Customer Success Story
IPSY Scales Subscriptions & Beats the Competition With Conversion Costs 27% Below Maximum
How In-app ads led DTC Beauty Brand to maintain profitability and hit major revenue milestones
- Subscription customer acquisition
- Rising costs of UA due to consumer oversubscription
- Saturation of existing channels
- Interplay™ Cost-Per-Engagement
- Interplay™ Cost-Per-Action
- 5.37% CTR for CPA
- 7.57% CTR for CPE
- 7% Quick Cancel Rate (App Campaigns)
- Avg. Cost-Per-Subscription 27% below maximum
Beauty Disruptor Seeks Growth Amid Competition
Seven years ago, makeup subscription brand IPSY launched with the vision to democratize beauty. IPSY’s founders sought to celebrate individuality and diversity and to improve the accessibility of high-quality beauty products. After all, they believed makeup shouldn’t have to break the bank.
IPSY launched with a single flagship product: the Glam Bag. Delivered on a monthly basis, the Glam Bag included a templatized selection of beauty products, personalized to the customer’s preferences. Impressively, IPSY managed to sustain profitability as it scaled — since 2015, it has grown over 3X all while operating in the black.
Due to the nature of its offering, IPSY found that it was forced to compete against all beauty and subscription brands — not merely companies in the exact same space. IPSY’s Growth Team was up for the challenge. The UA division understood that traditional marketing channels had become crowded with competition. Yet, the company was facing more pressure than ever to scale its subscriber base. The writing was on the wall: It was time to explore new channels for subscriber acquisition.
Saturated UA Channels Underdeliver
Over time, IPSY’s Growth Team had found that mobile web and desktop were inundated with marketing from beauty and lifestyle competitors. The wider market was also dealing with the issue of oversubscription. Most consumers are only comfortable managing a few monthly subscriptions, so the proliferation of subscription offerings made the vertical even more competitive.
“As a beauty subscription brand, IPSY competes with other beauty retailers and every other subscription box out there. To stand out, we needed to find a way to differentiate our offering upfront, and go where our competitors aren’t,” says Alessandra Sales, VP of Growth at IPSY.
To address this challenge, the Growth Team was eager to test mobile in-app ads, beyond social media. Rewarded mobile advertising, was seldom used by competitors, so this seemed like an advantageous solution. To keep the average cost-per-subscriber (CPS) within IPSY’s target range, they needed to find a scalable, performance ad solution to drive positive ROAS. The stakes were high: The team would need to meet its acquisition goals so that the company could avoid over-fulfillment and continue its growth streak.
“To compete with every other beauty retailer and subscription box out there, we needed to find a way to differentiate our offering upfront. And go where our competitors aren’t. Through our testing, we were able to validate our investment in the mobile in-app marketing experience.”
A Performance Play In An Emerging Channel
IPSY enlisted Tapjoy’s mobile growth strategists to kick things off. Tapjoy helped IPSY identify and test high-impact rewarded formats. On Android devices, IPSY launched a Cost-Per-Engagement (CPE) campaign in which users were invited to install the IPSY app in exchange for an in-app reward, such as virtual currency. This strategy immediately proved successful, however, it could not be translated to iOS — Apple’s latest policy revision now prevented incentivized app installs. After testing, the team found that a Cost-Per-Action (CPA) model was the most scalable and cost-effective approach on iOS. The CPA campaign asked users to sign up for a subscription to IPSY in exchange for virtual rewards. Because the format was entirely opt-in, these new subscribers still drove considerable value for the brand.
“I really value the users, the volume — and the team Tapjoy has,” said Alessandra. “Through our testing, we were able to validate our investment in the mobile in-app marketing experience.”
Next, the Tapjoy and IPSY teams worked together to optimize bidding and targeting. Although the CPE and CPA campaigns initially targeted females exclusively, they soon found that broader targeting to all US users produced good results. In total, Tapjoy kept the average CPS 27% below IPSY’s maximum threshold, a target set based on the campaigns’ ceiling CPS cost. Meanwhile, the average Quick Cancel Rate was just 7% — far exceeding the target KPI of 15%. Now the two teams continue to work together to strategically refine the campaign audiences to maximize user quality.
Profitable Growth Reaches New Heights
After two quarters of multivariate testing, IPSY concluded that its mobile in-app strategy had a significant positive impact against its UA goals, with both the CPE and CPA campaigns delivering ROAS at scale. Today, the IPSY team says that its approach to in-app advertising has become more dynamic and sophisticated, thanks to its partnership with Tapjoy.
IPSY’s mobile powerplay enabled it to continue its profitable growth streak. In fact, a recent Bloomberg article highlighted that the brand recently broke over half a billion in revenue. The campaigns also benefited end-user consumers in addition to the brand itself. The rewarded model encouraged brand affinity and engagement. Also, the campaign enabled consumers to immediately understand IPSY’s differentiator — personalization — thanks to the registration quiz. This gave IPSY a competitive edge in a crowded market.
“A lot of beauty retailers and lifestyle brands miss the opportunity to leverage in-app advertising as a growth channel,” Alessandra explained. “Mobile app users are more attentive and engaged than mobile web users, but only a few brands manage to tap the channel’s potential. For those that do so, it’s a huge competitive advantage.”
IPSY has since made in-app mobile advertising a key component in their growth strategy. Its partnership with Tapjoy will continue to play a role in the company’s expansion moving ahead.
What the clients had to say
“Mobile app users are more attentive and engaged than mobile web users, but only a few brands manage to tap the channel’s potential. For those that do so, it’s a huge competitive advantage.”
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