3 min read

Affiliate marketing: a hidden gem for beauty brands

Back in 2019, the value of the personal luxury goods market worldwide was €281 billion. The industry, which includes drinks, fashion, cosmetics, fragrances, watches, jewelry, luggage and handbags, has been on an upward climb for many years.

The luxury sector is huge in the marketing world. However, during 2020, COVID-19 has had an undeniable affect on how people shop. WWD, a fashion industry trade journal, has stated: “The luxury industry survived the Great Recession of 2008, and will weather this disruption, too.”

Consumer shopping habits continue to change – but what does this mean for affiliate marketing?

Relationship status: it's complicated

In the past, the luxury fashion and beauty industries have been hesitant to fully embrace the affiliate channel. This came from a fear of associating their high-end products with discount codes and cashback sites. However, over the last few years, the affiliate landscape has changed and, as a result, these high-end brands are leveraging performance from the affiliate channel and making it their own! 

Luxury brands have historically also approached social media with caution. At first glance, it seems counter-intuitive for a brand built around exclusivity to invest in platforms that are all about accessibility. However, times are changing. Consumers have never been as sceptical towards advertising as they are today. Luxury is no longer about shrouding the brand in mystery, but more about authenticity, quality, and personality.

Then vs now

As mentioned, affiliate marketing is traditionally focused on end-of-funnel marketing; aka using discount codes and cashback sites to close sales. Thanks to the rise of content affiliates, including influencers and bloggers, the channel has since permeated through every area of the sales funnel.

Social media influencers and online magazines have been working with high-end brands for years, however many are now becoming savvy to working on an affiliate basis too. This side of things was previously reserved for PR agencies, but there was a lack of measurement. The use of affiliate links within online content now allows brands to measure performance more accurately, and the partner gains a monetary reward for any sales generated, of course. Everyone is happy! 

Influencer and content collaborations allow luxury brands to position themselves in front of consumers within their chosen demographic at any stage of the buying process – not just at the checkout. This all takes place within the platforms customers are spending hours on each day, such as Instagram, YouTube and TikTok. Brands are embracing new techniques to reach these audiences, such as gifting new releases to chosen content creators ahead of the release date or developing long-lasting ambassador programs to promote brand awareness, boost revenue and build advocacy.

Where fashion editorials and high-end magazines used to dominate and drive consumer opinion, the new voice of truth comes from digital influencers. A recent study shows that 92% of consumers trust an influencer’s opinion more than an advertisement or traditional celebrity endorsement. Technology has also kept up with consumer sentiment, and with the advent of ad blocking technologies, consumers no longer have to accept intrusive digital advertisements as a fact of life.

Influencer marketing: risk vs reward

For the most prestigious brands, are they worrying over nothing or have they a right to be wary of influencer marketing?

We’ve all seen an influencer fall from grace. As a brand, you must consider the impact it could have on your reputation. In March 2019, YouTuber and Instagram sensation, Olivia Jade, was found to have illegally gained entry to the University of Southern California, as well as her sister. This was a result of their mother, Lori Loughlin’s, alleged bribery of the university – to the value of $500,000. Olivia was working with several high-end brands at the time, including Dolce & Gabbana and Marc Jacobs. However, after this news broke, she lost several brand deals including one with high-end beauty retailer, Sephora

Working with an influencer or content partner means putting at least some of the power in their hands. Their other ideas, opinions and behaviours could have a negative impact on your brand by association. If your brand invests in an influencer and is forced to withdraw support due to a controversy, this could see a significant loss of time and investment. 

Many brands use expensive screening processes to vet content partners they choose to work with, to ensure no questionable tweets or posts are lurking in their past. Naturally if these are paid partnerships too, the brand can always request final sign off on any content. But, ultimately, we cannot predict the future in terms of any scandal that will arise, and so there will always be an element of risk to partnership marketing. We know however, from experience, that the gains of collaborating with a suitable partner will usually far outweigh any risks, in terms of financial growth and brand perception.

First comes awareness, then comes ROI – or does it? How can brands be sure that significant investment into content will yield the results they want? Fortunately, Silverbean has decades of experience here. Affiliate marketing is a purely performance-based channel, and once we know what the brand is hoping to achieve, we start building an effective affiliate partner programme. We optimise programmes to align with various targets, from boosting international revenue to raising local brand awareness and everything in-between.

We use several tools to hand-pick relevant influencers and content sites within a brands budget. From here, we set KPIs and monitor activity closely. Nothing is set in stone, so we can be agile and tactical when allocating budget – so every penny is well spent on achieving our goal.

Luxury: a bespoke mix

If you caught our top tips for a successful luxury fashion affiliate programme, you’ll already know that it’s essential to have the right mix.

The affiliate mix is dependent on both the brand and its target audience, which can, as a result, affect what is achieved. A typical affiliate partner programme would have a very even mix of content, cashback, voucher codes, loyalty, community and technology affiliates. However, for luxury fashion and beauty brands, this tends to be a little different, and with good reason!

When it comes to luxury brands, strategies include recruiting a higher percentage of content site affiliates, as opposed to using generic ‘money off’ voucher codes. Any voucher codes that are used, are implemented strategically, and only ever with an offer that complements the brand’s image appropriately. Brand protection is key.

Brand protection on an international scale

Over the Chinese New Year period we ran an exclusive ‘free delivery’ code for a selection of affiliate programmes. Since this does not involve discounting a prestige product, it doesn’t devalue the brand in the same way a money-off voucher might. This is a perfect incentive to increase the average order value as well, so it’s often a favourite for brands in the luxury sector.

European brands make up 70 percent of the global luxury goods industry market, yet it is often not locals who bolster them. The same is true for U.S. brands and consumers. Instead, since 2008, the industry has been relying heavily on Chinese and Middle Eastern customers, particularly tourists.

As a result, the affiliate channel works closely with publishers who specifically promote to the global shopper for luxury brands. A large part of this is made up by the Chinese community, whether they live in China or elsewhere in the world. The Chinese social platform Weibo is key here, as many Chinese consumers living in the EU and US follow large Weibo accounts to find the best online deals within the fashion and beauty industries. They also follow them for new trends and user generated content. 

This allows brands to boost revenue by partaking in Chinese holidays including the aforementioned Chinese New Year, Golden Week, and Singles Day – all important shopping days in the Chinese calendar!

New product launches

While prestige brands tend to boast a core range that is already popular with their avid audiences, new product launches still play an important role in the sales funnel. There are a number of ways in which marketing can help promote new product launches, these include:

Giveaways

When executed correctly, a giveaway is a very valuable opportunity for a luxury fashion or beauty brand to create brand awareness and also lead generation. It is paramount that you choose the right partner to work with.

Consider a few things before reaching out, such as: what is their target demographic? Which brands do they already work with? You may choose to work with an online magazine within the luxury sector for maximum exposure. If going down the influencer route, we recommend selecting a handful of very relevant, smaller content creators, rather than a scattergun approach to the top 10 Insta-stars.

This way, a brand’s budget will not only go further, but easier to manage how the brand is perceived, and importantly, limit any risks regarding reputation.

Gifting opportunities

Brands may handpick a number of content publishers and influencers to receive new product launches ahead of time. This will give creators time to feature these items on their social media feeds or buying guides in advance of the release date. They may even have an exclusive code for free delivery, or early access, to share with their dedicated followers.

Affiliate codes

By giving partners a personalised affiliate code (e.g. free delivery), the brand will see whose audience is most engaged by keeping an eye on the codes customers choose to use. These should be used sparingly, so as not to affect the exclusivity of the product.

Final thought

Overall, there are a number of essential components that make up a successful luxury affiliate partner programme. It’s about creating a buzz around a brand or product – raising awareness and getting in front of the customer at as many touchpoints as possible. Your agency can, in turn, use this knowledge to organise some truly impactful campaigns for the programme, whether it be user generated content, reviews, gift guide inclusions or giveaways.

An influencer’s opinion on a product really does affect a consumer’s purchasing decisions. When a product is liked and it receives a certain level of publicity, it will very often sell out, so ensure you take into account stock levels before embarking on this type of activity!

Informing affiliates of any celebrity involvement will automatically create a buzz, as word of mouth is such a powerful tactic, an extreme (but exciting) case of this is when a product goes viral and it sells out both online and in-store.

So, the next time you purchase that amazing, must-have new eyeshadow palette that you’ve seen everyone wearing on Instagram, remember, this was most likely the result of a well-thought-out campaign. Get in touch today to find out how Silverbean’s team of expert affiliate marketers deliver an average of 38% revenue growth for our clients in just 100 days.

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