E048: Scaling with Affiliate Marketing: What’s Working for Leading DTC Brands, with Aaron Paul

Summary

Podcast Summary: Marketing Operators E048: Scaling with Affiliate Marketing: What’s Working for Leading DTC Brands, with Aaron Paul

Introduction

In Episode E048 of the Marketing Operators podcast, hosts Connor Rolain, Connor MacDonald, and Cody Plofker engage in an in-depth conversation with affiliate marketing expert Aaron Paul. Released on February 25, 2025, this episode delves into the evolution, current practices, and future trends of affiliate marketing, particularly within Direct-to-Consumer (DTC) brands. Aaron shares his extensive experience in scaling affiliate programs, overcoming industry challenges, and pioneering innovative strategies that are shaping the landscape of digital marketing.

Aaron Paul's Background and Journey in Affiliate Marketing

Aaron Paul begins by recounting his early fascination with DTC brands like Warby Parker and their disruptive approach to traditional industries. His initial foray into digital marketing involved building social assets for fine dining restaurants in the Middle East, which he successfully scaled to generate significant social followings and consistent bookings.

Quote:
[03:03] Aaron Paul: "The culture in Austin was just, you know, really incredible people doing really incredible things, but they had no ego about it."

Aaron's move to Toronto marked the beginning of his deep dive into affiliate marketing. At Flix, a startup specializing in cinemagraphs, he honed his skills in creative marketing and built robust affiliate programs. This experience laid the foundation for his subsequent role at an affiliate agency in Toronto, where he collaborated with industry veterans like Matt Dobson to drive substantial revenue through strategic media buying and affiliate partnerships.

History of Affiliate Marketing and OG Tactics

The episode explores the origins of affiliate marketing, tracing its roots back to word-of-mouth strategies of early human societies. Aaron highlights how affiliate marketing has evolved from simple referrals to sophisticated revenue-based models.

Quote:
[19:28] Aaron Paul: "The oldest form of marketing is word of mouth, right? So like, think about a caveman walking by another caveman."

Aaron explains that the advent of paid media platforms like Facebook revolutionized affiliate marketing by enabling pure arbitrage opportunities. Early affiliates capitalized on low-cost clicks and high-conversion landing pages, particularly in the health, beauty, and wellness sectors, driving enormous revenues through volume and aggressive scaling.

Current State of Affiliate Marketing: Channels and Strategies

As the digital landscape matured, so did affiliate marketing strategies. Aaron discusses the shift from arbitrary click-based models to more holistic, brand-focused approaches. He emphasizes the importance of building trust and combating fraud, which historically plagued the affiliate space.

Quote:
[27:21] Aaron Paul: "Now, everyone's playing like a long-term LTV game. You're playing retention."

Aaron outlines the segmentation of affiliates into content-driven publishers and media-buying affiliates. Content-driven affiliates, including tier-one publishers like Vogue and Good Housekeeping, focus on creating authentic, engaging content that drives conversions through storytelling and authority. Media-buying affiliates, on the other hand, leverage their expertise in channels like TikTok and native platforms to drive high-volume, performance-based conversions.

Managing Affiliate Programs: Balancing Payouts and Fraud Prevention

A significant portion of the discussion centers on the complexities of managing affiliate programs. Aaron highlights common pitfalls such as over-reliance on coupon sites, which often fail to drive substantial revenue and can damage brand credibility.

Quote:
[39:36] Aaron Paul: "Coupon has been one of the channels as an agency we've just been completely against purely because it just doesn't drive value."

To mitigate fraud and ensure effective partnerships, Aaron stresses the importance of rigorous monitoring and relationship-building with affiliates. He advocates for dynamic, performance-based payout structures that align incentives between brands and affiliates, ensuring mutual growth and trust.

Quote:
[59:36] Aaron Paul: "The best part about affiliate is the payout is never fixed. It's incredibly dynamic. It's, it's an absolute lever in terms of deal-making."

The conversation also touches on the necessity of educating affiliates about brand integrity and conversion optimization. By fostering transparent relationships and setting clear performance metrics, brands can harness the full potential of affiliate marketing without compromising on quality or trust.

The Future of Affiliate Marketing: Emerging Trends and Insights

Looking ahead, Aaron shares his insights on emerging trends that are poised to transform affiliate marketing. One notable innovation is the integration of Video Sales Letters (VSLs) and performance-based deals with high-profile influencers and celebrities.

Quote:
[72:38] Aaron Paul: "We've created a CPA-based deal where we... run the ads from the celebrity's ad account. This is a CPA-based game for the celebrity and for the media buying partner."

Aaron envisions a future where brands not only collaborate with content-driven affiliates but also engage in hybrid deals that combine performance marketing with traditional influencer partnerships. This approach aims to de-risk collaborations, align incentives, and maximize scalability.

Quote:
[75:08] Aaron Paul: "This is where they're trying to work with a partner. And so that is something I think that in the next couple of months that people are probably going to recognize and see and that could be a little bit more standard in the next year or two."

Additionally, Aaron anticipates the rise of publisher marketplaces that seamlessly blend content creation with commerce, enabling brands to monetize their audiences more effectively through integrated affiliate strategies.

Quote:
[78:04] Aaron Paul: "If Vogue were to create a marketplace where they're now talking to their audience from an authority perspective, but also are able to have an area where they're able to check out right there when it's so native to their audience, like that's just like an initiative worth testing."

Conclusion

Episode E048 of the Marketing Operators podcast offers a comprehensive exploration of affiliate marketing's past, present, and future. Aaron Paul's expertise provides invaluable insights into building and scaling effective affiliate programs, navigating industry challenges, and leveraging innovative strategies to drive sustainable growth for leading DTC brands. The discussion underscores the importance of trust, dynamic partnerships, and adaptability in maximizing the potential of affiliate marketing in an ever-evolving digital landscape.

Notable Quotes

• [03:03] Aaron Paul: "The culture in Austin was just, you know, really incredible people doing really incredible things, but they had no ego about it."

• [19:28] Aaron Paul: "The oldest form of marketing is word of mouth, right? So like, think about a caveman walking by another caveman."

• [27:21] Aaron Paul: "Now, everyone's playing like a long-term LTV game. You're playing retention."

• [39:36] Aaron Paul: "Coupon has been one of the channels as an agency we've just been completely against purely because it just doesn't drive value."

• [59:36] Aaron Paul: "The best part about affiliate is the payout is never fixed. It's incredibly dynamic. It's, it's an absolute lever in terms of deal-making."

• [72:38] Aaron Paul: "We've created a CPA-based deal where we... run the ads from the celebrity's ad account. This is a CPA-based game for the celebrity and for the media buying partner."

• [75:08] Aaron Paul: "This is where they're trying to work with a partner. And so that is something I think that in the next couple of months that people are probably going to recognize and see and that could be a little bit more standard in the next year or two."

• [78:04] Aaron Paul: "If Vogue were to create a marketplace where they're now talking to their audience from an authority perspective, but also are able to have an area where they're able to check out right there when it's so native to their audience, like that's just like an initiative worth testing."

Key Takeaways

1. Evolution of Affiliate Marketing: From word-of-mouth strategies to sophisticated, performance-based models adapted to modern digital platforms.
2. Importance of Trust and Quality: Building strong, transparent relationships with affiliates while combating fraud is crucial for sustainable success.
3. Dynamic Payout Structures: Flexible and performance-aligned compensation models incentivize affiliates and drive mutual growth.
4. Emerging Trends: Integration of VSLs, hybrid influencer deals, and publisher marketplaces are set to redefine affiliate marketing strategies.
5. Future Outlook: Brands are increasingly adopting content-driven approaches, aiming to own their audiences through authoritative and engaging content.

Final Thoughts

Aaron Paul's insights illuminate the intricate dynamics of affiliate marketing, offering actionable strategies for brands aiming to scale effectively in the competitive DTC landscape. By embracing innovation, fostering trust, and maintaining adaptability, brands can harness the full potential of affiliate marketing to drive significant growth and brand loyalty.

Transcript

[Connor]

All right, well, we made it. Welcome to another episode of the Marketing Operators podcast. We still don't have Cody, which we're sad about, but we've had some pretty cool guests in the meantime, like Aaron Paul. So, Aaron, welcome to the show. We're excited to have you.

[Aaron Paul]

Likewise. Thanks for having me. I know we've been going back and forth on scheduling. This last couple weeks have been pretty crazy. So appreciate your patience here. But I'm excited to dive in.

[Connor]

Yeah. Yeah. And I don't think actually that we've. I don't know if we've had an episode dedicated to affiliate yet. So, you know, we've talked a lot about paid media. We've talked a lot about Influencer. We've talked a lot about a lot of things, but not nothing dedicated to affiliate yet, which was, you know, you were definitely on our, our list for a while to come on and chat about affiliate. But before we get into that, so I want to. I want to ask if you remember this. You probably don't, but way back in the day, I had moved to Austin. I was working at an agency at the time. This is early in my. In my digital marketing days. I'd probably been in the game for like three, four years at this point and like doing E. Com for maybe a year or so. And I remember there was a north theme hosted event at one of the hotels on South Congress. It was like one of those hotel bars. Hotel, hotel. What do you know? I'm talking about some of the names of the. That. Do you know the name of that bar?

[Aaron Paul]

It's like an outdoor hotel. Like, it was like an outdoor situation.

[Connor]

Yeah, it was like an outdoor situation. And north theme was. Was hosting an event. But anyways, I remember show up. I was all nervous. I didn't know anyone and. And like you and Dennis were there hanging out, chatting with all these. Yeah. Is that. Is that Dennis's name?

[Aaron Paul]

Dennis Hegstad? Yeah.

[Connor]

Yeah, yeah. I thought you were saying he. I thought you were saying something else. Yes. Dennis Heg Dad. And, you know, I just remember you guys being super inviting, super cool. I didn't know anyone there. We were just like ended up sitting down and jamming on, like marketing services stuff. And, you know, I just want to say thanks for that because it was really. It meant a lot to me at that. At that point in my career where I was at. And like, I was trying to, you know, figure out my way into this game. And like, you guys were just so cool and like down to. Down to jam and there Was no, like, boys club or anything like that going on, even though you guys had, you know, been making some moves in the space for a while.

[Aaron Paul]

Dude, I remember that because I. We. We. I think that's when we added each other on Twitter and I think we were talking about on it at the time. Like, we were. I think. Yeah. So that was pre hexclad for you.

[Connor]

That was pretty hex cloud for me. I was at a growth marketing agency. I was at Zack Stocks growth marketing agency at the time, buying ads for. For. Yeah, buying ads, doing creative for all sorts of. Of E Com brands at that time. But, yeah, we were chatting about on it, and you were, like, opening my eyes to, like. Like what kind of, like, world and, like, shape the marketing services game can take and, like, the types of, like, the levels of sophistication and how you can kind of be surprised that, like, well, you know, big, big brands are knowing and doing versus some of these, like, smaller, scrappier brands that are, you know, following best practices and all that jazz. It was pretty interesting for me at the time.

[Aaron Paul]

Yeah, I think that must have been, like, 2021, because that's when I had Austin too, because. No, 2022. We moved here January 2022. And I remember, like, the culture in Austin was just, you know, really incredible people doing really incredible things, but, like, they had no ego about it. They were. They would go out of their way to, like, meet you, meet myself, like, and just jam and try to add value. And I've never seen that anywhere else. I moved here from Toronto, and there's a lot of great folks in Toronto building, but it's just very. The community's pretty closed. It's hard to build together, and I don't think we would have been able to scale Paul street had I not been in Austin. So, yeah, it's just like, that's. That's how it was for me when I moved here. You know, people are incredibly inviting, and that's just what makes Austin beautiful, you know? That's awesome, dude.

[Connor]

You're totally right. Yeah, I remember I hit up Dennis, too. I was like, yeah, you want to go to radio and get a coffee? He's like, yeah, I'll go to radio with you and get a coffee. Yeah, we had a client at the time who. Same thing. I'm like, I don't know anyone here. I reached out to him.

[Cody]

He.

[Connor]

He's like, yeah, come into the office. Ended up just, like, working out of his office for the next, like, 14 months. Like, you're Totally. Right. And like, I noticed that exact culture and attitude across a multitude of experiences and people. Like, it definitely makes Austin special.

[Aaron Paul]

Yeah. Yeah, it's. Yeah, we're, we're excited to be here. I think my wife and I are. I don't think we're a lifetime Austin folks. I think we, we eventually will make our way out, but this season, right now it's. Yeah. There's no place like it, but. Yeah.

[Connor]

Are you Canadian?

[Aaron Paul]

No. So I was born and raised in Bahrain in the Middle east, and then I moved to Toronto 2015.

[Connor]

Okay.

[Aaron Paul]

And yeah, so I've just been. I've been in North America 10 years now, so it's still pretty, pretty, pretty new. But. Yeah.

[Connor]

Nice. That's awesome. I had no idea. I didn't know you didn't grow up.

[Aaron Paul]

In the U.S. yeah, yeah, yeah, it's been. It's funny because my parents are Indian and being born in Bahrain, you're not born citizen, so you're still Indian in like. But you're not resident of India. You're classified as a non resident of India. And I moved all over and then Toronto and then the US and so when people ask me where I'm from, I'm just like, dude, I don't, I don't know.

[Connor]

I don't have a good answer. Do you have 30 minutes?

[Aaron Paul]

Yeah, yeah, it's like, I don't, I don't know. I mean, you watch Formula One. Have you heard of Bahrain? Like, yeah, that's where I'm at. You know, I, I've made this joke.

[Cody]

Before, but not on the podcast, but you know, that's. That is in a way an attribution question. First touch, multi touch.

[Connor]

Right. Yeah.

[Aaron Paul]

What do you attribute? Birth. Yeah, literally. That's. That's so funny.

[Connor]

That's awesome. Sweet. Well, sweet. I want to get into it, but before we do that, we're going to thank the amazing sponsors we have of the marketing operators. Thank you, Motion Rich panel. After Cell Prescient and North Beam, let's get into.

[Patty]

So Motion just sent us their latest research on how our e commerce brands can make incredible meta ads in 2020.

[Connor]

2025.

[Patty]

I've shared it with my team at Hexclad as this report is basically the jumping off point to guiding our 2025 paid media production roadmap. Motion, as you know, is the creative analytics and research platform used by brands like Hexclad, True Classic, Ridge Wallet, Jones Road, Beauty, Viori and many, many more. And they actually dug into over $100 million in ad spend surveyed 500 DTC advertisers and a deep dive with 12 legendary DTC experts to guide this report. Some of the people that contributed are Dara Denny, Savannah Sanchez, Barry Hot, Nick Sharma, Aaron Orendorf, Sarah Levenger, Joanna Wallace, Shadow Hexclad, Hannah Ho, and Gil Chamofsky. This is an amazing resource to help guide your 2025 paid media production roadmap. So generally a lot of creative strategists, a lot of teams, they come up with a lot of hypotheses about what isn't or is not going to work and then they build ads around it and then they launch it and they use the data to inform whether or not that's working well. What this report allows you to do is instead of starting at ground zero, you're actually able to start at ground level 5 because this report is looking at a bunch of advertisers data and consolidating information about what has and has not performed well in 2024. So as an example, this report concludes that ads are getting longer and longer and longer in 2024. And what does that mean? It means that education is becoming more and more prevalent in ads. There's some very, very natural next steps that you can action on for your brand based on this information. Another finding that generally ads as a whole under index on taking a comedic angle. But some of the top performing ads, 25% of them had some sort of comedic element in 2024. So what does that mean? Maybe you should introduce more humor into your into your paid media creative strategy this year. Maybe you should introduce more long form educational content into your pay media creator strategy this year. This is a great jumping off point. This is a great document to have pulled up as you're working out your production roadmap for 2025. By referencing this report, you're going to have a much better chance of having higher hit rates because you are leaning on 2024's actual data instead of just your gut instinct about what will or will not perform well. So this is a super tangible piece of research. It is Based on over $100 million in ad spend and the surveys DTC advertisers. If you have not read it yet, this is going to be super valuable for you. I highly recommend reading this or having it open as you're building out your 2025 paid media creative production roadmap. It's just going to give you a much better jumping off point than not having a piece of research like this. So if you want to Check it out. Go to motion app.com forward/creative trends. That is motionapp.com forward/creative-trends.

[Connor]

So first off, I, you know, affiliate marketing is, it's one of the OG digital marketing channels and I think the whole history of it is, is really interesting and I want to get into that before we do that. And this is probably, you know, we could probably transition from question one into the, into the history of affiliate marketing and like just talk about your note, which was like how some of the largest brands were built by old school affiliate marketers. But you know, real quick, like, what's your story? Like how did you get into digital marketing? You know, like, what's like the, the timeline of like getting into digital marketing to now running and scaling a really awesome affiliate agency.

[Aaron Paul]

Yeah. So interestingly enough, I was in bahrain in like 2012. 2012, 2013. And it was around the time that Warby Parker had come out. And I just remember like being obsessed with the fact that these folks that wanted to just start a, start a brand just could and undercut like this massive industry and they were going direct to consumer. And so I was obsessed with the brand, like the way that, you know, the photos of the glasses looked and I was like, I need it. I need Warby Parkins. But, but they never shipped the Bahrain. So what had happened is one of my friends in Bahrain got married to somebody from Jersey and that wedding was happening in Bahrain. And so I hit up my friend, I'm like, yo, is it okay if I have some Warby Parker shipped to Josh's house? And she was like, yeah, absolutely. And so I did that. When the wedding happened two months later, he brought Warby Parker's to me and I was just like, just completely obsessed with that process around. Oh my God. Like something on the Internet convinced me there's a beautiful story behind this. But like, again, like Connor, to your point, like how do you attribute that too, right? Like, it's pretty massive, you know, impact that a brand back then had. And so eventually that got me really interested in like digital marketing. I had worked at a company in Bahrain that owned a lot of the fine dining restaurants in the Middle East. And so just building social assets for them, you know, trying to build community and get them excited about our restaurants. And you know, we, we scale that to like a really massive like, you know, social following. You know, we were booked out every single day from a, from a capacity perspective. And then I moved to Toronto event. Um, my first job in Toronto was at this startup called Flixel. Where we created cinemagraphs. So cinemagraphs were this new medium that were being, you know, that a lot of brands were using. So it's like a hybrid between a photo and a video. So if you think of like a portrait, like the lady's fully still but like, you know, her hair is moving. So Flix will develop the app to, you know, you know, create cinemagraphs. They want an Apple Design Award. And you know, we were using cinemagraphs to, you know, have ads for Mercedes and like L'Oreal. And like it was, it just had incredible like click through rate. People were mesmerized by it. And so that's when like, you know, the power of creative was something that I started to like, you know, educate myself around and see the impact on. So I was there for about three, four years, built their affiliate programs, built community and like that's when I started, you know, getting into affiliate. And I worked with creative tech companies for about four or five years and then I just basically took like a couple of months off. And this recruiter reached out to me saying, hey, there's this affiliate agency in Toronto that you know, is looking for like a client partner, like, would you be interested? I'm like, yeah, sure, let's, let's jam. And I met this guy named Matt Dobson who is an OG in the affiliate space. And he worked at a company called Jumble Berry, which was like an affiliate network. And affiliate networks of that caliber were like in a little bit more of the grayer space of affiliate, which a lot of brands want to stay away from. But Matt had this interesting idea where, hey, if we take a brand that is well known and create direct response funnels around them and then go work with some of the best media buyers in the world who are affiliates and play an Arbitrage game, there's a potential for a lot of scale. And so over the next three years I work with Matt, you know, we built that team to about like 20, 30 people work with brands like On it and Goalie Nutrition, Chef's Plate by HelloFresh, Hims and Hers, you know, Lark, we did a little over, you know, 250 million in revenue just by working with media buying affiliates, right? And so the game that they would play was, hey, if, you know, a target CPA for brand X was 75 DOL, like give us that $75. We just believe that we're better media buyers than you. And so we're going to play the Arbitrage game, right? And so if we're now going to acquire that customer for $55, $60. Like, let's let it rip, right? And so we were doing like, you know, 1500 sales a day in some cases. Like it was just a crazy scalable, like, you know, initiative. And so that's what got me into, you know, the power of affiliate and what it can do to change certain brands and their trajectory. But at the end of three years, you fully burnt out. You know, this was just, you know, that's when I got married. And you know, we're like, all right, let's. This is taking up a lot of time. You know, we were. Yeah, yeah, I left in 2021.

[Connor]

Okay.

[Aaron Paul]

And so that's when. About the time we moved to Austin and in 2022, like by then, because we'd been in the space for a while, you know, we, we. I had the trust of a lot of folks in E commerce because of, you know, what we've been able to do. And you know, I was doing a little bit of investing, a little bit of consulting, but just, you know, basically a year off. You know, that's. We had met and I was going to a lot of events, just, you know, meeting folks. But the one thing that people will come and ask me for a help was with affiliate. And I'm like, oh, go to this agency, go to this person. I'm not going to help you out.

[Anna]

Right?

[Aaron Paul]

I'm, I'm done with affiliate. There's no, no, I'm not, I'm never going back in. But it kept happening. It kept happening, it kept happening. And so interestingly, I was like, okay, wait, these are not like new brands. These are nine figure companies that are asking for help with affiliate where seemingly they had, you know, like paid media figured out, that influencer figured out, brand marketing was figured out, you know, experiential was figured out. Why is affiliate just this like revolving door of vendor strategies, tactics, initiatives. And so when you, I did a little bit of a deep dive in the space holistically and you realize like the bar not to be great, not to be good, but mediocre or okay in the affiliate space was very low, right? There's, it was riddled with fraud, it was riddled with mistrust. And I even, even to this day, like when we bring a brand on, like, you know, I like, I call it, we take over distressed programs, right? And so like there's just a lot of lack of trust in it. But at the same time, everyone understands the potential of affiliate if and when done, right? So that got me thinking and so Patty, who I've met through just being in the space, who I have a, you know, incredible relationship with. He was on the founding team of Wayflyer.

[Connor]

Patty's great. So him and I. Super nice.

[Aaron Paul]

Yeah. So we started jamming about it, you know, and he's incredibly smart. And so I think he pushed us to, you know, let's say, hey, let's just start something. Let's start a small consultancy. Let's, let's figure this out. And so January of 2023, we started Paul street. And it was meant to just like, you know, have a little bit of a, you know, a consultancy for brands that wanted to just figure out affiliate marketing and do it well. And over the last two years, you know, we're a little over two years now, you know, we've grown organically. We work with some of the best brands and consumer. The team is now almost 50 people, which is insane. And so yeah, it's, and our whole, you know, thing is building private purely because of the lack of trust in affiliate. It's just like, hey, let's just come in, try to like, you know, scale it as much as we can, but by doing it well and a lot of highlights. You know, it's been an incredible two years, but we've also failed a lot, lot.

[Anna]

Right.

[Aaron Paul]

And so just that testing and this, that reception from brands and thankfully a lot of great brands just, you know, took a shot on us. You know, you, you guys were one of our first brands. You know, we've been able to, you know, just grow with you guys and brands similar to you. And so yeah, it's been, it's been a fascinating couple years I think. But yeah, we're, we're just getting started here.

[Connor]

Yeah. Dang, what a story. I, I appreciate the, the run through the roadmap. All right, so I want to, I want to go into the history of affiliate with you because when I think of OG affiliate, I do think of like kind of like Gray Hattie type tactics where like in like today's affiliate world, it's very revenue based. And don't get me wrong, there are still ways to, to do affiliate in a Gray hat way today. But when I think about like OG affiliate, I'm thinking about like, hey, we're gonna pay you 10 cents per click. The affiliate marketer thinking, I can get that for 5 cents. Doesn't matter what's happening post click. It's just like pure click arbitrage. And like that's what I think of when I think of like OG Affiliate Marketing. So can you, can, you know, I want to hear from your pov, like, what is the history of affiliate? And then you have this note here about how a lot of, like, you know, household brands that a lot of people know and love today were actually built on affiliate marketing. So. So, yeah, two parter, like, history of affiliate and then referring to some of the foundations on these OG brands.

[Aaron Paul]

Yeah. So I mean, affiliate's always been around. You know, I, you know, when I speak to brands, I'm like, hey, what? The oldest form of marketing is word of mouth, right? So like, think about a caveman walking by another caveman. It's like, hey, like, where'd you get that piece of rock? He's like, from down there. And then, you know, affiliate was the next natural evolution of. It was like, now you're incentivizing people to talk about the quarry, right? So like, you know, that has evolved over time, you know, in terms of audience, in terms of attention, in terms of community. I think on when, when, when paid media came out and like, Facebook first started, like, affiliate marketers gravitated, gravitated towards that because it was pure arbitrage. Right? And you know, Facebook's not going to tell you this, but like, Facebook was built on the backs of like, the entire algorithm was built on the backs of just affiliate marketers because they were spending so much money because they were able to find, you know, little opportunities for new products where, you know, it's not seemingly real products. You know, they're just gonna create a pill and just say, this is gonna cure your hair loss. And there was no rules back then. They'll say, this is backed by Oprah, this is backed by Dr. Phil, and just make whatever claims and then just run incredible scale behind that. And so they would just restart brands like every other month. And just like, you know, it was absolutely fraudulent. But like, that's where it started, right? And that's where direct response principles started in terms of, okay, there's like consumer psychology here, there's behavior here, there's creative here that, you know, if you were to approach it from like a direct response messaging perspective, that's going to convert really well and also bring in people to take action pretty immediately. And so a lot of money was made in affiliate marketing, right? Like, I know, I know folks that were personally taking home back in the day, 120, 140 million net, just themselves, right? Like million. Not 1,000 per month or anything. Crazy scale. Yeah.

[Connor]

Are these people, are these people, like, are these affiliates that you're referring to, are they generally finding a single product and just quadrupling down or are they figuring out how to crack the code for like 10, 15, 20 products? And they just have this insane horizontal scale where. And you're referring to the early days of Facebook, right? Whereas CPMs are dog cheap conversion. Like clicks are like, you know, $0.10, $0.20 and just like real arbitrage opportunity. But like what, what kind of like product brand stack were they working with?

[Aaron Paul]

Yeah, it was primarily they call it Nutra, which in today's world is just health and wellness, right? Like you know, supplements and you know that category beauty was huge. Again, like in terms of products that worked, think about need based brands. Like anything that would solve a need was a opportunity for arbitrage, not want, right? Like, you know, it's not luxury products that they're like selling. So that was one. They would call out a need. But the folks that would make the money here were divided into three. So you had the advertisers, which were the brands basically that would just create these products. You had the affiliates that were the media buyers and then you had the networks. The networks were the matchmakers of the two. So there were these three folks that would just create all this opportunity for scale and like we're making a lot of money. But I think just as you know, humans are like, you know, if you're, if you're generating a lot of I think revenue in not the right way after a while, like it catches up to you. And I think I'm not going to name some brands but like, you know, some of the most powerful brands today were built by affiliate marketers that had all that capital, right? And so it was a lot of brands that we, you know, use today, you know, that like I think all three of us in this, in this room right now have looked at for inspiration. Like, but if you go back to advertorials, these advertorials were like the main thing that affiliates would use back in the day to run scale with landing pages, right? Like in the last like three years, everyone's like, oh, you have to run to a landing page. That's been done like eight, nine years ago with these affiliates, right? So all of what's been done with affiliate marketing eventually will make its way to like direct response tactics that we use today. But that's where a lot of these brands started, right? I think a good example is like, I think this has gone on Twitter, viral on Twitter a couple of times where you know, if you look at what athletic Greens used to look like you know, eight, nine years ago. Like that's a straight up like direct response, you know, landing page with you know two beautiful people with eight packs on them saying if you drink AG1 or athletic greens at the time like you're going to look like us. Right. Like that's an arbitrage opportunity that you're running. But like that's where a brand like that was, you know, know is now this beautiful incredible company. But that's where it started.

[Anna]

Right.

[Aaron Paul]

And so that has evolved over time. I think an interesting thing that a lot of brands haven't started doing is just VSLS which is a video format of advertorials. So VSL stands for video Sales Lander. And so Golden Hippo is a great example of a brand that has created brands like Beverly Hills Maryland and you know Dr. Gundry and their entire initiative in terms of how they generate customers is they create these, think of an advertorial but in video format. Right. It's these 20, 30 minute long like videos that they put a lot of spend behind but even affiliates run it and that's a brand that does over you know a billion dollars a year in revenue just with arbitrage using VSLs. Right. And so I think eventually in the next couple of you know, months to maybe a year a lot more brands are going to start using VSLs. But again it's like this slow like transfer of tactics that were in the affiliate world that its way to like you know what we like legit, you know real brands are running today. So affiliate tactics influence a lot in terms of what we are talking about on a day to day basis which is kind of fascinating if you look at the history. Yeah, yeah.

[Zach]

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[Connor]

How has that changed? So you were talking about, you're saying like back in the day OG the, the affiliates wore the media buyers because they knew how to, they knew about the arbitrage and that information. I mean that's, that's what an arbitrage is. Right. It's like a few small group of people know about an opportunity, they go maximize it until at some point it's not an arbitrage anymore. Because you know, looking at Facebook now, there's more advertisers in the game, there's the same amount of advertisers or there's more advertisers commuting for the same amount of people. CPMs go up, the cost to acquire people goes up. Okay. Alas, the arbitrage doesn't exist anymore. What how is like so OG original channel, Facebook media buying affiliates are saying hey, hey, you're going to pay me 50 bucks for a conversion. I think I can get that conversion for 30 bucks. We got a $20 profit.

[Aaron Paul]

Cool.

[Connor]

How have you seen that like the channels shift as the arbitrage has, you know, in large part, you know how many businesses died in the last five years because the cost to play on Facebook's just gone up and they and their unit economics couldn't handle it. Like how has that changed the channels that affiliates are, are now operating through?

[Aaron Paul]

Yeah, I think you know, it's moved away from products to brands. Right. Like I think if you're now looking like day one arbitrage like that doesn't exist anymore. Everyone's playing like a long term LTV game. You're playing retention. Like you know there's that arbitrage is now like you know I worked with the, we're talking to a brand right now where they're like yeah, like show us how you know if we buy a customer today, we'll get that money back in three years. Like they're thinking about three year like cycles. Right. And so again that mindset has changed fully and think if that would be the reality back then like those affiliates be like there's no way. Right. And so I think yeah, right now, I mean we've now taken a holistic approach that type of arbitrage opportunity is hard to find currently unless you're paying like really high CPAs or the content's incredibly strong. It's still, it's still there. We're seeing a lot of brands do it, especially like in GLP1.

[Anna]

Right.

[Aaron Paul]

And so, like, that's another category that's like getting a lot of spend. And so again, like, you know, it's just moving where the opportunity is. And I think that's where affiliate always goes. Affiliate just goes to where, like, you know, it's the easiest to make money. Again, I'll tell you this, like, a good way to understand an affiliate is they're, they're the smartest folks in the world when it comes to like, making money, but they're also incredibly lazy. So they want to make it incredibly fast. Right. And so that's where there's a lot of tactics that we can learn from in terms of how we can implement that into just better, you know, performance across like a brand that we work with, for example. But. Yeah, yeah, okay.

[Cody]

I, I have a question here.

[Aaron Paul]

Yeah.

[Cody]

So one thing I'm curious about and, and I don't know if this is a part of the Paul street service or just like affiliates at large, but one example of this that I've seen that I would love your take on is what you described a couple years ago is like meta or Facebook at the time itself was an arbitrage opportunity. So it's pretty straightforward. Like you could run ads from some supplement company, run content, do a landing page. You can make money that way. That's gone also. Those brands are just advertising on meta now for the most part. So, like, you don't have this disconnect like that. That gap's kind of enclosed. What feels like where there might be more opportunity is with people developing unique content or publishers to like, approach a channel like meta in a net new way. And like I've seen, there's a number of performance publishers who have popped up over the last couple years whose businesses I think are fascinating. Ridge, as a brand is not going to show up and create some sort of like, facade of a men's publication to review our products or create a gift guide. But someone else can go do that in a very unique way that is maybe compelling to users on the platform. Now all of a sudden, there is an arbitrage meta opportunity within Meta. Does that feel. Are. Is that more the exception to the rule or are you seeing more examples of that going on today?

[Aaron Paul]

Yeah, I mean, that's a big part of what we bring to brands. So like one to. Yeah, so it works in a lot of, it's taken a lot of different forms. One example would be, you know, how do you run that type of initiative with a nameworthy publisher, like a Hearst, a dot dash merit, Vogue. So like they're now also, you know, opening their minds to like performance based relationships with brands. A second level of that is more you know, the fit healthy mamas of the world that are not like, you know, name brands but like, like have the ability to create really high level authentic content that people can resonate with. And then we're taking this with creators as well.

[Anna]

Right.

[Aaron Paul]

Like creators are now open to like a lot more performance based deals which I know you guys have the test of the week segment and there was an exciting one that we've, we're running this week which I can jump into later. But like it's, it's, it's, yeah, like it's taken different forms. It's an additional way now that like brands now have the ability to work with publishers and vice versa. But absolutely.

[Cody]

And are those some of the big ones? Like I, I said performance publish shows which are like maybe in the like mom blog that you mentioned, the.

[Aaron Paul]

Yeah.

[Cody]

Recognizable publications of Oga, Hearst, whoever creators. Anything else interesting? And maybe you don't want to give away the secret sauce or whatever, but I'm curious if there's any other like creative ways that people are kind of repackaging themselves for, for different social platforms?

[Aaron Paul]

Yeah, I think like honestly there's no, there's no secret there. But like it's, it's, I think the win is when we go to a publisher and we teach them how to write direct response articles if they're not really in that category. If it's a name brand publisher, they don't do doctor and doctor Is where we find the most amount of arbitrage. And so it's about like, okay, these publishers are now losing audiences. There's not that many people coming to visit them from a ranking perspective anymore. So that's where they're now working with, you know, bigger brands to create a little bit more of a, you know, an intentional piece where there is a reason to buy. And then they work with brands, whether from the, from the perspective of either it's like a percentage of spend model, a CPA model or like brands are now whitelisting that content directly.

[Anna]

Right.

[Aaron Paul]

And so yeah, that outside of that there's, it's not really that much. But yeah, that's just an opportunity that's that is scaling right now for a lot of brands. Brands.

[Connor]

And do you see, do you see publishers? Because like that's, you know, I want to, I want to go into the media buying affiliates because it's something we turned on and ultimately turned off and I want to get into that. But before then, do you see a lot of publishers open to like, a lot of brands or publishers have historically taken the like the very traditional PR approach where it's like flat fee, they're, they're going to give you some sort of like, like earn media value and like assign a dollar number to it, but it's not really revenue. Like do you see those publishers, are they open to more either straight up affiliate deals now or like a hybrid affiliate publisher or a hybrid affiliate flat fee deal?

[Aaron Paul]

Yeah. So I, I, I'll take a step back there and I'll, I'll, I'll kind of walk you through the different like cohorts of affiliate. Right. So like the one thing that's interesting is, you know, when we speak about affiliate, like the media buying affiliates is one type, there's the publishers, but everyone's definition of affiliate like all over the place. Right. So I'd say the way we look at it at Paul street is, you know, the first division that we kind of offer is like these content driven publishers, right. Like the one thing that we absolutely don't do across the board is any form of coupon. Like we just like completely have this visceral reaction to it and again it's like not, it's not a question about like oh, they're fraudulent, it's just like, hey, there's no value being driven. If I turn it off completely, the revenue for brands don't change. So just, it's just a like worst value. It's not incremental. Yeah, absolutely. So, so that brings us to just content driven affiliates and we segment that from tier one, tier two, tier three. So tier ones being the Vogue, second, Good Housekeepings, the Katie Courage of the World where you know, we've had a lot of success with, with Hexclad. So I'd say the way we work with them is also interesting because these big name publishers have two divisions. There's the editorial side and then there's the commerce content side. Now these two like really don't talk to each other. So in order to get the editorial side interested, you know, we are now deploying traditional PR tactics. So we're building a story around the brand, making it story worthy, noteworthy. So we're getting their attention. And once we get a couple of organic inclusions that now gives us ammunition to go to the commerce content side and say hey listen, like this is, this is, this is a hot brand, you know, are your publishers are writing about it, it's, it's going, it's going to convert. So let's create some form of a, a deal around this and that now brings it to either a flat fee deal, CPA CPC or Rev Share.

[Anna]

Right.

[Aaron Paul]

And so it's, it again it's, it depends on the publisher but like there's no one size fits all type of model. It's typically flat fees, cpa, CPC or Rev Share.

[Anna]

Right.

[Aaron Paul]

And so we use flat fees as sort of an accelerator. Like you know, if it's, if they now have access to, you know, newsletters, communities, like you know, other ways for them to penetrate them with the content that they've created. That's where flat fees can be an accelerant to the content that's already performing. The other part of it is again media buying affiliates. And that's where you know, the way we're controlling that is we're already coming in. We have access to, you know, third party, you know, domain sites and we write a lot of whitelisted content and we create funnels and then we take, you know, these funnels and then that's what we're giving to these media buyers on a CPA model so they can find some arbitrage. It works for some brands it doesn't.

[Anna]

Right.

[Aaron Paul]

It's truly a testing process. And then the other part of it is closed communities. Right. So this is another type of affiliate that like is more the card length offers of the world, you know, perks for employees. You know, you're, you're trying to penetrate small groups. For example, I'm sure you guys are American Express holders. You log into the app and now you have a deal for like you know, American Eagle.

[Anna]

Right.

[Aaron Paul]

And so that is what we found an actually an incremental channel for a lot of brands because that was where they were discovering brands and actually purchasing through those channels. So we try to do that at scale. But the other part of it is Amazon specifically we're running that on, on a platform called Levanta. But if you take a step back, it's just holistic view about affiliate.

[Gil]

Right.

[Aaron Paul]

We have a content driven approach, we have a direct response driven approach and then there's a community approach of it as well. So that's really where most the brands are seeing success right now when it comes to affiliate.

[Connor]

I didn't realize that a lot of those big publisher houses were, were dividing that way like content, commerce and just pure like pr. Interesting.

[Aaron Paul]

Yeah.

[Connor]

Okay.

[Aaron Paul]

Yeah. And I get why they what you know, they separated because they don't want like you know, the actual dollar amount to influence the stories. They're Right. And so is that journalistic integrity that they're trying to maintain.

[Connor]

Yeah.

[Aaron Paul]

And so on the other side like commerce, contents, what's keep the lights on. Right. So yeah, we have to talk to both of them.

[Zach]

One thing we talk about our marketing operators all the time is measurement. How am I as the CMO of Ridge logging in and understanding what our performance was yesterday and last week and last month compared to different time periods. Our go to solution for that is North Beam, a multi touch attribution tool that we rely on every single day. We really like it for two reasons. One, it is a standard form of measurement across all channels. Channels we know deterministically that if someone clicks through we're tracking in north theme that that user is measured in the exact same way between Meta and Snap and TikTok and YouTube partnerships if we're clicking through from there or TV if we're clicking through from there. So we get this foundational layer that we know is measured in the exact same way over long periods of time. So I have full confidence that we know that we are comparing things accurately and honestly. The second thing I like about Northbeam is its data management tools. We tag incessant. I talk about naming conventions all the time and Northbeam is where we benefit greatly from that. Every day I can log in and divide my spend and sort it across different dimensions. So I know exactly how much we're spending across categories, across different demos, across different offers or asset types. It's our go to tool. If you want to hear more about North Beam, make sure to visit northbeam IO and make sure to tell them that the marketing operator sent you.

[Cody]

I'm super interested in the, the the types of affiliate that are working today, but I'd love to jump back so we can like nail this for all the listeners. Coupon sites bad for affiliate. Like do you want to expound on that anymore? Like what, what are the maybe common mistakes you're seeing brands make today with affiliate and if there's any like hey, this is like these are the really red flags that you every brand should be avoiding.

[Aaron Paul]

Yeah. So I'd say most of the brands we talk to, they're your experience with affiliates been, you know, tainted purely because of the bottom of the funnel sources.

[Anna]

Right.

[Aaron Paul]

And coupon has been a really big source of that. And again there's a change that's happening right now in the industry, which is good. But you know, we had coupon sites that were predominantly, you know, driving most of the revenue in any affiliate program that you were if we were to audit it. Right. And so the reason being it was easy, you know there, it's natural for a customer to go to a coupon site. I mean I still do it. I'm sure you guys do as well. Because why not? But again for a lot more brands, if you're going through the decision to purchase a product that you truly like, a coupon is not really going to make or break that deal.

[Anna]

Right.

[Aaron Paul]

And so it's a nice to have but like what has happened is a lot of brands is over index on it and it's a quick win. It's like immediate dopamine. When most brands turn on their affiliate channel within a couple of weeks, couple of months, you're now starting to see the affiliate channel, you know, scaling in impact or Awin or whatever it is. And so very quickly you're getting excited by it. But then a couple of months later you're like, well this is not actually driving revenue. Like revenue's not like increasing but like I'm paying now more to affiliate. So it's been a little bit of a interesting journey for brands to realize that. And so that's where affiliate also is a little bit where I'd say brands need to just understand like how much time it takes for true affiliate to show back revenue. But like coupon's been one of the channels as an agency we've just been completely against purely because it just doesn't drive value. Now for brands that are really massive. Like think about the four or five billion dollars a year in revenue. You know, my mother in law in Oklahoma City still clips coupons, right? Like where coupons become the reason to buy a product. Right. And so there's another, another like type of brand that has value in that but you know, in our space it's just simply not like where we want to be investing a lot of our performative dollars.

[Cody]

Makes total sense. Okay, so let me tell you one issue that we faced and then, and then that'll lead into a question about how like the best brands are kind of shaping their affiliate programs. We've worked with like very good faith publishers as affiliates and we'll say like and it's really tricky, right, because I'm like Hey, if you can drive, drive an incremental purchase, I'll give you a big affiliate commission. We give Facebook 40% of revenue. Right? Like, I, I'll happily, I would love to give an affiliate 25% if it's an incremental conversion. And sometimes it is, and sometimes you're getting featured in the email or you're on the homepage and it's like a new user that's not in market that's discovering you. And like, let's call that incremental. The flip side is I heard from a publisher who, like, was excited about this. They were like, yeah, we really, we. We started ranking on the first page for the term Ridge Wallet revealed view. And I'm like, that's awesome, but that is completely different. And I cannot pay you 30% of revenue to rank for people who are already searching for our brand. So I've always struggled with how to balance that. And then one thing I love about what you're saying, and this leads to my question about how people are building out the programs at large, is really like working with affiliates to develop content and then almost pairing that with another distribution strategy, not necessarily relying on them for the traffic, but to say, hey, this Vogue article on Facebook will be a profitable funnel for me, which makes total sense. So with that in mind, do you have any advice for how I could better handle that publisher? And then two, how are you structuring programs today to balance this, like, kind of demand capture versus creation?

[Aaron Paul]

Yeah, so that part of it's a little interesting. Right. So I'd say a lot of the affiliates, like, want to rank really highly because, like, again, I mean, you go on the first page of Google, there's like 10, like, you know, links that you're looking at. And ideally, you want. Want to have all of it be Ridge Wallet. Right. So that way you're not giving it extra or some other brand. And so, like, one of the ways that affiliates want to work, the reason they want to work with brands that are a little bit more top of mind is because they're selfish. You're trying to make money off of your guys's brand awareness as well.

[Anna]

Right.

[Aaron Paul]

And so that's one way to work with them. But again, like, as they're, you know, starting to see, you know, revenue coming from them. Because, because again, with an affiliate, it's like affiliates hold all of the leverage when you first work with them.

[Anna]

Right.

[Aaron Paul]

And so, because if you don't give them what they want, they'll just go work with the next brand. And get what they want there. And so once you kind of build trust there, go through this process that we like to call affiliate brand fit. That's when you have now the ability to, you know, collaborate with them in ways that they might not work with, you know, you know, traditionally with brands. So again, you know, it requires a lot of, I think education on the affiliate side being like, cool. We now can guarantee a minimum amount of spend if you are now letting us whitelist or like, you know, you guys can, you know, run internal ads on your guys's Facebook page and we'll additionally give you an affiliate commission on that. That part of it has been incredibly, you know, successful on both sides, but it takes a little bit more time to get there now. Yeah, it's, it's, it's, it's a little interesting because brand, the, the, the, the actual publishers want to rank really highly. And so, so again, the brand bidding fraud that we see with a lot of affiliates, they actually come from nameworthy publishers that are actually bidding on brand terms so they can capitalize on that commission. But yeah, I hope that makes a little bit of sense.

[Cody]

But yeah, totally.

[Connor]

So how do you think about piggybacking off that a little bit? Because we don't do media buying affiliates. We really want the way that we look at affiliates and the way that we're working with you on affiliates like you just mentioned, are these, these content publisher affiliates, right? Like, we want to go and say, hey, we want to, we want to partner with affiliates that have built audiences and their, their distribution, at least to an extent, is built into their content because they have top of funnel traffic going to this, this article, to their website and they're clicking through because they're reading that article and you know, we're making the bet that it's an, it's an incremental audience that we're not reaching through our other audience audiences. We killed media buying affiliates because we are spending like ridge a lot of money on Facebook ads and all sorts of paid media ads. And I just didn't believe that these affiliates driving revenue were doing it in a way that wasn't just capturing our demand. So we killed it. And like, we have a, you know, we love our affiliate program. It's very content publisher driven. And you called out a point that I think is really important to, to double down on. Like, whoever's leading up your affiliate program has to be an absolute hawk with fraud. Like, we work with Anna. Anna Barker is our director of affiliate marketing. She is a whiz at affiliate marketing, she is so hard on these affiliates. Like, she is cutting affiliates left and right based on, you know, the things that they're doing. So what, how do you look at media buying affiliates and like, what. What's like the recipe for success on a media buying affiliate versus the recipe for a disaster in like a situation where you're probably just ultimately paying double to Facebook and to the affiliate and the affiliates maybe not driving an incremental order.

[Aaron Paul]

Yeah. So I'd say, like step one is. I think you guys are a great example. Anna is an absolute like, G. Like, she understands the channel so well. And I think the biggest part of it is also education. Right. Like, every type of affiliate that's in the program is different from another. So like, the way it behaves, behaves the type of customer it drives. Conversion rates based on the channel. That channel that they're driving in is also variable. And so that part of it is incredible, has been an incredible relationship for us to work with Anna very closely now when it comes to fraud and identifying that. I think step one is if things look a little too good to be true, it's fraud. I think it's high conversion rates. That's like, like step one, you know, if an affiliate scaling really highly with like, not the, you know, most competitive of payouts, you know, that could be another one if we're starting to see like, you know, cookie stuffing and like, you know, again, like, you guys, again, so cookie stuffing is like, you know, where an affiliate's, you know, putting multiple tracking cookies on a user's browser without their consent. And like this now will trick like a merchant system into attributing the sale to the affiliate. And so that way, like they're getting credited for a sale and getting commission even if they're not. It's not a last click or direct link, like, you know, sale. So there's a lot of stuff that we have to on the daily, like try to catch, but it's also not relying on the affiliate platform as a source of truth. So the brands where we're the most successful with are the ones that give us a direct line of access into their internal attribution tool. Like, you know, for if it's like Prescient or like Rockerbox or, you know, North Beam or Looker, like, that's where we're able to see like, hey, this is actually like, you know, driving a lot of sales because that's what allows us to be, you know, a little bit more ahead of the curve here. Again, we are Using things like brand verity, you know, so that we can catch affiliates proactively because they all like to ask, you know, forgiveness rather than permission. So we just have to proactively find these affiliates from brand bidding. And that's the first thing that they usually fall into. And it's, you know, it's easier, easier said than done. But we have a full team that all they do every single day is continuously log in from using VPNs, you know, using brand terms to see if our affiliates are ranking highly for brand term for our brand. Right? And that's what we catch it. We retro payments out and it sucks. You know, I'm like, it's a necessary evil is part of like the, you know, by being an affiliate agency, like operator. Like it's just, I guess we have to, we have to invest heavily into that. But I'm just like, I just wish for the day where everyone's just incredibly, you know, you know, transparent and like just, you know, working together closely. But I think you guys are also a really good program because now we've developed a lot of trust with publishers and that takes about a year. You know, especially in the beginning when we work with new brands and new publishers, they like affiliates are typically trying to get away with, you know, little sins, right? And so that's where, you know, we hold them accountable. And we have a pretty strong policy. If like one affiliate's acting a little out of the ordinary on one brand, we knock them out completely out of the entire roster. And so that's resulted in just as a, as an agency, we've been able to demand a lot of trust. But yeah, cookie stuffing, like there's, you know, coupon usage on multiple like, you know, sites that, you know, they own and leverage. Ad hijacking is another one that just falls into like brand bidding and getting on display sites. But yeah, there's a lot of fraud in affiliates still, but not as much as it was like you know, a year ago, two years ago.

[Connor]

So will you, with the media buying affiliates, will you ever, will you ever add in rules and say like, yes, you can, you can be a media buying affiliate for this brand, but you can only buy in Facebook or a top of funnel social channel or, or yes, you can be an affiliate for this brand, but you have to give us access to the back end of your Google account and send us a weekly report on your search terms and that's the only way we'll do it. Like, does that work or does that not work?

[Aaron Paul]

So for the brands that are like seeing a lot of value in this channel. That's the approach right now. Step one is we use a tool called everflow specifically for these types of affiliates. And so step one we're able to control the pixel for it to fire on net new customers only the second part of it is in order for it to be a last click attribution, we're also able to set time based attribution windows. So if it's pure direct response, you know, we're able to like, you know bring it down to a four hour window or like 12 hour window. Usually we start with 30 days and we bring it down so that we're only working with high quality partners that are driving a lot of, you know, new customers, you know, from a doctor perspective. But then the other part of it is, you know, um, we completely just ban Google.

[Anna]

Right.

[Aaron Paul]

Like no one's allowed to run on Google. So the only channels that they're working with are like TikTok, Taboola, Outbrain, Tapjoy, you know, or like native sources are great, Facebook obviously. But for example, you know, we have this one supplement brand where we work with a TikTok media buying affiliate and this TikTok media buying affiliate on a weekly basis will create and produce anywhere between 50 to 100 net new pieces of creative and ads like they're shooting in their content studio and they're now running ads behind that and driving anywhere between 75 to 200 sales per day on a CPA model. So now for this brand they get to work with this TikTok media buying affiliate without really having to invest in a content in the channel without really having to work with an agency for that channel and pay retainer plus ad spend. They're just working with them purely on a CPA game.

[Anna]

Right.

[Aaron Paul]

And so that's an example of a quality media buying partner. Yeah, but again like it takes, you know, it took us probably like you know, six to seven months of testing and like painfully testing to get to that level of like a comfortable cadence where that partner is now able to drive consistent scale.

[Cody]

Yeah, totally.

[Gil]

It's been really cool to see prescient this year just emerge as one of the leading, you know, trusting solutions for brands to measure their media mix. You know, now more than ever, you know, triangulation, having no source of truth. But really it's best practice to have multiple methods to be able to figure out, you know, what is performing. And one of the things that we love in our toolbox is prescient, but it's been really Cool to see a lot of brands onboarding with them and having a lot of success. Onboarding is super quick. It's. It's the quickest I've ever seen from an. Mmm. It's been great for our upper funnel channels. Things like TV and YouTube has really given us confidence and it's very hard to validate and test tv, so they have great integrations. We use Tatari for all our TV buying and so it's the best way that we're able to understand how our upper funnel channels are working. We're not on Amazon, but if you're on Amazon, you can get really cool halo sales impacts of Amazon as well as retail channels. So it's awesome. You can forecast revenue and acquisition costs across all your channels, optimize your media mix to improve your profitability. They've always got new channels coming, which is, which is really cool. It's. It's really played a really big role in us scaling and having the confidence to, to increase our spend in things like TV, both, both linear and streaming and YouTube as well. We wouldn't be able to do it without them. So there's a reason why Prescient is trusted by Jonesboro Beauty, Hexclad, Holosox, Coterie and over 100 more. And so if you want to be like one of us, like Jones Road, like, like Connor from Hexcloud, check out Prescient, which I highly recommend you should go to prescient AI.com operators to book a demo and see for yourself.

[Cody]

I have a couple of points here. One is, is yeah, one reason I'm so interested in the, the unique content and I, I described as like repackaging a brand for different social channels is because like Connor, you mentioned we both spend a ton of money on Meta, but like we really only spend it in one way.

[Anna]

Right?

[Cody]

We might be white listing, but it's like largely coming from the brand page. So it's like all of a sudden if we have this cool tactical TikTok buyer, it's like I don't actually, really, theoretically I don't, I don't work with them, but I don't, I don't really care that we're paying them out on a CPA basis. This is like a net new function of the business and that's what I think is really unique about the, the program. So Aaron, my question is, and just.

[Aaron Paul]

Real quick, like, like that part of it, Connor, is like a lot of brands use this model as a testing channel, you know what I'm saying? So like for what they're seeing. I was like, oh, this is actually great. Now if the, if there's room for me to save on those margins and then I'll bring it internally but like effectively I've had someone else like prove that out for me.

[Anna]

Right?

[Cody]

Yeah, yeah, yeah, totally, totally. So, so one of my questions is if, if you look at, you know, all the, the Paul street clients are 100% of revenue, what percentage now even just ballpark, I don't know if you know this too accurately, but what percentage comes from media buying partners versus someone like a Hearst sending emails featuring you on the homepage, featuring you in articles in that like more. It's not, there's no media buying attachment to it.

[Aaron Paul]

Yeah, I'd say probably like 65, 70% of it comes from content driven publishers. That, that's where we're, that's where we're spending most of our time. Because again, like, you know, it's, I mean we work with a lot of great brands. Like we work with like Todd Snyder and like Coterie. These are beautiful. Like you know, brands that like that want to tell stories to create their, to convert a customer rather than going down the direct response route. Now for the media buying affiliates like Dr. Is a big part of it, but again it's branded Dr. It's not like you know, they're seeing whatever they want to acquire those customers. But again it needs to be like proper arbitrage and there needs to be an opportunity for consistent like growth in the daily volume because that's what at the end of the day a media buying affiliate is looking for. So what we'd like to do is a lot of brands want to test this channel because it's a channel that's worth testing because again like a goalie, nutrition and on it, you know, anywhere between 30 to 60% of net new customers that they acquire on a daily basis comes from this channel, which is very significant. Right. And so it's worth a shot now after kind of going through it and understanding that this requires, you know, heavy compliance, heavy testing, a lot of creatives, daily approvals, change in cpa. It's a lot of work.

[Anna]

Right.

[Aaron Paul]

And I think from the media buying perspective, the media buyers need to like back out at least you know, 8 to 15% in margin minimum.

[Anna]

Right.

[Aaron Paul]

For them to like, you know, take home a return and some, in, in some cases it's just not the right fit.

[Anna]

Right.

[Aaron Paul]

And I think that's where we like to test it. Well but again like be, you know, okay. With the fact that it's not meant for every brand. And so that's where we focus a lot of our energy on content driven publishers and finding unique ways to work and scale with them. And that's why, you know, and that's very exciting for us too because you know, we're able to scale up a content like driven approach for brands when previously for them majority of their volume has been from bottom of the barrel sources.

[Cody]

But yeah, totally, very cool. I, you know, I thought it was going to be the inverse just because the media buying theoretically so scalable. But, and we, and I was also.

[Aaron Paul]

The potential, but the p. But the potential is there on the media buying side. Right? Like, but again like we like to less is more there.

[Anna]

Right.

[Aaron Paul]

If I were to run that for all of our brands, it's like a nightmare operation. Like, you know, there's no way. Absolutely.

[Cody]

Got it.

[Connor]

Aaron, I want to talk about the, the analytics a little bit here. How should brands be thinking about, you know, what a good, Sorry, I got to move my thing, my air quotes and what's a good kickback on an affiliate? It obviously varies from brand to brand, but like how do you help brands wrap their heads around whether or not they should be paying, you know, 30% to an affiliate of all revenue or 5%? Like what is, what's the thinking that should go into that to establish, like ensure that, that you're not breaking the bank or paying too little because it's a sweet spot. Right. Like if you don't incentivize the affiliate, like they're not going to write about your brand and plug you and obviously you can't be paying them too much to the point where you're not getting any margin on, on your affiliate kickback. So how do you, how do you think about that when it comes to establishing those affiliate kickback rates?

[Aaron Paul]

Yeah, so the best part about affiliate is the payout is never fixed. Right. It's incredibly dynamic. It's, it's an absolute lever in terms of, of like deal making.

[Anna]

Right.

[Aaron Paul]

And I think this is where most brands, you know, fall short of having a successful affiliate program is they just like, you know, set up the platform, turn on the channel and then say yeah, we're at 10% and that's it. Like, and then they're like, oh shit, why aren't we getting affiliates? This is, this is so crazy. Like we're a big brand. We, you know, but again, this is the model, right? Affiliates eat first and then you eat.

[Anna]

Right.

[Aaron Paul]

And what I mean by that is if you want to go now after, after a, like a powerful affiliate, that's, you know, if, let's just say you're a beauty brand and you want to go work with a number one like beauty affiliate and you say, hey, we'd like to work with you. Here's 15%, right? That beauty affiliate may not care about the brand, even though you might be a massive, massive company in terms of revenue, in terms of brand equity. But if you're able to go to them and say, hey, we'd like to, you know, explore opportunities with you, let's get on call and see what it takes to make it work, right? And what you're seeing now is, is you're trying to build trust with an affiliate. Because the one thing is, I would love for, you know, affiliate as a channel to be as, you know, as much of a machine like Facebook is where, you know, you're putting out a dollar in this side and hopefully it's spits out two or three on the other end. But with affiliate, you're dealing with people, right? And so when you're dealing with people, it's purely a relationship based game where you're earning trust with the affiliate driving value for them. And then that's where that, you know, leverage shifts over time is after an affiliate starting to see success in the relationship, that's where you can kind of go in and set certain like parameters of actual payouts. Right? And so what that means is in the beginning, if you're giving the affiliate an opportunity to not make money or not lose money, right. If at least where they're break even, that gives you enough ammunition to go back and test like, you know, like Connor said. Yeah, if you're paying Facebook 40% of your revenue, ideally you want to go that, you know, go make it that lucrative with an affiliate in the beginning, if you believe that that's a channel that can bode well for both parties and then eventually, you know, lower that payout because you know, you want to make it a long term relationship. Now in terms of three things that an affiliate looks for in terms of priority, number one is they want to work with brands that convert. Convert well, right? So you could give an affiliate a 500 payout, but like if the traffic goes to a brick wall on your PDP and it doesn't convert, no one wins, right? And so number one is they're looking for EPC rates, they're like looking for high converting brands to work with. And that is where most brands who spend most of their time before going and engaging with affiliate, the number two part is pay them on time.

[Anna]

Right.

[Aaron Paul]

And so most affiliates, like pay them immediately. You know, they're like agencies or whatever. Like it's not a monthly net 10 or monthly net 15. Like pay them on a weekly basis, biweekly basis. The more money the affiliate gets back, the more they're able to invest back into the program and grow. Right. That second thing, the third thing is the payout, right. That's where they're looking for competitive payouts, where at least in the beginning, if you build enough trust with them, they're not, they at least want to break even. If they lose money and they're consistently losing money and you refuse to like address that, you have forever lost that affiliate. They'll never come back.

[Anna]

Right.

[Aaron Paul]

And so we've always seen this with brands were like, hey, like we want to work with the Vogue, but we will only give them 15%. I'm like, that's great. Like we all want that, but they don't want to work with you. Like, you know, and again, it's like trying to earn that trust with them. You know, Healthline is a great example. It's one of our top converting partners, top converting affiliates in the health and wellness space. But they require a minimum of a six figure engagement to work out an affiliate deal with them. Now in every case that we work with them and like, you know, we go kind of go through the due diligence, it's backed out for the brand.

[Anna]

Right.

[Aaron Paul]

But for a brand that's not willing to go through that process and they're like shocked at the six figure, like, you know, engagement, that's kind of what it takes with a powerful affiliate because again, you're tapping into an audience that you previously would never have had access to and you're using their authority, authority to help educate and also convert them. So that's where I'd say like you use the payout as a, like a lever to like actually, you know, create custom deals and it's never fixed. We change out affiliate payouts with certain partners on weekly basis.

[Anna]

Right.

[Aaron Paul]

Like it's, it's, it's ongoing, living, breathing thing that you have a lot of control over.

[Connor]

But yeah, I think, I think a lot of, I appreciate the breakthrough, the, the breakdown. That makes a lot of sense. I think a lot of brands, they get like sticker shock at a percentage and they don't do the math.

[Aaron Paul]

Yeah.

[Connor]

And realize that that percentage is actually like way marginally better than what they're paying other top of funnel channels. It's like, you know, they get, they get like, wait, what 30% like, to this affiliate? Like, I can't pay that. And then they, and then they don't do the math. But if they went and did the math, they'd realize that they're actually paying way more like on Facebook's whatever window. And then they go do the math on 30%, it's actually $20 cheaper than what they're, than what they're paying Facebook. And so that's how we always look at it is like, you know, this is, this is basically what we, what I, what we talked about, Connor, in the past. Like, what if you don't have an incrementality testing tool? What if you don't have like an mmm? Like, how do you compare these channels to one another? Well, you should look at, you know, the, like the North Bean data you have. It's kind of the same thing with affiliates. Like, well, what are other top of the funnel channels getting me in terms of a CP and can I do a kickback to an affiliate that's a lucrative to the affiliate and motivates them, like you just said. But B is marginally better than what I'm paying Facebook or TikTok or YouTube or a creator. And because ultimately you're trying to like always drive down your blended acquisition costs. And as long as you're like trying to marginally do that in all your channels, you're gonna probably achieve that or at least offset any CPA increases that happen from natural things in a business like scaling media spend or whatever it is. Yeah, so we always look at it that way, but I think a lot of it's. You gotta do that comparative math and don't get sticker shock at the percentage. Like, chances are it's still better than what you're paying other channels that are at higher scale.

[Aaron Paul]

Yeah, I mean, I mean, I mean if you were to, I mean, you guys are in a different category, but like, if you were to look at the average, like beauty brand or like supplement brand, they're paying Facebook sometimes 150% of POV on first order. Right. Like, you know, it's, it's like it's not. And then they go and turn on the affiliate channel. And I think the general understanding is if you, you haven't turned on affiliate, is that it's supposed to be at 15% or 10% or 20.

[Anna]

Right.

[Aaron Paul]

And so like it's just like a, you know, a conversation and education around. Yeah. If you're acquiring customers for you're, you're okay paying that and in the beginning like go ahead and do that. So that way you're building a little bit more trust with the partner and working together. Right. But yeah, I think that's again, I'll say this the way, way we've built out like our offering is knowing that marketers internally the brands affiliate is a channel that's important but it's not going to be like, you know, yeah, we've seen it be like a primary source of customer acquisition for some brands but ideally they want to just have you know, trust with the person that's running affiliate. And so that's being driven on an ongoing basis. But most brands are not required to ongoing understand or be educated about how affiliate works. It's just by having a partner that you know, you want to bring in, have a lot more trust and give them the liberty to like create and control a lot more of the payouts. And that's what I talk to most brands with and it's like look at it as a blended payout. So some affiliates you're you know, paying out 140% and then some affiliate you're paying out 5%.

[Anna]

Right.

[Aaron Paul]

And so that part of it is very manageable for brands and one that can result in a lot of value value.

[Connor]

But yeah, yeah, I think it makes your other, it makes your other channels perform better too. Like I, you know, you think about hexcloud as a good example where we, we really are pretty diligent about a, making sure that affiliates super top of funnel, like we're not doing, you know, a ton of media buying affiliates for the reasons you said. We have a very long consideration period. So think about that like chances are these affiliates are driving top of funnel traffic to our site. That traffic at least a good chunk of it's not converting in that 30 day, you know, affiliate kickback window. And then at some point we're going to convert them whether it's organic or through a Facebook ad or whatever it is and we're not paying the affiliate on that. Now it's obviously in the affiliate's best interest to like for those brands like us do multiple pieces of content over time so they can try to get the first click and the last click. But like yeah, these affiliate channels can, can really grow a lot of your other channels and, and same with the media buying affiliates. Like I would argue that that TikTok affiliate example that you mentioned, like that affiliate unlocked a new funnel for that brand. They added a whole new like Content pillar which in theory should make all their other content perform better because they've overall just diversified the admix. So like it has halo into these other channels. It's not, certainly not happening in a silo by any means.

[Aaron Paul]

Yeah, we did a, we did a study with that specific use case and we saw that the affiliates, when they drove revenue from a media buying perspective resulted in a 18 to 20% halo in, in other channels. And so what the branded was, they just increased the payout from that perspective to incentivize the affiliate a little bit more.

[Anna]

Right.

[Aaron Paul]

And so again it's like you know, levels to this in terms of how like variable you can get and creative you can get with the, with the payout structure of it. But again, yeah, it's, it's again less is more here. Right. Again, a lot of this is again the understanding with affiliates is that it's a quantity game which is, which is not true. It's completely quality based because again, if you, when we take over, you know, some programs and we look at the parts of affiliate, it's primarily not more than 15 to 20 affiliates that are driving most of the quality conversions. Right. And so if we were to work with them, you know, with this really unique handheld white glove approach that results in a, you know, much more scalable program. But also no one's stressing out because you're not dealing with, you know, hundreds of different partners that, you know, you have to control on every little aspect of it. But yeah, it's really a quality game over, over just quantity as well. But yeah.

[Gil]

So we switched CX software right before Black Friday. Normally wouldn't be the best decision, but we were looking at Rich Panel and it was just so much better than what we were using. Our contract was up and honestly it was, I'm so happy we did. It was the first time ever that we made it through Black Friday and holiday period with no ticket backlog. And I really owe that to Rich Panel. First of all, it's cheaper, it's, it's way less. We cut our cost compared to what we were paying before by 50%. It's the first AI CX platform I've seen that's really built with AI in mind and we're not even fully maximizing what we can do with AI yet. So I can't wait to see how much more efficient we can be. But it's really the first one I've seen that's built in this new era of, of commerce and, and AI tech. It's you know, already being used by over 2,000 brands like us, like Ridge as well. One thing that's been really cool, we were able to leverage a lot of their automations and, and routing. So our, our average response time went way down when we switched them. Our efficiency with AI went way up. We also just implemented their, like their self serve help desk reduced our tickets by 30% without affecting anything. We're, we're, we're able to take care of 60% of those interactions without actually having to route them to a person. So obviously there's financial components to that that have been really helpful. The team is great. I see our team going back and forth with the Rich panel team all the time in Slack. They all, they want feedback, they want feature requests. You're just not going to get that from some of the old legacy players. So it's going to be, be cheaper. You're going to have better use of AI that everyone's trying to catch up on. The UX is way better. The tagging is better. It has the best analytics suite of any of the CX tools I've used. So we're super happy. So if your help desk costs are too high, if you're not thrilled with your outdated software that is, you know, you feel like is robbing you, I highly recommend you switch to Rich panel. You can reduce cost, reduce ticket volume by 30% and honestly that's pretty conservative. Highly recommend you get a demo, see for yourself. Go to richpanel.com to check it out.

[Connor]

Connor, did you have a, a question?

[Cody]

I wanted to, I was hoping you guys were down to chat on the cool stuff. You, you kind of touched on it earlier. Aaron, affiliates are historically have been ahead of the curve in terms of what, what are the best practices of tomorrow's marketers. You talked about VSLs a little bit. I'd love to jam a little bit more on what we think today is getting done that like will all think everybody will be adopting two or three years from now. Are you guys, you guys down to do that?

[Connor]

Yeah.

[Aaron Paul]

Yeah, absolutely.

[Cody]

So, so Aaron, you brought up VSLs. Is there anything else you'd put in that bucket? Cool stuff you see affiliates doing today where you're like this is, this is, this is what hexclad, this is what Ridge is going to be doing in 2026.

[Aaron Paul]

So something that's cool that we just started testing over the last two weeks has been a performance based test deal. So what we're doing is we're working with one of the most recognizable celebrities you Know, massive on Instagram, big brand aware, big you know, awareness around who he is and typically charges like you know, two, $300,000 for a post type of situation.

[Anna]

Right.

[Aaron Paul]

And so what we're doing with this celebrity is we've created a CPA base deal where we, we went to this really big brand and we're essentially having that person create content and we're using that content and giving it to some of our media buying partners. And they're now running the ads from the celebrities ad account and sorry, celebrities actual page and they're connected to the media buyer's ad account. But this is a CPA based game for the celebrity and for the media buying partner. So now for the brand you get access to now one of most credible people on the Internet without having to pay, you know, pretty massive, you know, sum to get, you know, their name, image and likeness and stamp of approval behind their product. But this is now a pure performance play between both parties. And so for the influencer, the reason they're doing this is they kind of understand that this is where it's going, right? Purely because they're now starting to see that deals are starting to like be a little bit more, less that's coming to them that are willing to pay them the you know, three, $400,000 for a post or you know, or like, you know, any form of a sum that's for an appearance or something like that. So like this is where they're trying to work with a partner. And so that is something I think that in the next like couple of months that people are probably going to recognize and see and that could be a little bit more standard in the next year or two. Um, but we're really excited about this. The early numbers on it are really, really promising. Um, it's converting really well. There's a halo on the brand side. Um, so yeah, it's, it's, it's actually pretty exciting.

[Cody]

Dude, that's, that's awesome. And that makes total sense. Like just de risking it for the brand, creating more opportunities to have successful partnerships and then you get like, it's a CPA basis so you get like scalable payment basically makes total sense. Like we, I would love to see we, we try to sign more of those like hybrid deals on the influencer side to like de risk it a bit for us and then give creators upside if their video performs really well. We had our best creator video was last summer. It was expensive as maybe 100 grand and it did like 800 grand in revenue and I'm like, frankly, I would love to.

[Aaron Paul]

Organically or.

[Cody]

Organically? Yeah, it was crazy. Yeah, yeah, yeah. By far the best video ever. And I would love to do more videos like that, but frankly, like a lot of the time you're spending $100,000 and it just kind of falls flat. So I'm like, oh yeah, if it's. All of a sudden it's a lower commitment, but we're paying you 300 grand if you generate 800. That aligns all of our incentives. We could just do way more deals, get more content out there. So I agree. That does sound like just more favorable for all parties.

[Aaron Paul]

Yeah, that's another thing is like you can go to these creators and like, like if they charge $300,000, a way that we've seen a lot of success with them is like, hey, we'll give you $100,000 but then we'll guarantee $200,000 in a percentage of spend when, if you give us access to run. Running the ad from your ad account.

[Anna]

Right.

[Aaron Paul]

And so we're starting to see a little bit more acceptance in that which I think is going to be more like, more receptive, you know, with, with creators. Again, it's like an education on the creator side because they're not performance marketers. They don' that perspective and nor are they supposed to, but like they are, you know, trying to learn that in a way of, okay, this is now a, a lucrative way to, you know, put more money in my pocket from a performance based deal. And it also incentivizes them to like be in lockstep with the brand, you know, kind of have that feedback loop on, oh, this messaging work, this creative work and like, hey, now you're just kind of getting a steady stream of content from them organically. Right. Which is great. But yeah, yeah, yeah.

[Cody]

So, okay, so one other like affiliate adjacent company that I was super interested and they didn't, it didn't work out for them, but I could see it being a thing of the future. Did you follow the Fascination?

[Aaron Paul]

Yeah, yeah.

[Cody]

So the fascination for those listening founders came from Lisa Mattress Mattress industry. Famously like super PVP affiliate. Super affiliate driven. Yeah. So they were like very familiar with this. They built out the Fascination, which was like half performance publisher, half marketplace. Their, their vision was like you could ultimately buy Ridge while it's on the fascination.com so it creates, create content. They'd host your products for sale and then they would partner with media buyers to like run there so you could run. Hey, we were number one on The Fascinations gift guide. They could grow brand awareness because brands were promoting them and you'd create this like natural flywheel. I always thought that that was super cool. I want to see more of it. Do you think that happens?

[Aaron Paul]

Yeah, I think like it's Publisher marketplaces are exciting. It's worked. It's. I think it's going to happen. I think it's going to require a lot of testing, a lot of like, a lot more brands willing to invest into it from a. From an intentional perspective. Have you, have you tried it at.

[Cody]

The Ridge publisher marketplaces? I mean, we were on. I was really into this a couple of years ago, so we were like, let me think. The Fascination is going to be the best example. There were a handful of others that we were listed on Vera Shop. I'd put in that bucket. They were like kind of editorial.

[Aaron Paul]

How did, how did it do?

[Cody]

It just wasn't meaningful. And that's like, frankly been our experience with affiliate a lot so far. Far is like we can put in time and energy and we just hasn't moved the needle for us. And then we basically shut those down just because we didn't want to manage. Take the time and energy to manage the relationships.

[Aaron Paul]

Got it. Yeah. Yeah. I think like from a publisher perspective, like, if I were a publisher, like that that's where the most amount of opportunity is. So if you're able to like, create a lot of trust with your audience, but again, serve a marketplace where they're able to, like, check out within their own experience, now there is a direct rev share with the product. They're now, you know, media buying advertising companies internally, there's opportunities for collaboration. So like, I think like from a publisher perspective, because honestly, you know, we're speaking to a lot of, you know, some of the biggest publishers in the space and they're all, you know, honestly kind of spooked. They're scared about, like, what the future holds in terms of AI and like, you know, searchability. And there was a massive, like, round of layoffs in December in the space. And so they're all like trying to see where that next leg of authority and conversion and commerce is. And so I feel like, you know, if there's, I mean, think about it. If Vogue were to create a marketplace where, you know, they're now talking to their audience from an authority perspective, but also are able to, like, have an area where, you know, they're able to check out right there when it's so native to their audience, like, and in their experience, like that's just, just a, like a initiative worth testing. But I think that's where like also there's some opportunity for future affiliate wins in the space. But again it's a channel that evolves on a daily basis.

[Connor]

Right.

[Aaron Paul]

There's a new thing happening in affiliate almost every week and so that part of it keeps us on our toes as well in terms of like where to test, where to not like be, you know, maybe a little too starry eyed with the newest, hottest thing and just trying to be careful. Um, but yeah, that's exciting though.

[Cody]

Yeah, yeah, I think it's cool. You know you bring up Vogue having a marketplace. I mean I, that reminds me of Stack Commerce. Similar sort of. I think Stack commerce bought the fascination. Like that was all a part of the same vision of like making editorial or content publishers more shoppable.

[Aaron Paul]

No. Yeah, I think like again like there's think testing, there's an opportunity with those guys. You know, quality edit. Like, you know, Lauren's built an incredible company there and I've been a fan of hers from afar. But you know there's, there's a, there's a, there's a lot of cool things happening in affiliate. It's just not at scale yet. But I think like the right things are happening in, in certain things. But yeah. Yeah.

[Cody]

Cool. Yeah, so those are the first ones that come to mind anyway. I, it was super fun. I like jamming.

[Connor]

I have one more, one more I want to ask about. So. So do you think that. All right, so you were saying at the beginning of the episode, Aaron, that was the affiliate that owned the media buying expertise back in the day and then that expertise over time became owned by the brand. And now a lot of brands are doing their own media buying or working with agencies and they're not doing it on affiliate deal. So now it's, you know, the core affiliate channel in many cases has become content publishers, right. Like they've built an audience and they're then leveraging that, that, that audience that the brand's not getting to drive revenue through an affiliate link and getting kicked by back that way. Do you think that the same way the media buying has transitioned in house to brands that like brands are going to start to generate audiences outside of just their product. Right. Like brands are going to be starting to like try to also become publishers and bring that, that expertise in house and like build audiences that way. Like, like we've talked a lot about this with recipes, right. Like we are a cookware brand, thus it makes a ton of sense for us to provide amazing recipes to our audience. And we think that we one day can do it so good, hopefully that we actually have people coming to us for our recipes first and we ultimately create this content to commerce model. Right now we're just a product company. Everyone comes to hexcloud because, because, because of that reason. But we think that there might be an avenue to, to get people coming to our site to consume content. Whether that's recipe content or maybe like think like masterclass type content of like here's nine knife skills you need. Like do you think that will also transition to the brand the same way the media buying affiliate transition to the brand?

[Aaron Paul]

I mean, media buying it? I mean, yeah, I think one of my favorite like stories in the last like couple years was Ridge buying like the publisher. Like that was such a, like a genius move. You know, I think owning an audience by way of a authoritative, credible like voice is powerful because at the end of the day that's what like consumers are buying into. You know, I think if Hex Cloud were to you know, own like their own like cooking initiative, like you know, a TV channel one day, like, you know, like that's just like owning direct access to a consumer where they're not just coming to you for product but they're coming to you for education, learning, like inspiration. Like absolutely. I think there are a couple of brands doing this well and yeah, I think like similar to how, you know, brands now becoming content creators, I think they're now going into like also there's an opportunity for them, them to become owners of their audience. But I will say though that I still believe that, you know, on your earlier point though is just because most of our revenue comes from you know, content driven affiliates. It's, it's, it, it, it blows me away kind of seeing the level of scale that some of these media buying affiliates are able to do. Again, like the, the, the, the secret I'd say that you know, that most people don't know is some of our media buying affiliates are, are some of the best media buyers in the Twitter sphere. Like, you know, these are like people that, you know, you go to these, you go to Twitter and like they have hot takes and they're well known but they'll come work with us being like, hey, like are you telling me I have the ability to run like a Todd Snyder on a CPA model? Like why wouldn't I? Because I believe in myself as a really capable media buyer and if this is the payout, I can definitely beat that. So like, again, some of the best media buyers in the world like work for themselves.

[Anna]

Right.

[Aaron Paul]

And so this is a opportunity for them to like work with brands and find that arbitrage. And it's an incredible like, place for me to be just sitting here and just like witnessing that on a day to day basis because we've been able to see these partners come out of nowhere and drive meaningful value to our brands in a way that gets them excited too. Because, you know, we've had some brands give up on TikTok. We've had some brands give up on like, you know, native sources. Right. And so for them to have like this window of opportunity with partners that are really good in this channel has also gotten them excited about their business. And you know, it's been a, it's been a meaningful engagement for, for some of them as well. But yeah, I think that's where I'm excited about the future of affiliate. You know, our mission at the company is just to make our brands fall in love with the affiliate channel. Right. And the reason why we, you know, say that is purely because most of the times we're taking over a brand that hates the channel. Right. And so I've been on the receiving end of seeing affiliate turn businesses around and, and being able to run that for brands and kind of change their perspective and understand this is a people driven initiative. Like there's a lot of potential there as well. But yeah, it's really, really exciting.

[Connor]

Awesome. Yeah, I think Hawkberry is one that I always mention. I've probably mentioned them 10 times in this podcast, but they're a great example. They're so good, dude, they're so good. Like they got people coming there to watch a 30 minute YouTube episode and an interview with Leon Bridges that has nothing to do with their products, but it's branded storytelling. And then eventually I bet those people are going to buy something from that brand.

[Aaron Paul]

I mean, I mean like Huckberry is an affiliate for other brands too, right? Like they've, they've, you know, they've, they've completely, you know, we had the privilege of working with them early last year and like it was incredible to just witness like how they thought about affiliate, how they thought about content. But yeah, it's like, it's wild to me. Like brands can become affiliates for other brands by building a community there as well. Well, but like, I remember we went to Japan, my wife and I, last year and like we looked at the Huckberry content for inspiration of where to go to eat. Like you Know, I'm like, that's crazy that I'm looking at, like, a brand that sells, like, hiking shoes and backpacks for recommendations of where to eat in Japan. Right.

[Connor]

Are you watching their dirt episode?

[Aaron Paul]

Their dirt episode.

[Connor]

Right.

[Aaron Paul]

Like, it's. It's so crazy to me, but, yeah, phenomenal team. They're phenomenal.

[Connor]

They're. They're the best.

[Aaron Paul]

Yeah. Yeah, absolutely. Yeah.

[Connor]

So I'm pumped that you mentioned test of the week. I didn't forget about that. Any. Any guest that prepares a test of the week, we got to. We got to run through that. That test.

[Aaron Paul]

I mean. I mean, honestly, it was. It was the test that we did with the celebrity, like, what I talked about earlier. I mean, again, it's. We're really excited about that part of it.

[Anna]

Right?

[Aaron Paul]

It's like being able to work with someone that's massive and bring to them a brand that is proven and does nine figures a year in revenue. Like, that gets the celebrity excited to the brand. It gets them really wanting to make this work, because if you're able to network with a really powerful creator on a performance model, they could do this all day. And so I'm excited about it because this now also allows us to kind of create a playbook that allows us to now go and talk to other nameworthy creators, nameworthy celebrities in terms of, like, hey, let's work with brands on a performance model. This is how you guys can make a lot of money. But that. That was the test. You know, it were again, like, there's a little bit more of a competitive CPA here. Like, the payout that we're giving out to the affiliate is, you know, like, 250 to $300. Like, you know, which is, again, considering the fact that you are working with someone of a high, you know, authoritative standpoint like this very. He's a very recognizable person. But, yeah, I don't think there's anything like that that's been done before. And so we're. We're excited to see the. The efforts of it in the next, like, two, three weeks. So I'll keep you posted on how that goes.

[Cody]

Please do. Fascinating test.

[Aaron Paul]

Yeah. Yeah.

[Connor]

Well, this. This has been a banger first. First affiliate episode on. On the Operator, so we appreciate you coming on, Aaron. It's been a lot of fun. I'm. I'm learning a lot.

[Aaron Paul]

No, of course. Thanks for having me. Yeah. I again, appreciate you guys for, like, doing this. You know, me and Patti talk about, like, you know, wanting to create some form of content, and I'M like, man. No, it's just, it's just a lot of work and like you guys were what episode 49. I can't, I can't imagine this is easy. So thank you guys for, for doing what you're doing. I'm sure it's exciting and rewarding, but yeah, this is great. Thanks for having me on, guys.

[Cody]

Dude, of course. And are you on Twitter?

[Aaron Paul]

I am, yeah.

[Connor]

Where should the people. Where should the people find you? Personally, if anyone's interested in working with Paul street, what's the best way to have a chat with you?

[Aaron Paul]

Yeah, Paul Street Co P A U L Street co. My name is Aaron Paul Brown. Aaron Paul. But Aaron Paul Os is my. On my Twitter but I'm not on Twitter a lot. But yeah, hit me up on either Twitter or LinkedIn. And yeah, we can jam. I would love to jam about affiliate. I'd love to, like I'm such a nerd about other affiliate programs. So I randomly ask for brands to, you know, I'll like, hey, I'll sign an NDA. I just want to see what you're working with, like, you know, just to see, you know, what their. What the opportunity is. But yeah, I'm a nerd about affiliate and I am super, super lucky to have, you know, been a part of, you know, pretty awesome growth with Paul street because we have some incredible people working for us and so, yeah, I just want to shout them out too, as well. But yeah, this has been great.

[Connor]

Oh yeah, amazing. Thanks for coming on, Aaron. All right, that's a wrap on this episode of the Marketing Operators podcast. Thank you so much, Aaron Paul, for joining. That was a value added episode on All Things Affiliate. As always, if you're in join the Marketing Operators. Make sure to like it. Make sure to subscribe to our YouTube channel, share with a friend, leave a comment if you have any questions. We're trying to answer those as much as we can. And as always, thank you to the sponsors Motion Rich panel after Cell Prescient and North Beam.