A Complete Overview of the Health & Beauty (Nutra) Vertical
28 April 2017
The Health & Beauty (H&B) vertical – also known as “Nutra” or “Nutraceuticals” – is one of the most profitable verticals in affiliate marketing… yet many affiliates are afraid to try it.
“I don’t know how to get started.”
“My traffic might not be good enough.”
These are legitimate concerns… but the payoff is worth it. If you take the time to overcome those obstacles and master the vertical, you will not only have a great business model, you’ll also become a better affiliate.
As we’ll explain, those who succeed in H&B are the ones who fill caps with a nice EPC while also delivering excellent traffic to advertisers. In this vertical, the quality of your leads will always be under intense pressure – more so than any other vertical. This means many affiliates will drop out after a few tests… leaving plenty of space for the most dedicated affiliates to dominate the vertical.
By mastering H&B, you’ll gain a strong understanding of the advertiser-affiliate relationship and the real importance of traffic quality. This knowledge, when applied effectively, will help you create and deliver more valuable traffic… even in other verticals.
The H&B flow seems complicated, but mastering it is worth your time - and can even boost your performance in other verticals.
So how does H&B work?
The H&B flow may seem a bit complicated in theory, but it’s actually pretty simple in practice, especially if you have some experience.
It starts with an advertiser. This advertiser has a product they wish to sell. It’s usually a bottle of pills and fits categorically within one of the most common H&B subverticals:
Once an advertiser has developed their H&B product – including packaging, customer support channels and fulfilment protocols – the next step is to decide how to sell it.
How H&B products are sold
Advertisers have three primary options:
Straight Sales (SS)
Straight sales are, well, straightforward. The advertiser has bottles and sells them directly, charging full price from the start. Straight Sales are a lot more reliable than other options because the payment is made immediately – the customer converts on the advertiser’s landing page.
Earning potential is lower with Straight Sales, but payouts are earned quicker, making it attractive to newer affiliates. Many H&B affiliates begin with Straight Sales, where the challenges that come with managing certain advertising platforms, such as Facebook, are not as prevalent. There is also no need to worry about rebills (more on those in the Trials section below). Once they have their game figured out, most affiliates switch to the more-lucrative Trial model.
Cash on Delivery
Cash on Delivery (CoD) is similar to Straight Sales (SS). The main difference between CoD and SS is that the customerdoes not pay when they order the product. Instead, they leave their contact details and someone from the advertiser’s side contacts them by phone to confirm the order (this is often done via a third party CRM, which we’ll get to later).
When the customer’s order is confirmed, the bottle is shipped. The customer pays cash directly to the delivery person. This method is easier to convert, as it does not require a credit card submission – making it an especially popular format for GEOs wherein credit cards are not popularly used. However, it involves more opportunities for the sale to be lost, as there are additional steps before a lead becomes a sale.
This is the most common and most effective way to sell a H&B product. In a trial model, the customer completes a form on the advertiser’s landing page that includes their home address (for shipping) and credit card number (for later payment). By submitting these details, the customer becomes a lead.
The next step is to approve the customer. This is usually an automated process that ensures that the home address and credit card number are both valid. The ratio of accepted customers vs. the number who have signed up but were not approved is called the approval rate.
After being approved, the customer is sent their first trial bottle. Their credit card is not charged at this time (or, if it is, they only pay shipping costs). After a period of time (usually around 15-30 days), the customer is automatically sent another bottle and is charged for the purchase. This happens only if the customer has not cancelled.
When a customer renews, it’s called a “rebill” – and rebills are critical to success. A good rebill rate is even more important than top-notch EPC, because a low rebill rate will cause issues on all sides – the advertiser, affiliate and network are all affected.
If customers don’t rebill, the advertiser loses both the cost of production and the payout to the affiliate. This is part of doing business in the trial space – that’s the game being played here. When the advertiser is paying more to generate leads and send free trials than they are earning from rebills, they lose money. Traffic with a low rebill rate can end an affiliate-advertiser relationship very quickly.
So… how do we get a high rebill rate?
On the affiliate side, that’s where the traffic source, advertisements/banners, targeting, pre-lander and landing page come into play… and they have to be consistent with the advertiser’s angle or customers will lose confidence and avoid signing up.
This is all done before the initial sale. After that, responsibility turns to the advertiser. There are 3 pillars that are really important:
Merchant accounts (MIDs)
To make sure customers can be charged for the bottles they receive, the advertiser’s MIDs (merchant accounts) need to handle the amount of money charged from the customer.
In addition, the advertiser needs to have their customer support in place. This boosts rebill rates by preventing customers from canceling. It also provides opportunities for the advertiser to convert customers into upsells and downsells.
By outperforming competitors with effective fulfillment (packaging and shipping), advertisers retain customers. Using bottles and packages that stand out from the rest supports rebills primarily because they prevent lost customers – nobody wants to receive a product that looks outdated or homemade, even if the product itself works really well.
There are a few resources that advertisers can turn to for help. Two well-known examples include the CRMs Limelight and Konnektive. These systems offer tools that allow advertisers to automate or improve parts of the process – including billing optimization, MID management, customer support and transaction management.
When the advertiser and the affiliate are each doing their part properly, you’re able to generate high rebill rates. That’s why trials are the clear best option for long-term success.
How H&B products are marketed
We know the format through which products are sold. Now comes the hard part… we have to find customers. That’s where the affiliate comes in.
In most cases, the advertiser goes to a trusted affiliate network. Networks have a strong understanding of the traffic and campaigns they are able to provide, and chances are good that they already have an affiliate who is good at promoting the type of H&B product the advertiser is selling.
For example, an affiliate might have a great Diet landing page that could be tweaked to suit a new offer. The angle (primary selling point), creatives (advertisements, banners, social media content, pre-landers, etc) and advertiser’s landing page (from which the advertiser captures leads) are all consistent, giving customers confidence… thus leading to more sales and better rebills.
This is where the great H&B affiliates start to stand out. They understand the flow of the vertical and the customers who are attracted to it. They know which traffic sources work best for which subvertical, along with which creatives are most effective.
They think beyond the conversion point. They take a holistic approach, putting the customers’ interests first. In short, they know theirpeople and they know why they want what they want. It’s driven by data (and maybe a bit of a sixth sense for what works).
When it comes to finding affiliate networks and offers, the same expectations and requirements apply.
Advidi is a strong example of a network that understands this relationship, and it’s why we’ve grown to become one of the biggest and most experienced networks for H&B offers in Europe, with an extensive presence in the USA – the largest market for H&B products.
Our close relationship with advertisers allows us to find the data needed to take campaigns to new heights. We analyze and track traffic quality reports, helping the advertiser to optimize on their end while providing crucial performance-based feedback to affiliates. This unique relationship benefits both sides of the equation greatly.
Indeed, mastering H&B product marketing takes time, practice, data and lots of investment. But when done right, it all pays off.
How do advertisers determine traffic quality in H&B?
It should be clear by now how valuable high-quality traffic is in this vertical. While it’s always a benefit in affiliate marketing, H&B is one of the verticals where it can make or break your business.
Advertisers primarily focus on two key metrics.
We discussed rebill rates earlier – they are what make or break a product sold on a Trial model. A rule of thumb that a lot of advertisers use is that the rebill rate should be about 15% lower than the approval rate (the number of customers who were approved for the trial). If the gap between approved trials and rebills (people who actually pay) gets too big, the advertiser loses money, so this metric is watched very closely by both the advertiser and the affiliate network. The networks who are able to monitor rebills effectively and maintain higher rates are the most successful in the industry.
Rebills can be the difference between a highly successful campaign and a flop. Maintaining high rates what Trial affiliates and advertisers do best.
In addition to preventing low rebill rates, great H&B affiliates (and affiliate managers) work hard to avoid chargebacks. A “chargeback” occurs when a customer gets billed for a bottle that they didn’t really want. Typically, chargebacks only occur when a campaign has been misleading or an advertiser has not set up proper support or cancellation procedures.
Affiliates have some control over chargebacks and rebill rates, though it’s also the advertiser’s responsibility to make good on their promises. That’s why it’s so important to ensure that all claims made about the product are accurate – they may boost the initial conversion rate, but the rebill rate will drop, which is what matters most.
It’s also why affiliate networks are widely used by both advertisers and affiliates in the vertical.
Affiliate networks provide affiliates with security and an extensive selection of high-performance offers. They act as a middleman to ensure traffic quality remains high – this involves carefully monitoring rebill rates and conversions for the advertiser while optimizing the affiliate’s EPC. They also have a much bigger reach when it comes to finding high-quality traffic and affiliate campaigns, which benefits both the advertiser (they get high-quality leads) and the affiliate (they get consistent payouts for their relevant, high-quality traffic and can even negotiate higher payouts).
With customer quality as the top priority, it should be clear that delivering high-quality traffic with high rebill rates and low EPCs is the name of the game in H&B.
What effect do advertisers have on rebill rates?
Advertisers are the ones who control the final selling moment, the bottle that is sent and the interaction with the customer after the lead. They are thus very influential in the success of their product.
That said, most advertisers will test and study their product extensively before going to the general affiliate market. They split test landing pages, analyze various angles and design the product to be as appealing as possible.
Some things advertisers do include:
Using appealing packaging on the bottles to give the customer a good feeling about what they’ve purchased
Making sure the product has the effect they claim it will have
Providing customer support to resolve issues and prevent chargebacks or trial cancellations
Working with merchant payment processors to minimize hassles in billing credit cards
The flow from the advertiser’s side is more complicated than in other verticals, from fulfillment (creating the actual product, packaging it and then shipping it) to payment processing and customer support. That creates a high barrier for entry, and with it, higher expectations for the traffic quality that affiliates send.
Who is currently mastering the vertical?
H&B is all about creating a profitable, optimized flow that gets engaged customers interested and satisfied with the product. That means the affiliate, advertisers and affiliate network will all work closely together to optimize campaigns.
The standout performers in H&B are the advertisers and affiliates who…
Create quality products that customers love
Use honest, enticing creatives and angles that attract ideal customers
Put rebills as an even higher priority than EPC
Establish long-term relationships with networks
Dynamically adjust payouts according to the market
Find an angle that works and scale it rather than hopping from offer to offer
Avoid using faulty promises or tricks
Advertise with the right traffic source at the right time
Effectively “warm up” the customer for an eventual rebill… from the start
These experts are able to use their capabilities to negotiate higher payouts, establish long-term relationships with affiliate networks, and even influence the advertiser’s campaigns and landing pages to better suit their pre-selling and advertising tactics.
Future opportunities in H&B
H&B was a $184 billion industry in 2015, and it’s only going upward. With its predicted compound annual growth rate (CAGR) of 7.04% between 2016 and 2021, H&B is expected to grow to become a $303 billion industry in four years.
The majority of the opportunity is in North America. Demand has been strong for years and continues to rise – the US is the clear leader and will remain that way for the foreseeable future, with growing markets in the European Union and APAC each contributing to the overall growth of the H&B market.
North America (primarily The USA), APAC and EU are all dominating the market, though the vertical is growing substantially across the globe.
This growth pattern suggests a strong future for H&B affiliates and advertisers. Whether you’re already running camps and can’t crack them… or you’ve never run a H&B offer, but see the same potential we do… get in touch! Advidi is the biggest affiliate network for H&B offers in Europe, with coverage in more than 140 GEOs across all tiers worldwide – including an extensive selection of offers in North America (with a strong focus on the USA).
We can help you make more money as an affiliate by analyzing your flows and campaigns in depth. Or we can improve your advertising ROI by identifying the affiliates and traffic sources in our network that best apply to your specific needs.
Get in touch to start crushing it in this powerful vertical: