previous position with that. And then you have now iGaming Club events have rebranded to AffPapa conference. So you also have the directory. What other things do you do in the business? Are there any services? Are there any other things?

Because I saw some interesting posts promoting some service as well, but I wasn't sure, because for me, I have known AffPapa more like a directory and events, but I do suspect there's others.

Yeah. No, and like all the businesses that you mentioned, they are extension to again the same idea of AffPapa. Why we started, for example, Gamblist, right? Because we had too many requests from B2B companies to get featured on AffPapa, to get an interview there, etc. And we decided that for B2B we should create a separate room, kind of a separate platform where we can concentrate on them better and share the news about B2B, keeping AffPapa more affiliate focused.

The same with iGaming Club events, it's an extension of the directory, bringing together the affiliates and operators. On top of that, one of the services which we have been doing already for three years, and I think it's very difficult to compare, but I think we have the largest portfolio of brands under our management. It's affiliate management services.

Oh, okay.

We have over 25 brands that we are managing ourselves. And the team consists of around 12 people right now. We are training more. And this is also an extension to the same business. And we are trying to solve the same problem, helping operators to connect with affiliates, especially the operators that are lacking the expertise or they need addition.

In the beginning maybe it's hard to hire the right people and everything depends on that.

Yeah, exactly. And there are also like companies that are very well established but they need additional help. They need someone to reach out for them or someone to bring affiliates who they can talk to with and they don't want to go over finding those affiliates, not just finding but filtering out if they are relevant or not. And that's what we help with as well. So they are saving time because we do the shortlist for them.

That's great because they have access to the platform but they still need to know how to use it, how to find the right ones, how to work with them and so on. So over the time you have learned a thing or two and then you have trained your team and now they're helping as a service.

Yeah. But the team, I think they are more experienced than myself.

I mean when I say you, it's the team and the company. But are they also like senior level people? Are they also like head of affiliates or they more like affiliate managers, senior level positions?

We have two senior affiliate managers who are managing our affiliate managers as well, looking... So you get a team, it's not like a junior. No, no, it's a team. We have junior affiliate managers, middle ones, and the senior ones who are following the team, training new ones also. So I mean, we have a brand whose affiliate management team is being fully managed by us. So they have like four affiliate managers.

Our senior affiliate manager is checking the numbers, the KPIs, relevance of the affiliates, the fees, where are they getting the traffic from, etc. And also guiding what to do, what to improve, because sometimes you have to cut some partnership. It's not that you have to just get more and more. Some partnerships cost you a lot of money and you have to get rid from them.

Yeah. You know, sometimes one of the critics I hear from operators as well, especially regarding matchmaking platforms, is that the platforms don't verify the affiliates. Do you get that a lot? Do you handle, do you verify affiliates before letting them in to the platform?

Yeah, for the last two years we have a very rigid verification. We verify that they are the owners of the accounts that they claim to be.

Oh, yeah.

Yeah. I mean, because someone can register with Ask Gamblers. I mean, we will ask them to prove somehow by sending an email or putting some code on their website. If it's a Twitch account, we do it in a different way. YouTube also in a different way. Telegram, because affiliates are a bit, I mean, they're a bit secret, you know, they have their own ways of doing things. But we have a cycle for that, how do we manage to get so many affiliates registered with us.

When you're organizing an event, they want to join because their affiliate pass is free. And in order to grant them the free affiliate pass, we require them to have an affiliate account on our platform.

I just thought about the meme. We'll put it here somewhere.

Yeah, that was a good one, man. And before posting that, we didn't know it's going to sink or it's going to jump, you know.

Yeah, yeah, it's always the case with memes. If it works, it blows up. If it doesn't hit, I mean, it's... But yeah, that's good to know. Is there any statistic that you're proud of with regards to the platform? How many affiliates do you have now?

Right now, if I'm not mistaken, we have around 2,400 or maybe even 500, because closer to the conference the numbers grow very fast. And each time before the conference we get the most registrations, it's the peak of the registrations throughout the year. And for the operators, we're around 350. So we have around 350 operators and we have about maybe 25-30 B2Bs inside the platform too.

That seems like a lot of affiliates, right? Is it the biggest one out there or do you have competitors in this area?

I think we have been the first doing this. Since then we have been the biggest. We have seen some attempts to replicate our system. But of course doing this events, all the additional media, the community.

And I mean we started doing all that in order not to allow any competition near, because otherwise if you just keep doing one thing without improving, adding additional activities, adding additional services to what you do, strengthening your position, then someone with a lot of money will appear sooner or later and capture the remaining market.

Now when someone tries to offer a similar solution, the first thing they hear is like, "Oh, this is similar to AffPapa, you do similar thing." That's the first comment basically. And then you have to add additional value to engage them to your platform, like why are you better than AffPapa, so that we should trust.

That's quite interesting. We also received some questions from our WhatsApp community. One of them is from Hank Wolf. He has this interesting question which is relevant to what we're discussing now, which is, what's your take on listing fees? Like do you charge listing fees for affiliates to be on the platform?

For affiliates we don't charge, but I think his question is related to affiliate listing fees, which is a big debate these days, whether it makes sense to pay those fees or it goes against the logic of the affiliate relationship. Because let's understand what's affiliate, right? What's affiliate relationship? What's the affiliate partnership? And how is it different from just a regular marketing or PPC campaign?

The main idea of the affiliates was you bring the results, we pay you post. So based on the results, we will decide how much you have gained. So you bring X amount of players with Y amount of revenue, then your commission is the amount Z. But right now when affiliates are implementing this listing fees...

Who do they have to pay the listing fees?

To the affiliate. You pay the affiliate for your brand to appear on their website.

Oh, yeah.

Because before, affiliate would do it for free. They would review your website, write some content about what you offer, etc. Now, the prominent affiliates with serious traffic, they wouldn't do it for free. Because they have 100 other brands. And also the main thing is the risk factor for them. So to take this risk, they ask for a listing fee in order to be safe, to be okay, sure that something can be covered if things go south or if things don't work out.

And that's the point of the entire listing fee, because you can't just list anyone that asks you to get on your website, because apparently the demand is much higher. So once the demand is higher for all the operators to get listed, then you feel that you can charge them. Why not? And at least now you have a way to filter out the ones that are not serious. And the ones that are worth being listed on your website, trying to do business with them.

Okay. So does it only happen with the big affiliates?

That's the thing, you know, it's not happening just with the big affiliates. Many small affiliates are doing that. And that's a very strange thing when... and we have seen this on our website. For example, you get new affiliates registered with zero traffic or close to zero traffic. They are the owners of the website, they are not scamming, there is nothing wrong with their project.

But they would go to the operator, tell them that the stats on AffPapa are not correct, "We have thousands of users coming and we are charging like 2K listing fee for a brand." And in this way they try to swindle you, in a sense. Of course we can't block them initially because initially you don't know their intentions. But when you learn this and some operators warn you that these guys are new and they are charging crazy amount, then you realize that there is something wrong.

And that's the thing that new affiliates or some companies found these ways of quick earnings. They might get 20 brands listed and then disappear without delivering any traffic.

Yeah. Okay. Is there a solution to the problem for both the sides?

Yes. I mean, the solution is pretty simple. You see, you look at their stats, you see there is no traffic. And they send you a fake screenshot of their Google Analytics that is just jumping up and up. Now with AI it's super simple to create, and it's super simple also to detect it. So I mean, it's just that if they take the effort. If they don't check it. And we had an operator who was scammed three times during one day.

It was like, "Oh, I paid this guy and he listed and he doesn't have traffic, and like one hour later I paid this guy and then I paid this." We're like, "Man, stop paying." It's not how this works. You know, you have to analyze. You have to do some homework before jumping into the partnership. But it's a very good question and the answer is there is a very bad tendency from these new swindlers, but also it's not the end of the world.

So this is a trend that is going to pass away soon.

Maybe there's a way you can include something in the platform that...

We do. Yeah, we do. I mean, and we just implemented new badges. We have AffPapa approved, which means that we know these people, you can trust them. We have companies without badge, like judge yourself if you want to work, you work. And we have companies with a tag of new in the system, like they registered, they have zero traffic and they are new, so we don't know them.

If you want to work, if you want to get into listing fee discussions, make sure you check it yourself, because we are not responsible. The only thing we can tell you, they are new to the system, they have zero traffic. These things we can see and we can mark them with the badges.

That's really cool. Because I didn't look at your platform, this is just based on our conversation. And these are the 2,400-2,500 affiliates. Do they have badges as well, like verified?

I think we have around 300 that is verified. And verified again are the brands that we personally know, we personally met, we saw each other, or our affiliate managers worked with them, because our affiliate management team gives a lot of insights for us. That's why it's super easy to detect a swindler, because every time these companies register, we are the first ones to reach out to them for the brands that we are managing.

And when they start asking 2K, 3K, 5K for a listing fee for zero traffic website, we are like, "Guys, sorry." Then we block them and they are not happy with us.

And the same thing happens on the other side with streamers. There's a lot of issues on the streaming side. I know I follow Martin Vand, who writes amazing stuff on LinkedIn, and also some of the people. So I mean, let's look at, do you think that now the new age affiliates are the streamers and influencers, or we still have the website and the SEO focus still very strong?

Because from what I'm hearing and seeing, crypto casinos they often go straight to streamers and influencers. So how do you see the shift at the moment?

I think there are all the channels right now and I wouldn't distinguish one of the channels to be major or to be overrated or getting more attention these days. Some crypto casinos go to the streamers because these streamers they already have the base of the audience that is the target audience of these specific brands. But at the same time, the same thing happens with this industry and there are plenty of streamers that have fake numbers. They have fake viewers.

They have fake depositors. The entire process is there. So they might deposit, they might wager a day or two and then you see that the player lifetime value is so small, their lifetime period is one or two days, they just get the bonus and then they disappear, they stop playing.

It's one of the more complicated ways to check their behavior but more easier way is just to compare their IPs and stuff, when you sometimes see that they are all coming from the same IP, from the same location. The same thing with SEO new affiliates, the same thing is happening with the streamers these days.

Is there any indication that SEO affiliates or affiliates in general have higher LTV, or streamers and influencers have a higher... do you see anything like this from the data?

From the data, like yes. Not all the SEO affiliates, because again SEO is also multi-layer, it depends on what kind of traffic they are bringing. If we are talking about no deposit bonus pages, they are also coming from SEO, but these players are looking for something else, so their lifetime value is way different than a solid page which is comparing different brands and suggesting where to gamble.

So the lifetime value is totally different depending on the resource and even from that resource it goes through the different layers.

Okay. So what do operators need to have in mind especially when it comes to streamers? What do they get wrong? Is there some misconception that some operators go direct to streamers? What is it that they need to know?