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Paul Jauregui first appeared on this podcast in September 2020. He and Lisa, his spouse, had launched BK Magnificence, a direct-to-consumer cosmetics model, the 12 months earlier than to nice success.
Since then, many DTC manufacturers have suffered resulting from iOS 14.5’s impression on Fb promoting. However not BK Magnificence. Jauregui “pulled the plug” on Fb adverts in late April 2021, simply earlier than the iOS launch.
He informed me, “There was quite a lot of mud that wanted to settle with Fb adverts, quite a lot of questions. I needed to focus elsewhere.”
“Elsewhere” for BK Magnificence is affiliate marketing online. He and I not too long ago mentioned that channel — getting began, recruiting associates, assigning commissions, and extra.
Our whole audio dialog is embedded under. The transcript is edited for readability and size.
Eric Bandholz: BK Magnificence is without doubt one of the few DTC firms that wasn’t damage by iOS 14.5 and Fb adverts.
Paul Jauregui: It didn’t have an effect on us. We scaled up Fb adverts by 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: Proper about when Apple launched iOS 14.5.
Jauregui: Sure. I speak to quite a lot of owner-operators. There was quite a lot of mud that wanted to settle with Fb adverts, quite a lot of questions. It was a distraction, and I needed to focus elsewhere.
Bandholz: Beardbrand had the identical downside. We reached roughly $120,000 a month in Fb advert spend throughout the summer time of 2021. We began trying on the numbers and realized we had been simply giving Zuckerberg cash with nothing in return. We ended up blowing a half-million {dollars} in 2021 in adverts that didn’t drive gross sales.
Jauregui: We acquired clients profitably by Fb earlier than iOS 14.5, however it wasn’t the ROI we would have liked. Plus, the purchasers coming in didn’t join with the model as a result of we had been targeted on chilly prospecting. Customer support emails had been ticking up.
Our return fee has at all times been low — just below 2%. However it began to creep up, too. There have been many indicators. They weren’t the best clients I needed to be bringing into the fold. We had different alternatives — some model partnerships and product collaborations. Online marketing with content material creators on YouTube was our first flywheel and nonetheless is as we speak.
We’ll revisit paid social and paid acquisition, however not for now.
Bandholz: Many people thought we had to make use of paid social, however there are a lot of methods to develop a enterprise. Inform us about your associates program.
Jauregui: We arrange an associates program fairly early. Right here’s the context. We launched the enterprise in August 2019. However earlier than that, my spouse had a preferred 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 people who supported the model and our launch. We opted to ship compensation to these supporters for the gross sales that they had 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 known 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 oldsters we needed to have interaction with had been working from. So I reached out to rewardStyle to get extra information. They pointed me to different affiliate networks that needed to be the first platform.
Sub-affiliate networks piggyback off of main platforms, akin to Shareasale, which is the one we’re on. CJ Affiliate, previously Fee 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 correct affiliate platform?
Jauregui: Affiliate networks and platforms maintain the again workplace and the transactional nature of a service provider and its associates with payouts, reporting, hyperlink monitoring, and comparable. I didn’t assume Shareasale would convey creators or relationships to us. Definitely rewardStyle and one other sub-affiliate in our class, MagicLinks, have packages to attach with influencers and creators. However we’ve got at all times sourced our personal associates. We attempt to develop genuine human relationships.
We do quite a lot of product seeding. We meet new content material creators, ship them our assortment, and concern a custom-branded 10% low cost code that they will share with their viewers. We’ve no expectations. As a rule, they use the product, like it, and speak about it. After that, we introduce them to our associates program. We’ll point out, “By the way in which, we’ve got a 15% off fee by Shareasale and rewardStyle.” We are able to 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 the way 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. Sure, we usually concern 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 main platforms cost comparable quantities, though it’s generally 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 join instantly by Shareasale get the complete 15%. However creators who join by rewardStyle would obtain the web quantity — as a lot as 40% much less. Loads of creators should not 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 concern coupon codes for 10%. That’s our baseline. It supplies the creators with a branded low cost code to entice their viewers. By way of the 15% fee, we needed to ensure our content material creators are getting truthful compensation. They drive our enterprise. Fifteen p.c is an effective center floor when it comes to commissions.
Bandholz: What number of associates do you will have?
Jauregui: We now have over 100 people who we work with or have some stage of engagement. Past 100, it’s tough to handle.
All are within the magnificence house. Many individuals, together with coupon websites, apply to our program instantly by Shareasale.
Bandholz: Coupon websites — they’re basically stealing cash from you. A buyer prepared to purchase will search on Google for a coupon.
Jauregui: Past 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 in all probability on the fence about entering into affiliate marketing online. What are lifelike expectations? How a lot enterprise can an associates program drive?
Jauregui: Each enterprise and class is exclusive. For us, associates drive 20% of gross sales, however I can see that growing. It’s quite a lot of buyer acquisition and lifelong worth. Many content material creators concentrate on magnificence and make-up. It’s countless.
We’ll attain out and have interaction and seed product to people who perhaps solely have 2,000 to five,000 subscribers. However our candy spot is 10,000 to 50,000. We are able to get an early begin with content material creators in that vary. We are able to are available early, give them quite a lot of direct consideration, and assist develop their channel with commissions, product, and assist.
Bandholz: How can listeners attain out to you?
Jauregui: Our web site is BKbeauty.com. I’m on Twitter and LinkedIn.
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