Why luxury beauty brands are embracing Affiliate Marketing
In the past, the luxury beauty industry was 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 adopting the affiliate channel.
One of the biggest changes to the affiliate channel is the rise of the social media influencer. Luxury beauty brands can now position themselves in front of consumers in their chosen demographic, at any stage of the buying process – not just at the checkout. All within the platforms their customers are spending hours each day, such as Instagram, YouTube and Pinterest.
So, what’s happened in the luxury beauty industry since then? Well, it’s certainly growing. In fact, the market has a global market value of $116bn in 2017, and is expected to reach $126bn this year.
When we talk about luxury beauty, we don’t just mean make-up. According to a report by NPD Group, the skin-care industry boasts year-over-year growth at 16 per cent, makeup, by comparison, had only grown by 3 per cent. Not only are the channels changing but as are consumer habits… but what does this mean for affiliate marketing?
The affiliate channel is changing
As we’ve already mentioned, affiliates traditionally focused on end-of-funnel marketing, by using discount codes and cashback sites to close sales. Thanks to the rise of content affiliates, including influencers and bloggers, the channel has since infiltrated every area of the sales funnel.
For many brands, influencer marketing has become a huge part of their Affiliate Partner Programme. Brands are embracing new techniques to reach these audiences, such as gifting new releases to choice content creators ahead of the release date or developing long-lasting ambassador programs to promote brand awareness, boost revenue and build advocacy.
Currently, the health, wellness & beauty sector accounts for 11% of total affiliate programs, coming in third place after fashion and sports & outdoors. But when it comes to luxury beauty, investment remains low.
In a poll of over 300 luxury brands, 79% of them were carrying out influencer marketing in 2017. However, the same poll showed half of these brands had only been active in influencer marketing for a year or less, while 59% of those were spending less than 10% of their total digital marketing budget on influencers.
So it seems luxury beauty brands are dipping their toes in the world of influencer marketing, but why the lack of investment? We suspect these companies are hesitant about this relatively new marketing channel because of the impact it could have on their reputation.
Why luxury brands are hesitant about affiliate marketing
We’ve worked with our fair share of luxury beauty brands to know what’s concerning them when it comes to influencer marketing. The first is the brand itself – by buying into a channel that famously promotes discount codes, they risk watering down their brand and thus removing the prestige aspect that they are founded on.
We’ve all seen an influencer fall from grace and, as a brand, you must consider the impact it could have on your brand reputation. For example, in March 2019, YouTuber and Instagram Star, Olivia Jade, was found to have illegally gained entry to the University of Southern California along with her sister. This came as a result of her mother Lori Loughlin’s alleged bribing of the college to the value of $500,000. At the time, Olivia was working with a number of high-end brands including Dolce & Gabbana and Marc Jacobs. Since the news broke, Olivia has lost several brand deals including one with high-end beauty retailer, Sephora.
Working with an influencer means putting some of the power in their hands. Their other ideas, opinions and behaviours could have a negative impact on your brand – simply 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.
Secondly, brands are nervous about ROI. How can they be sure that significant investment into influencers will yield the results they want? Fortunately, we can help with this too. Once we know what the brand is hoping to achieve, from boosting revenue to raising brand awareness and everything in-between, we can start building an effective Affiliate Partner Programme.
We use several tools to hand-pick relevant influencers within the client’s budget. From here, we can set KPI’s 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.
It’s all in the mix
If you caught our top tips for a successful luxury fashion affiliate program, you’ll already know that it’s essential to have the right mix.
The mix is dependent on both the brand and its target audience which can, as a result, affect what you are hoping to achieve.
A typical Affiliate Partner Programme would have a very even mix of content, cashback, voucher codes, loyalty, community and technology affiliates. However, for luxury beauty brands, this tends to be a little different, and with good reason!
When it comes to luxury beauty brands, we aim for a higher percentage of content site affiliates, as opposed to using generic ‘money off’ voucher codes. Any voucher codes that are used, need to be used strategically, and only ever with an offer that complements the brand’s image appropriately.
Over the Chinese New Year period, we ran an exclusive ‘free delivery’ code for a selection of affiliate programs. 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 great incentive to increase the average order value as well, so it’s often a favourite for brands in the luxury sector.
New product launches
While prestige brands tend to boast a core range, which is already popular amongst its avid audience, new product launches still play an important role in the sales funnel. There is a number of ways that influencer marketing can help promote new product launches, these include:
When executed correctly, a giveaway can be a very valuable opportunity for a luxury beauty brand. It’s paramount that you choose the right influencer(s) to work with. Consider a few things before reaching out, such as what is their target demographic? Which brands do they already work with? We recommend picking a handful of very relevant, smaller content creators, rather than a scattergun approach to the top 10 Insta-stars.
This way, your budget will not only go further, but you’ll be able to manage how your brand is perceived and limit any risks regarding your reputation.
You may handpick a number of influencers to receive new product launches ahead of time. This will give them time to feature these items on their social media feeds 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.
By giving an influencer a personalised affiliate code (e.g. free delivery), you’ll be able to 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.
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.
For example, Kylie Jenner listed three of Charlotte Tilbury’s most iconic products, including the Filmstar Bronze & Glow, in her everyday make-up tutorial in 2015. This sparked a snowball effect, as the savviest bloggers jumped on the chance to recreate Kylie’s ‘Everyday Make-up Tutorial’. For a brand, this only amplifies the hype, usually with no extra cost.
Informing affiliates of any celebrity involvement will automatically create a buzz, as word of mouth is such a powerful thing, an extreme (but exciting) case of this is when a product goes viral and it sells out both online and in-store.
Overall, there are a number of essential components that make up a successful luxury beauty 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. We can, in turn, use this knowledge to organise some truly impactful campaigns for the Programme, whether it be advertorials, reviews or giveaways.
So, the next time you purchase that amazing, must-have, new lipstick, that you have seen on everyone wearing on Instagram, remember, this was most likely the result of a well-thought-out campaign.