Spend model in iGaming – what is it and how does it work?

Hello, community! Affiliates are used to thinking of CPA and RevShare as the key payout models in iGaming. And if you are experienced enough and the affiliate program respects you, it may even offer you a Hybrid deal.  

At the same time, the Spend model is discussed unfairly rarely. So we decided to shed a bit more light on it, even though it can definitely be called a niche format. You will understand why we think so in just a moment. 

Before we begin, we would like to remind you that we have already published a detailed overview of the iGaming vertical. Definitely worth checking out! 

What is the Spend model? 

Let’s start with the most important part. This model is highly unique. Not every affiliate program is in a position to offer it. And even when such an option exists, it is usually available only to large and experienced teams. Although, of course, there are always exceptions. 

This becomes easy to understand once you look closer at how it works. The key feature of the Spend model is that the affiliate program compensates all advertising campaign costs and also pays an extra percentage on top. That percentage is what can be considered the affiliate’s net profit. 

All of this creates the following advantages: 

• Lower risks. In a way, the entire traffic acquisition process happens without using your own money. Though there are a lot of “buts” here, which we will also discuss later. 
• Stable and predictable ROI. You always know exactly how much profit you will make, because it is based on a fixed percentage. So the final amount depends solely on how much the campaign cost. 
• Room for experimentation. The relative absence of risk to your own money creates new opportunities, allowing you to test yourself in new GEOs or scale in places where an affiliate would hardly dare to do so with their own funds. 

But it is not that simple. Because if the ad campaign does not deliver the expected results, all the magic disappears and the carriage turns back into a pumpkin. The advertiser sets strict traffic requirements, as well as minimum KPI or LTV benchmarks. And if the performance does not meet expectations, neither the affiliate nor the team gets any compensation at all.  

That said, it is important to stress that all these conditions are discussed in advance and formalized in the relevant offer agreement. So there are no surprises here. Both sides of the deal know exactly which obligations they are taking on. So if this model has already started to seem unfair to you, it really is not. Although it certainly does have downsides. 

Why is an affiliate program interested in the Spend model? 

It is easy to understand why affiliates choose this type of cooperation. But why would an advertiser or affiliate program be willing to fully reimburse an ad campaign instead of simply paying for the result directly? For example, the way it happens under RevShare or CPA.  

Advertisers are willing to work under such a model because:  

• It is an opportunity to work with stronger affiliate teams that are simply not used to running traffic under CPA deals. For them, it is often not profitable enough. If you want to work with the best, you have to offer the right conditions. And Spend handles that perfectly. 
• It is easier to control traffic quality. When an advertiser pays for an FTD, there is still no guarantee that the user will make any further deposits. As a result, spending commission money on affiliates may fail to justify itself. A pre-set KPI, on the other hand, does provide a certain level of stability.  
• No risks. And in this respect, advertisers are in a better position than affiliates. Because they pay for a specific result, while affiliates still have to deliver that result.  

At the same time, only projects with a sufficient budget can afford this model. So in most cases, it is offered only by affiliate programs tied to large and recognizable brands.  

Does the Spend model have drawbacks? 

Yes, absolutely. It is not a “CPA killer,” no matter what some media outlets may claim. It is just one of the possible cooperation formats worth considering.  

The major downsides of the Spend model in iGaming include:  

1. The risk of failing to hit the target and ending up deep in the red. Especially if the affiliate “lied on the résumé.” In other words, simply overestimated their own abilities and failed to deliver on the offer. 
2. Profit may be lower than under other models. You will not see any 300%+ ROI cases here. It is always predictable and represents a relatively small percentage of total spend, which is both a plus and a minus at the same time.  
3. Terms may change during the campaign. For example, if traffic quality falls short only on some criteria that the advertiser is still willing to overlook, but only by lowering the affiliate’s “bonus.”  
4. Far from everyone gets the chance to work under the Spend model. It would not be wrong to say that this is one of the most exclusive cooperation formats in affiliate marketing. 

Even if you are an affiliate with an impressive background, that still guarantees nothing. Most brands first ask you to run a test volume of 100–200 FTDs. If the overall quality of that traffic satisfies the advertiser, only then do you get the opportunity to move on to more favorable terms. 

Which payout model should an affiliate choose? 

As we already emphasized, the Spend model does not replace all the others. It simply serves as an alternative. 

Even experienced teams that work with Spend still combine it with other payout models, building separate campaigns and funnels around them. Because this is simply resource diversification, and it can increase profit. 

In general, there are specific cases where each of the existing models can show its full potential. For a highly gambling-prone and solvent GEO, RevShare is the ideal option. Because it can generate much greater profit than Spend. And if the goal is some kind of fast-scaling “adventure,” CPA may be the perfect fit.  

So making it your goal to work in iGaming only under the Spend model is a mistake. Because money can be made in different ways. Everything depends on the specific campaign parameters, the GEO, and the target audience.  

Conclusion 

The Spend model is a breath of fresh air in iGaming. A large number of affiliates have never even heard of this type of payout format. Yet it is gradually becoming more and more popular. And although the entry barrier for Spend is very high, it is still achievable for professional affiliate teams and even solo affiliates.  

And if you cannot reach it, that is not the end of the world. Other payout models still work and still generate profit — sometimes even more than Spend. So the most important things are still your analytical skills, creativity, knowledge, and experience.  

Had you heard of the Spend model in iGaming before this? Or maybe you are already actively running traffic under it? Share your thoughts in our Telegram community, the best affiliate marketing community in Ukraine!  

With respect, your Geek! 

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