Paul Jauregui first appeared on this podcast in September 2020. He and Lisa, his spouse, had launched BK Beauty, a direct-to-consumer cosmetics model, the yr earlier than to nice success.
Since then, many DTC manufacturers have suffered attributable to iOS 14.5’s impression on Facebook promoting. But not BK Beauty. Jauregui “pulled the plug” on Facebook advertisements in late April 2021, simply earlier than the iOS launch.
He instructed me, “There was a whole lot of mud that wanted to settle with Facebook advertisements, a whole lot of questions. I needed to focus elsewhere.”
“Elsewhere” for BK Beauty is affiliate marketing online. He and I lately mentioned that channel — getting began, recruiting associates, assigning commissions, and extra.
Our total audio dialog is embedded beneath. The transcript is edited for readability and size.
Eric Bandholz: BK Beauty is likely one of the few DTC firms that wasn’t harm by iOS 14.5 and Facebook advertisements.
Paul Jauregui: It didn’t have an effect on us. We scaled up Facebook advertisements by means of March 2021 to roughly $50,000 a month. Then issues began getting rocky, and the reporting wasn’t giving me confidence. So we pulled the plug in late April.
Bandholz: Right about when Apple launched iOS 14.5.
Jauregui: Yes. I speak to a whole lot of owner-operators. There was a whole lot of mud that wanted to settle with Facebook advertisements, a whole lot of questions. It was a distraction, and I needed to focus elsewhere.
Bandholz: Beardbrand had the identical drawback. We reached roughly $120,000 a month in Facebook advert spend through the summer time of 2021. We began trying on the numbers and realized we have been simply giving Zuckerberg cash with nothing in return. We ended up blowing a half-million {dollars} in 2021 in advertisements that didn’t drive gross sales.
Jauregui: We acquired prospects profitably by means of Facebook earlier than iOS 14.5, but it surely wasn’t the ROI we wanted. Plus, the purchasers coming in didn’t join with the model as a result of we have been targeted on chilly prospecting. Customer service emails have been ticking up.
Our return charge has at all times been low — just below 2%. But it began to creep up, too. There have been many indicators. They weren’t the best prospects I needed to be bringing into the fold. We had different alternatives — some model partnerships and product collaborations. Affiliate advertising and marketing with content material creators on YouTube was our first flywheel and nonetheless is at present.
We’ll revisit paid social and paid acquisition, however not for now.
Bandholz: Many of us thought we had to make use of paid social, however there are lots of methods to develop a enterprise. Tell us about your associates program.
Jauregui: We arrange an associates program fairly early. Here’s the context. We launched the enterprise in August 2019. But earlier than that, my spouse had a well-liked YouTube channel round make-up and cosmetics for about eight years. She did model partnerships and included affiliate hyperlinks in her description field about merchandise she loves. So we had a great deal of perception into the mindset of content material creators and the way they function.
So my spouse had relationships with of us who supported the model and our launch. We opted to ship compensation to these supporters for the gross sales that they have been producing. That was the beginning of our associates program.
Many creators in our area of interest use rewardStyle, which is a sub-affiliate community. It’s now referred to as LTK. I didn’t know a lot in regards to the house, however I knew I wanted to be on rewardStyle as a result of that’s the place the parents we needed to have interaction with have been working from. So I reached out to rewardStyle to get extra data. They pointed me to different affiliate networks that needed to be the first platform.
Sub-affiliate networks piggyback off of major platforms, resembling Shareasale, which is the one we’re on. CJ Affiliate, previously Commission Junction, is one other.
Bandholz: All of that’s complicated. Beardbrand simply launched an associates program utilizing AvantLink. How does a service provider discover the best affiliate platform?
Jauregui: Affiliate networks and platforms deal with the again workplace and the transactional nature of a service provider and its associates with payouts, reporting, hyperlink monitoring, and related. I didn’t assume Shareasale would convey creators or relationships to us. Certainly rewardStyle and one other sub-affiliate in our class, MagicLinks, have applications to attach with influencers and creators. But now we have at all times sourced our personal associates. We attempt to develop genuine human relationships.
We do a whole lot of product seeding. We meet new content material creators, ship them our assortment, and subject a custom-branded 10% low cost code that they will share with their viewers. We don’t have any expectations. More usually than not, they use the product, adore it, and speak about it. After that, we introduce them to our associates program. We’ll point out, “By the best way, now we have a 15% off fee by means of Shareasale and rewardStyle.” We can look of their YouTube description field and see what affiliate platforms they’re on.
Bandholz: So let’s speak about price. How a lot are these platforms taking? And how a lot fee do the associates obtain? Do you provide them a reduction code for his or her viewers?
Jauregui: I’ll begin with the final one. Yes, we usually subject a ten% low cost code to the creators. For the platform price, I’ll break it out by working backward from Shareasale to us. In my expertise, most major platforms cost related quantities, though it’s typically calculated in another way. Shareasale takes a 20% reduce of payouts. And we’re working a 15% fee.
So on a $100 sale, $15 goes to the affiliate. And 20% of that — $3 — goes to Shareasale.
That stated, the sub-affiliate networks, rewardStyle and MagicLinks, take one other reduce of the creator’s payout. Creators who enroll immediately by means of Shareasale get the total 15%. But creators who enroll by means of rewardStyle would obtain the web quantity — as a lot as 40% much less. A variety of creators aren’t conscious. Sub-affiliate networks take cash from associates, not the manufacturers.
Bandholz: Why pay a 15% fee plus a ten% coupon versus a 25% fee and no coupon?
Jauregui: We subject coupon codes for 10%. That’s our baseline. It supplies the creators with a branded low cost code to entice their viewers. In phrases of the 15% fee, we needed to ensure our content material creators are getting honest compensation. They drive our enterprise. Fifteen p.c is an efficient center floor by way of commissions.
Bandholz: How many associates do you could have?
Jauregui: We now have over 100 of us who we work with or have some degree of engagement. Beyond 100, it’s troublesome to handle.
All are within the magnificence house. Many folks, together with coupon websites, apply to our program immediately by means of Shareasale.
Bandholz: Coupon websites — they’re primarily stealing cash from you. A buyer prepared to purchase will search on Google for a coupon.
Jauregui: Beyond that, they’re stealing cash from our content material creators and our associates. I usually don’t approve coupon websites. I’m very selective.
Bandholz: Many listeners are most likely on the fence about moving into affiliate marketing online. What are sensible expectations? How a lot enterprise can an associates program drive?
Jauregui: Every enterprise and class is exclusive. For us, associates drive 20% of gross sales, however I can see that rising. It’s a whole lot of buyer acquisition and lifelong worth. Many content material creators concentrate on magnificence and make-up. It is limitless.
We’ll attain out and have interaction and seed product to of us who possibly solely have 2,000 to five,000 subscribers. But our candy spot is 10,000 to 50,000. We can get an early begin with content material creators in that vary. We can are available early, give them a whole lot of direct consideration, and assist develop their channel with commissions, product, and help.
Bandholz: How can listeners attain out to you?
Jauregui: Our web site is BKbeauty.com. I’m on Twitter and LinkedIn.
https://www.practicalecommerce.com/bk-beauty-avoiding-facebook-thrives-with-affiliate-marketing
