E-COMMERCE

BK Beauty, avoiding Facebook, thrives with affiliate marketing

Paul Jauregi first appeared on this podcast in September 2020. He and Lisa, his wife, a year before the great success launched BK Beauty, a brand of cosmetics for consumers.

Since then, many DTC brands have been affected by the impact of iOS 14.5 on Facebook advertising. But not BK Beauty. Yauregi “turned off” advertising on Facebook in late April 2021, just before the release of iOS.

He told me, “There was a lot of dust that had to settle with Facebook advertising, a lot of questions. I wanted to focus on something else. ”

“Elsewhere” for BK Beauty is affiliate marketing. We recently discussed this channel with him – the beginning of work, recruitment of branches, appointment of commissions and much more.

Our entire audio conversation is embedded below. The transcript has been edited for clarity and length.

Eric Bandholz: BC beauty is one of the few DTC companies that has not been affected by iOS 14.5 and Facebook advertising.

Paul Yaregi: It did not affect us. We have increased Facebook advertising by March 2021 to about $ 50,000 per month. Then things started to get worse, and the reports didn’t give me confidence. So we disconnected in late April.

Bandholz: About when Apple released iOS 14.5.

Jauregui: Yes. I talk to many host operators. There was a lot of dust that needed to go away with Facebook advertising, a lot of questions. It was a distraction and I wanted to focus on another.

Bandholz: The same problem was with Beardbrand. In the summer of 2021, we reached about $ 120,000 a month for Facebook advertising. We started looking at the numbers and realized we were just giving Zuckerberg money out nothing in return. In 2021, we spent half a million dollars on advertising, which did not contribute to sales growth.

Jauregui: We profitably acquired customers through Facebook to iOS 14.5but it did not need a return on investment. Also, the customers who came did not contact the brand because we were focused on cold intelligence. Email customer service ticked.

Our profitability has always been low – just under 2%. But it also began to creep. There were many signs. They weren’t the perfect customers I wanted to attract. We had other opportunities – some partnerships with brands and collaboration with products. Affiliate marketing with YouTube content creators was our first flywheel and remains today.

We will return to paid social and paid acquisitions, but not yet.

Bandholz: Many of us thought we needed to use paid social media, but there are many ways to grow a business. Tell us about your affiliate program.

Jauregui: We set up an affiliate program quite early. Here is the context. We launched the business in August 2019. But before that, my wife of about eight had a popular YouTube channel about makeup and makeup. She has collaborated with brands and included in the description field affiliate links to products she loves. So we had a good idea of ​​the content creators ’thinking and how they work.

So my wife had a relationship with people who supported the brand and our launch. We decided to compensate these fans for the sales they generated. This was the beginning of our affiliate program.

Many creators in our niche use rewardStyle, which is a sub-affiliate network. It is now called LTK. I knew little about space, but I knew I needed to be on rewardStyle because that’s where the people we wanted to work with acted. So I turned to rewardStyle for more information. They showed me other affiliate networks that were supposed to be the main platform.

Sub-affiliate networks from major platforms such as Shareasale on which we operate. Another is the CJ Affiliate, formerly the Commission Junction.

Bandholz: All this is confusing. Beardbrand has just launched an affiliate program using AvantLink. How does a merchant find the right affiliate platform?

Jauregui: Affiliate networks and platforms take care of the back office and transactional nature of the merchant and its affiliates with payouts, reporting, link tracking and the like. I didn’t expect Shareasale to bring us creators or relationships. Of course, rewardStyle and another subsidiary in our category, MagicLinks, have communication programs influential people and creators. But we have always found our own branches. We try to develop real human relationships.

We make a lot of sowing products. We meet new content creators, send them our collection, and issue a 10 percent discount code with an individual brand that they can share with their audience. We have no expectations. Most often they use the product, love it and talk about it. We then introduce them to our affiliate program. We will mention: “By the way, we have a 15% commission discount through Shareasale and rewardStyle.” We can take a look at their YouTube description box and see which affiliate platforms they are on.

Bandholz: So let’s talk about cost. How much do these platforms cost? And how many commissions do affiliates receive? Do you offer them a discount code for their audience?

Jauregui: I’ll start with the last one. Yes, we usually give creators code for a 10% discount. As for the cost of the platform, I’ll disassemble it, working in reverse from Shareasale to us. In my experience, most major platforms charge the same amounts, although sometimes calculated differently. Shareasale reduces payouts by 20%. And we have a 15% commission.

So when selling for $ 100 $ 15 goes to a partner. And 20% of that – $ 3 – goes to Shareasale.

However, affiliate networks, rewardStyle and MagicLinks, take away another portion of the creator’s payouts. Creators who register directly through Shareasale receive all 15%. But creators who register through rewardStyle will receive a net amount – 40% less. Many creators do not know. Sub-affiliate networks take money from affiliates, not from brands.

Bandholz: Why pay a 15% commission plus a 10% coupon against a 25% commission and no coupon?

Jauregui: We issue coupon codes for 10%. This is our baseline. It gives creators a branded discount code to engage their audience. As for the 15% commission, we wanted to make sure that content creators get fair compensation. They drive our business. Fifteen percent is a good middle ground in terms of commissions.

Bandholz: How many branches do you have?

Jauregui: We now have over 100 people with whom we work or have a certain level of engagement. Over 100, it’s hard to manage.

Everyone is in a space of beauty. Many people, including coupon sites, access our program directly through Shareasale.

Bandholz: Coupon sites – they are, in fact, stealing money from you. A customer willing to buy will search for a coupon on Google.

Jauregui: In addition, they steal money from our content creators and our affiliates. I don’t usually approve coupon sites. I am very selective.

Bandholz: Many listeners probably do not regret to join affiliate marketing. What are the realistic expectations? How much business can an affiliate program lead?

Jauregui: Every business and category is unique. For us, affiliates provide 20% of sales, but I see that increasing. It’s a lot of customer engagement and lifelong value. Many content creators focus on beauty and makeup. It’s endless.

We will appeal to people who may have only 2,000 to 5,000 subscribers. But our sweet place – from 10 to 50 thousand. We can start early with content creators in this range. We can come earlier, give them a lot of direct attention and help develop their channel with commissions, products and support.

Bandholz: How can listeners contact you?

Jauregui: Our site is BKbeauty.com. I’m on Twitter and LinkedIn.



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