Whitepaper: Comparing Two Traffic Acquisition Strategies in Online Casino Using Unit Economics
Whitepaper
Comparing Two Traffic Acquisition Strategies in Online Casino Using Unit Economics
1. Executive Summary
This whitepaper analyzes two different traffic acquisition strategies for acquiring FTDs (players) in an online casino. Both strategies rely on similar infrastructure and the same unit economics framework, but differ significantly in their approach to growth, cost structure, and LTV management.
Key takeaway: a strategy with lower FTD volume but higher LTV and lower CAC delivers higher margins, earlier break-even, and nearly half the capital requirements, despite higher fixed costs per unit.
Reference: a Google file with financial model and formulas
https://docs.google.com/spreadsheets/d/1a4-nt1ERir9802J71GUCmcR9pxLcCHSRKUROD4IQFsg/edit?gid=0#gid=0
2. Case Description and Key Assumptions
We analyze two products, each representing a distinct traffic acquisition strategy.
Strategy 1 — High Volume / Low Growth
- Large volume of FTDs
- High marketing spend
- Low LTV growth
- Flat margins at maturity
Strategy 2 — Low Volume / High Value
- Half the number of FTDs
- Significantly lower CAC
- High LTV growth (pricing power)
- Stronger partnership-driven model
Model horizon: 6 quarters
LTV lifetime: 4 quarters (1 year)
3. Key Product Parameters
Table 1. Core Metrics
| Metric | Product 1 | Product 2 |
|---|---|---|
| FTDs / quarter (Q1–Q3) | 800 | 400 |
| FTDs / quarter (from Q4) | 800 | 450 |
| FTD growth | +3.7% / q | +3.7% / q |
| Initial LTV (quarterly) | €170 | €170 |
| Average LTV (quarterly) | €186 | €208 |
| Annualized LTV | €700 | €778 |
| LTV growth per quarter | 3.5% | 6.6% |
| Player lifetime | 4 quarters | 4 quarters |
4. Cost Structure
4.1 Fixed Costs
The difference in fixed costs is driven by affiliate team size and management structure.
Table 2. Fixed Costs
| Metric | Product 1 | Product 2 |
|---|---|---|
| Fixed costs (annual) | €400,000 | €275,000 |
| Fixed costs / month | €33,333 | €22,917 |
| Fixed costs / FTD | €118 | €162 |
| Affiliate managers | 4 + line manager | 2 |
| Platform + selling fees | Baseline | +2% (success fee) |
4.2 Variable Costs (CAC)
Table 3. CAC Structure
| CAC Component | Product 1 | Product 2 |
|---|---|---|
| Prepay (PP) | €30 | €30 |
| CPA | €50 | €0 |
| Revenue Share | 30% GGR | 30% GGR |
| Total CAC (excl. RS) | €80 | €30 |
Insight: Product 2 deliberately sacrifices FTD volume in exchange for lower entry costs, stronger partnerships, and higher LTV growth.
5. Revenue Build-Up and Margins
5.1 Revenue Build-Up
Revenue is calculated as:
Revenue = FTD × LTV (by quarter)
LTV accumulates over 4 quarters and is fully realized by the end of the year.
5.2 Key Performance Metrics
Table 4. Product Operations Ratios
| Metric | Product 1 | Product 2 |
|---|---|---|
| ROAS (Q1) | ~1.8 | ~2.0 |
| ROAS (Q6) | ~2.2 | ~3.0 |
| Average Gross Profit Margin | ~50% | ~63% |
| LTV / CAC | ~2.1 | ~4.0 |
| Unit Contribution Margin | Medium | High |
6. Financial Outcome and Break-Even
Table 5. Break-Even and Capital Requirements
| Metric | Product 1 | Product 2 |
|---|---|---|
| Business break-even | Month 12 | Month 10 |
| Initial investment required | €736,800 | €373,570 |
| Margins after Q4 | Flat | Growing |
Break-even formula: Fixed Costs / Gross Profit Margin
7. Strategic Implications
Product 1
- Scales quickly in volume
- Hits a margin ceiling
- Requires CAC reduction or LTV growth
This is a strategic inflection point where a change in approach becomes necessary.
Product 2
- Shows stronger dynamics and is approximately two quarters ahead
- Provides more strategic optionality
- Allows a choice between niche positioning and scaling
Possible scenarios:
- Remain a niche brand with high LTV and low CAC
- Scale by increasing FTDs while preserving LTV
8. Conclusion
This case demonstrates that FTD volume alone does not define success. Control over LTV and CAC determines profitability speed, business resilience, and investment attractiveness.
Unit economics makes these dynamics visible early, allowing informed decisions before issues surface in the P&L.
9. Contact
If you would like to adapt this model to your business, audit your affiliate strategy, or prepare an investor-ready version, please contact:
