How Google Search Updates Turned Affiliate-Media Partnerships Into Costly Zombie Deals

Depending on your perspective, gambling affiliates have either taken a direct hit or caught some strays after the most recent Google Search update on May 5. 

The media partnership deals that were in vogue the last few years were the primary target, and if I can be so bold as to quote Happy Gilmore, “Talk about your all-time backfires.” The overall outcomes are mixed depending on the company, but the partnership deals specifically have turned decidedly sour.

Affiliates — companies that make revenue by referring customers to operator websites — have trumpeted the benefits of these deals with more mainstream media outlets for several years. Thanks to the legacy media sites’ reputation in searches, affiliates brought in tons of new depositing customers (NDCs), padding their key performance indicators (KPIs).

Now, after May 5, those sites are missing from searches, which has boosted affiliates’ core content but leaves affiliates trapped in what increasingly looks like costly zombie deals — in some cases, deals with eight-figure annual guarantees and highly unfavorable revenue splits.

According to several sources with knowledge of the situation, this is the new reality. Even with cleanups and content removal, Google is unlikely to reverse course and bring these sites back into the search engine results pages (SERPs).

That raises the question: Are the affiliates finished taking their lumps, or should they brace for more? 

Varying degrees of impact

As a result of the Site Reputational Update, many sponsored posts have vanished from Google. Several major media sites that had partnered with affiliate companies like Advanced, Hearst, and Cox removed content, which also disappeared from aggregators like MSN and Yahoo.

With less competition for Google’s top results, operators and major affiliate sites have benefited (to varying degrees). However, their smaller regional sites in more mature markets haven’t fared as well, with some minor losses and gains. 

Affiliate CEOs said as much during their recent earnings calls, noting that the update has benefited flagship sites but had little or no impact on second- and third-tier sites.

This brings up an interesting question that I’ll attempt to answer later in this article: Can someone step in and fill the void left by the legacy media brands?  

Winners and losers

Before diving into the Big Three — Better Collective, Catena Media, and Gambling.com — I’ll touch on the smaller affiliates. 

Medium-sized affiliates probably liked the update, as the removal of the legacy media sites allowed them to maintain or slightly move up in search rankings. 

For example, XL Media noted upticks in the aftermath of the update. 

The smallest affiliate companies face the same challenges they did before the update: competing against companies with link-building networks and hundreds of employees who update sites often. 

GDC Group (Gambling.com)

Gambling.com, which has media deals with The Independent, McClatchy, and Gannett, has been the most vocal U.S. affiliate regarding the Google update. The company specifically cited the Google update when it revised its Fiscal Year 2024 revenue forecast down 8% (from $131 million to $120 million) and EBITDA down 7%.

“The amount of content that has fallen within the parameters of Google’s new policy is greater than anyone would have expected,” Gambling.com CEO Charles Gillespie said. “Virtually all media partnerships, including the ones in the online gambling industry and our own, have been affected.”

Gillespie categorized the change as Google moving the goalposts on acceptable content but said Gambling.com remains “committed to our media partners as they organize to make a concerted effort to push back on what they perceive to be an overly broad implementation of this new policy.” 

The update also changed the company’s strategy. According to Gillespie, Gambling.com is “no longer only looking at SEO-driven gambling affiliate businesses” as M&A targets. 

“When something changes like this, we need to recalibrate,” Gillespie said.

Better Collective

Better Collective CEO Jesper Søgaard said it was difficult to assess the impact of the Google update in the mid- and long-term but did say it has boosted its flagship sites.

Pointing to the company’s strong U.S. performance in Q1, Søgaard said the company has “never been stronger positioned commercially.”

As for BC’s partnerships, Søgaard said the update “impacted the rankings and thereby traffic to some of our media partnerships,” adding that BC is “working closely together with all parties involved to address the changes.”

Catena Media

Catena Media has also reported its Q1 results, the first since Michael Daly resigned as CEO in February. 

Interim CEO Pierre Cadena said that contributing factors to the company’s 49% year-on-year decline were “lackluster execution in our core operations, stronger competition, tightened marketing spending by operators, recent Google core updates that have adversely impacted the visibility and ranking of some of our sites, and a less favorable state launch rollout.”

He also fielded questions about the company’s stated embrace of AI and what impact the Google update has had on that.

Cadena said the March and May changes focused on “scaled content abuse, which is meant to deal with low-quality unoriginal and automated or automatically generated content,” and “future enforcement of site reputation abuse.” Cadena said it is “consistently monitoring” its usage of AI. 

Inside the deals

Deals with legacy media have long been seen as low-risk partnerships, with both sides — affiliates and legacy media brands — pooling their best assets. The affiliate gains access to the legacy brand’s more extensive readership base. The media brand receives proven content that appeals to current and potential bettors without going through the process of creating affiliate deals with numerous U.S. operators.

“It’s safe to say that this model has emerged as the highest and best use in terms of ways for legacy media companies to leverage their assets to make money off of sports betting,” Gambling.com’s Gillespie said in an April interview with Sportico, conducted prior to the May 5 update that changed the Google landscape. “Fundamentally working with all of the operators, [as opposed to] a single operator, and leveraging the experience, technology, and know-how of the largest performance marketing companies to ensure the largest maximum return.”

According to our sources, most deals are 50/50 or 40/60 splits, with some having built-in guarantees for the legacy media brand — which can further skew revenue share in their favor. 

Once the deals proved lucrative — and catnip for shareholders and investors on earnings calls — affiliate companies were willing to offer larger guarantees and take the shorter end of the revenue-sharing agreement. That was exacerbated by the media companies leveraging the affiliates against one another to get an even better deal by creating a bidding war. Sources pointed to 30/70 and even 20/80 revenue splits and guarantees to the legacy media companies as high as $15 million per year.

When deals were up for renewal, publicly traded affiliates were under even more pressure to re-up, as the deals bolstered their KPIs even if they weren’t profitable.

Many of these deals are now a drag on an affiliate’s bottom line but are also difficult to exit. Some exit clauses may exist, but contractual guarantees are difficult to escape.

When a deal goes sideways

One high-profile example of a deal going sour was the agreement between Better Collective and Globe Media, which runs Boston.com. 

The deal was consummated in August 2022 (under the terms, Better Collective would pay Globe Media $1.25 million per year), setting Better Collective up to crush the Massachusetts mobile betting launch in March 2023. 

That didn’t happen. 

Better Collective filed a lawsuit in April 2023, claiming Boston.com violated the terms of the deal, which required Boston.com “to develop, maintain and host a subsection of its website to display the Betting Content on agreed-upon URLs,” per the lawsuit.

Better Collective also claimed Boston.com didn’t market prior to launch, had no links on the home page, and had no search engine optimization. It also sought to trigger a Reduction Event clause in February when Massachusetts released its marketing restrictions, and it was clear there would be far fewer operators than initially expected. Better Collective claimed Boston.com refused to negotiate. 

Globe Media countersued in May, claiming Better Collective failed to meet the agreement’s content requirements. 

Remaining questions

Who will come out on top?

Veteran gaming industry investor and adviser Chris Grove often talks about what he calls “the mores.” The thesis is, “The winner of the U.S. online gambling market will be the company that offers the most mores — more products, more brands, more price points, and more options for more consumers.”

The same logic can be applied to the affiliate space, as the Google update demonstrates the importance of a diversified portfolio. 

During its earnings call, Better Collective’s Søgaard said the company would examine everything from high-level media to podcasts and YouTube shows to social media content.

“We need to have as much optionality as possible,” Søgaard said. “We are now seeing sort of the effect of having that diverse optionality.”

How will the battle play out?

Two things could happen. The nimblest and most diversified affiliate could climb to the top and capture the revenue lost by its competitors. Affiliates could also look for the next shortcut that can mimic the fast results that legacy media partnerships have produced. 

With few if any new online sports betting launches on the horizon in 2025 (Missouri appears to be the lone possibility), there will be extreme pressure on publicly traded affiliates to grow revenue.

I’m not sure how that happens without new states coming online, with the loss of the legacy media rankings, and with the increasing pressure on operators (marketing restrictions, increased tax burdens, and friction-creating responsible gambling policies) by states that are cutting into revenue.

The Google update that was completed May 5 represents an inflection point for the affiliate side of the gambling industry. One part of their strategy is looking like an “all-time backfire.” The winners will be the businesses that make the right decisions on how to fire back.