Doing it their way

The KAX Media story has a somewhat familiar ring to it on first hearing. The digital marketing company, owner of sites such as Gambling.com and CasinoSource, is one of many egaming affiliates to have its origins in the bedroom of an online poker player, keen to make a bit of extra cash. But for CEO Charles Gillespie, who founded the affiliate marketing firm as a college student in 2006, that is where many of the similarities end.

Buoyed by their early success at university, Gillespie and his long-term business partner, Kevin McCrystle, quickly made KAX Media their fulltime career and took the bold decision to relocate the business thousands of miles away in China. After the country’s sports betting affiliate market became a darker shade of grey, the business was later re-located to Europe; and its strategy quickly shifted to one focused on developing its own proprietary technology.

KAX Media CEO, Charles Gillespie

Today, at the heart of this approach is the Dublin-headquartered firm’s in-house publishing platform and data-integration system. Indeed, KAX Media neatly sums up the company’s philosophy on its own website: ‘Some companies talk about big data, KAX Media is big data’. And with the backing of a number of industry investors, including Sportingbet founder Mark Blandford, KAX Media has been able to invest “several million euros” to ensure its software is one of the most advanced and data-led in the whole of egaming affiliation.

KAX Media has clearly come a long way from being a traditional bedroom affiliate, and is now preparing to expand its reach with a number of acquisitions. EGR Marketing spoke with Gillespie to find out how the firm’s in-house technology will enable it to scale up the business.

EGR Marketing: Can you tell us a bit more about your proprietary technology and how it helps you stand out from other performance marketing companies?
Charles Gillespie (CG): Our publishing platform allows us to run all of our own affiliate sites. We currently have about 23 websites and expect to have approximately 50 by the end of the year. If you’ve got one or two websites then you can usually rely on something like WordPress, but when you have 50, you need a bespoke piece of kit to manage it as efficiently as possible.

Managing affiliate sites is not a lot of fun, so trying to automate that as much as possible makes it more of an exciting problem to solve, as opposed to just tediously updating HTML. This publishing system acts as the centralised platform to publish all of these sites; it’s a web-enabled service and people can use it from any internet-enabled device to manage, update and change any of our websites at any time. It is quite an important piece of the business.

EGR Marketing: Is this unique to KAX Media or now increasingly common for other affiliates too?
CG: A lot of affiliates still use WordPress and some have their own systems, but the quality of those systems varies wildly and we haven’t found anything that is as good as ours yet. We view it as being key to the company’s growth as our future strategy involves operating lots of websites. We own Gambling.com, which is one of the industry’s premier affiliate sites, but despite that, there are still affiliates out there that are much bigger than us. And that’s not because they have higher quality websites, it’s because they have a greater quantity of websites.

Two years ago we decided that while Gambling.com is awesome and easily one of the best out there, additional growth would be easier to come by if we created a lot of additional websites, as opposed to just continuing to focus on one.

EGR Marketing: So you have gone the opposite route to some affiliates – quality first and then quantity?
CG: We always thought that the best use of our time would be to build a brand – that is why we put our heart and soul into Gambling.com. But if you look at Catena Media, they claim to have 2,000 websites, and XLMedia claims to have about 3,000 websites. I can’t imagine they are actually publishing that many unique websites but it is a lot of websites and every single one helps pick up traffic from an SEO perspective. You just need a portfolio of sites to maximise the opportunity because different strategies work in different markets. But when you’ve got dozens of websites, you’ve got the flexibility to target the opportunities as they arise.

EGR Marketing: Why did you decide to launch your business intelligence platform?
CG: Adge is our secret sauce and we’ve invested huge sums into it. We are integrated with over 1,000 different online gambling affiliate programmes, which means we can programmatically pull data out of any of them at any time. Fundamentally it is an Electronic Data Integration (EDI) platform and EDI is hard work. Previously, if I wanted to know how much money we made, I would have had to log in to hundreds of different affiliate accounts. Now, all I need to do is get my phone out of my pocket, fire up the Adge app, have a look and the data is immediately there. And because of that, we can operate the business much more effectively.

EGR Marketing: What value does this add to the business?
CG: The main value components to it are that it helps with financial accounting, how much money you’re making and, if you’re a sophisticated user, you can actually use it to understand attribution. So where are your players coming from? Are they coming from SEO or PPC? If they are coming from PPC, which keywords are they coming from? It’s a very advanced piece of technology and we are very proud to have built it. We have also opened it up to the public so that independent and small affiliates can register and use the service.

EGR Marketing: So Adge acts as a B2B product to the egaming affiliate sector?
CG: We thought it was going to be the greatest thing in the world as it solved a major problem in the industry. Affiliates are a bit weird about their data and don’t look at their business in a very mature way – so a lot of small affiliates just don’t trust it and think we built it to steal their data. With all due respect to them, I don’t think their data is actually that interesting. Our data is interesting and that’s because it’s ours, we know where it came from, how we generated it and what we are going to do with it.

EGR Marketing: How did you initially end up working in the egaming affiliate marketing sector?
CG: I actually learned about affiliation before I started playing online poker and experimented for the first time in 2003 with a simple affiliate website. It didn’t make any money initially, but six months later I had an extra $2,000 in my bank account and I didn’t know where it had come from. It took me a couple of days to figure it out and I realised it was that website I built six months previously.

The next school year started and I had a new roommate who had made $25,000 playing poker on the internet, which sounded absolutely crazy. By Christmas, he had made $100,000 playing online and by the summer had made nearly a million. So that captured my attention, as well as many of my friends, and he taught us how to play. The rest of us did pretty well – although we didn’t make the same kind of money he did – but we lived very comfortably throughout university and made enough money to kick-start the next phase of our lives.

EGR Marketing: Why was online poker such a common starting point for many egaming affiliates?
CG: Poker is really a game you can bond over and creates a fun atmosphere. But after a year or two, I definitely wanted to move on and I started looking around for finance to mount some pretty aggressive affiliate businesses. In fact, the original plan was to do sports betting in China. In 2006, I incorporated my debut company, raised my first round of investment to build a sports content website and I moved to Shanghai, where I hired 25 people to help launch it. When we arrived in Shanghai, gambling online was a light shade of grey and two years later it was a pretty dark shade of grey.

EGR Marketing: Did that prompt you to exit the Chinese market?
CG: After a couple of years we decided to move on, so we closed the office in China and I flew to London not really knowing what I wanted to do. The only thing I knew was that I didn’t want to go back to the US. We ultimately decided against re-basing the company in Malta – which was our original idea – and the senior members of the company instead moved back to the US and opened an American office. I eventually settled down in Monaco in 2011.

EGR Marketing: Are the senior people in the business the same guys you met in college?
CG: My business partner Kevin McCrystle has been with me since day one and is my oldest friend. Mark Blandford, who is one of the big investors behind the business, jokes that whenever Americans start a company, they always phone up their best friend or university roommate to become their number two in the business.

I’m afraid this is a pretty similar situation, but Kevin has done a great job and I’m very pleased to have done 10 years in this business with him. It can be tricky doing this with your friends but we’ve managed to make it work. A year-and-ahalf ago, he moved to Ireland to be the head of our new Dublin headquarters.

We now have about 20 people over there and it’s where we are rebasing most of the activity of the company. It will also be the place where most of our future hires go as well.

KAX Media’s Dublin base is 20-strong and growing

EGR Marketing: Why did you decide on Dublin?
CG: It’s English-speaking, full of Americans and is quite easy to get to. Ireland also makes it a very attractive place to do business from a tax and visa perspective, while half of Silicon Valley has offices over there. It really does tick all the boxes and it has been booming ever since the financial crisis. However, we’ve still got five people in our American office, two of us here in Monaco and a handful of freelancers scattered about.

EGR Marketing: How did the acquisition of Gambling.com come about and was it an expensive deal at the time?
CG: It was very much a right place at the right time situation. In 2011, we were shifting our strategy away from China and into the European online casino market, when we got a phone call that Media Corp was trying to sell Gambling. com. We didn’t exactly have that amount of money lying around at the time, but with a little bit of help from thirdparty investors, we quickly arranged the financing, made a bid and were lucky enough to win the auction.

EGR Marketing: Was that a lot of money for a site back then?
CG: I think it was a very good price. If they had conducted the sales process in a better way, then they could have achieved a higher price, even in 2011. And if you look into the value of just the domain today, it is much higher. Overall, domain-name values have gone down, with the exception of dot.coms. These are seen as a safe harbour now in a sea of confusion. No one is worried about the future value of a dot.com but the others are seen as far less interesting than they used to be.

EGR Marketing: Why do you think acquisitions are becoming more common in the affiliate space?
CG: It’s an interesting time for the industry. Three or four years ago, you couldn’t sell an affiliate site to save your life. Today, people have accepted that these sites are valuable and people have realised they are most valuable in numbers as part of a portfolio. All these websites make most of their money from Google and the thinking previously was that if Google changed, you could immediately lose all your money. That is still true but if you do 10 acquisitions and two blow up, then you will probably still be ok in the long-run. The big affiliates in the space have realised that but consolidation is also affecting the smaller guys as well.

EGR Marketing: Does KAX Media plan to take an active role in this in the future? CG: There are many affiliates out there, other than XLMedia and Catena Media, which are buying and we are just one of them. I think that competition is OK though because there is a huge number of these websites out there and the marketplace is still very fragmented. We realised we’ve got all the infrastructure in place to run these businesses: our publishing platform and our business intelligence platform.

So if I go out and buy a couple of websites which make €300,000 a month and I integrate them on to my platforms, it doesn’t cost me an additional €300,000 a month to operate them, it will cost me a tiny fraction of that. So the additional acquisitions don’t meaningfully increase my costs but do meaningfully increase my bottom line. So there is definitely a scale effect to all this.

EGR Marketing: Do you have any plans to diversify your strategy at all?
CG: Historically the business has been an SEO shop, and made the bulk of our money from organic search. But in 2016 we decided to take our PPC side of the business much more seriously. In mid-2016, we hired a former senior PPC manager from Betfair and we are definitely going to continue pushing that forwards. With Gambling.com, we’ve got a real advantage there because if you see it in the search results next to other domains, people are going to click on Gambling.com more often because it’s a great domain name. We’ve also put Gambling.com on UK national TV with two substantial ad campaigns. So we’ve taken what was originally a very good domain name, turned it into a brand and more and more people know it now.