Staying Away From Facebook, BK Beauty Grows With Affiliate Marketing

Staying Away From Facebook, BK Beauty Grows With Affiliate Marketing

Paul Jauregui first appeared on this podcast in September 2020. He and his wife, Lisa, launched BK Beauty, a direct-to-consumer cosmetics brand that was a huge success a year ago.

Since then, many DTC brands have suffered due to the impact of iOS 14.5 on Facebook ads. But not BK Beauty. Jauregui “pulled the plug” in Facebook ads in late April 2021, just before the iOS release.

He told me, “There was a lot of dust to be solved with Facebook ads, a lot of questions. I wanted to focus elsewhere.”

For BK Beauty, “Elsewhere” is affiliate marketing. He and I recently discussed this channel – getting started, recruiting affiliates, assigning commissions, and more.

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

Eric Bandholz: BK Beauty is one of the few DTC companies that hasn’t been harmed by iOS 14.5 and Facebook ads.

Paul Jauregui: It didn’t affect us. We’ve increased Facebook ads to about $50,000 per month through March 2021. Then things started to take a turn for the worse and the reporting didn’t give me confidence. That’s why we pulled the plug at the end of April.

Bandholz: About the time Apple released iOS 14.5.

Jauregui: Yes. I talk to many business owners. There was too much dust, too many questions to be content with with Facebook ads. It was distracting and I wanted to focus elsewhere.

Bandholz: Beardbrand had the same problem. We hit nearly $120,000 per month in Facebook ad spend in the summer of 2021. We started looking at the numbers and realized that we were just giving Zuckerberg money without giving anything in return. We spent half a million dollars on ads that didn’t drive sales in 2021.

Jauregui: Prior to iOS 14.5, we had profitable customers on Facebook, but that wasn’t the ROI we needed. Also, incoming customers did not connect with the brand because we focused on cold mineral exploration. The customer service emails were jam-packed.

Our rate of return has always been low – just under 2%. But it also began to creep. There were many signs. They were not the ideal customers I wanted to include in the group. We had other opportunities as well – some brand partnerships and product collaborations. Affiliate marketing with creators on YouTube was our first cog and remains so today.

We will revisit paid social and paid acquisition, but not for now.

Bandholz: Many of us thought we should 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 pretty early on. Here is the context. We started the business in August 2019. But before that, my wife had a popular makeup and cosmetics YouTube channel for about eight years. He made brand partnerships and added affiliate links in the description box about the products he liked. So we got quite a bit of insight into the mindset of creators and how they work.

So my wife had relationships with people who supported the brand and our launch. We have chosen to compensate these supporters for the sales they generate. This was the beginning of our affiliate program.

Many creators in our niche use PrizeStyle, a sub-affiliate network. It is now called LTK. I didn’t know much about the field, but I knew I had to be in the Award Style because the people we wanted to interact with were operating from here. So I reached out to PrizeStyle for more information. They referred me to other affiliate networks that should have been the primary platform.

Sub-affiliate networks are moving away from the primary platforms we’re on, like Shareasale. CJ Affiliate, formerly Commission Junction, is another.

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

Jauregui: It deals with the back office and transactional nature of a merchant and its affiliates, with affiliate networks and platforms, payments, reporting, link tracking and the like. I didn’t think Shareasale would bring us creators or relationships. Definitely PrizeStyle and another sub-partner in our category, MagicLinks has programs to connect with influencers and creators. But we have always sourced our own affiliates. We strive to develop authentic human relationships.

We are planting many crops. We meet new creators, send them our collection, and issue a private label 10% discount code they can share with their audience. We have no expectations. Most often they use the product, love it and talk about it. After that, we introduce them to our affiliate program. “By the way, we have a 15% off commission through Shareasale and PrizeStyle.” we will say. We can look at the YouTube description boxes and see which affiliate platforms they are on.

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

Jauregui: I’ll start with the last one. Yes, we usually give a 10% discount code to creators. For platform cost, I’ll break that down by working backwards from Shareasale to us. In my experience, most primary platforms charge similar amounts, though sometimes calculated differently. Shareasale deducts 20% on payments. And we get 15% commission.

So on a $100 sale, $15 goes to the affiliate. And 20% of that – $3 – goes to Shareasale.

However, its sub-affiliate networks, PrizeStyle and MagicLinks, take another deduction from the creator’s payment. Creators who sign up directly through Shareasale receive the full 15%. However, creators who sign up through the bounty Style will receive the net amount – up to 40% less. Not many creators are aware of it. Sub-affiliate networks receive money from affiliates, not brands.

Bandholz: Why pay 15% commission plus 10% coupon instead of 25% commission and no coupon?

Jauregui: We give 10% coupon code. This is our foundation. It provides creators with a branded discount code to lure their viewers. In terms of 15% commission, we wanted to make sure our creators were getting a fair wage. They run our business. A good middle ground in terms of fifteen percent commission.

Bandholz: How many affiliates do you have?

Jauregui: We currently have over 100 people with whom we work or who have some degree of commitment. Beyond 100, it is difficult to manage.

All in the beauty field. Many people apply directly to our program through Shareasale, including on coupon sites.

Bandholz: Coupon sites — essentially stealing money from you. A ready-to-buy customer will search Google for a coupon.

Jauregui: Beyond that, they steal money from our creators and affiliates. I don’t usually approve of coupon sites. I am very selective.

Bandholz: Many listeners are probably undecided about getting into affiliate marketing. What are realistic expectations? How much business can an affiliate program bring?

Jauregui: Every business and category is unique. For us, affiliates provide 20% of sales, but I can see that increasing. Lots of customer acquisition and lifetime value. Many creators focus on beauty and makeup. It’s endless.

We will only reach people with 2,000 to 5,000 subscribers and engage with the product. But our sweet spot is 10,000 to 50,000. We can get an early start with creators in this range. We can come early, give them lots of direct attention, and help them grow their channels with commissions, products, and support.

Bandholz: How can listeners reach you?

Jauregui: Our website is BKbeauty.com. I’m in excitement and LinkedIn.

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