BK Beauty, Avoiding Facebook, Thrives with Affiliate Marketing

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 12 months earlier than to nice success.
Since then, many DTC manufacturers have suffered because of iOS 14.5’s influence on Facebook promoting. But not BK Beauty. Jauregui “pulled the plug” on Facebook adverts in late April 2021, simply earlier than the iOS launch.
He informed me, “There was a whole lot of mud that wanted to settle with Facebook adverts, a whole lot of questions. I wished to focus elsewhere.”
“Elsewhere” for BK Beauty is internet online affiliate marketing. 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 Beauty is likely one of the few DTC firms that wasn’t harm by iOS 14.5 and Facebook adverts.
Paul Jauregui: It didn’t have an effect on us. We scaled up Facebook adverts 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 adverts, a whole lot of questions. It was a distraction, and I wished to focus elsewhere.
Bandholz: Beardbrand had the identical drawback. We reached roughly $120,000 a month in Facebook 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 means of Facebook earlier than iOS 14.5, however it wasn’t the ROI we would have liked. Plus, the shoppers coming in didn’t join with the model as a result of we had been targeted on chilly prospecting. Customer service emails had been ticking up.
Our return price has at all times been low —  just below 2%. But it began to creep up, too. There had been many indicators. They weren’t the perfect clients I wished to be bringing into the fold. We had different alternatives — some model partnerships and product collaborations. Affiliate advertising with content material creators on YouTube was our first flywheel and nonetheless is right this moment.
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 a lot 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 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 area, however I knew I wanted to be on rewardStyle as a result of that’s the place the oldsters we wished to have interaction with had 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, akin to 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 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 deliver 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 we’ve got 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 challenge a custom-branded 10% low cost code that they’ll share with their viewers. We haven’t any expectations. More typically than not, they use the product, find it irresistible, and speak about it. After that, we introduce them to our associates program. We’ll point out, “By the best way, we’ve got 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 value. How a lot are these platforms taking? And how a lot fee do the associates obtain? Do you supply them a reduction code for his or her viewers?
Jauregui: I’ll begin with the final one. Yes, we sometimes challenge a ten% low cost code to the creators. For the platform value, I’ll break it out by working backward from Shareasale to us. In my expertise, most major platforms cost comparable quantities, though it’s typically calculated in another way. Shareasale takes a 20% reduce of payouts. And we’re operating a 15% fee.
So on a $100 sale, $15 goes to the affiliate. And 20% of that — $3 — goes to Shareasale.
That mentioned, 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 complete 15%. But creators who enroll by means of rewardStyle would obtain the web quantity — as a lot as 40% much less. Lots of creators are usually 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 challenge coupon codes for 10%. That’s our baseline. It gives the creators with a branded low cost code to entice their viewers. In phrases of the 15% fee, we wished to verify our content material creators are getting truthful compensation. They drive our enterprise. Fifteen p.c is an efficient center floor by way of commissions.
Bandholz: How many associates do you’ve got?
Jauregui: We now have over 100 people who we work with or have some stage of engagement. Beyond 100, it’s tough to handle.
All are within the magnificence area. Many individuals, 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 sometimes don’t approve coupon websites. I’m very selective.
Bandholz: Many listeners are most likely on the fence about stepping into internet online affiliate marketing. What are practical 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 infinite.
We’ll attain out and interact and seed product to people who perhaps 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 in 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.


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