Content Is Profit Podcast: Newsletters 101 Part 5
Episode Title: Newsletters 101 Part 5: How To Build & Monetize Them with Ethan Brooks
Host/Author: BIZBROS
Release Date: January 12, 2025
Introduction
In the fifth installment of the "Newsletters 101" series, hosts Luis and Louise from BIZBROS welcome back their guest, Ethan Brooks. The episode delves into advanced strategies for building and monetizing newsletters, drawing from Ethan's extensive experience with prominent companies like Red Bull and Orangetheory Fitness. The conversation aims to bridge the gap between content creation and revenue generation, providing listeners with actionable insights to turn their newsletters into profitable ventures.
Monetization Strategies for Newsletters
Ethan begins by outlining the three primary monetization avenues for newsletters:
- Free Products (Ads and Affiliate Deals)
- Front-End Products (Low-Price Subscriptions)
- Back-End Products (High-Price Subscriptions)
Notable Quote:
“Inside this newsletter model, there's really three ways to make money. You have free products which you monetize via ads or affiliate deals, you have what they call front end products, which is a low price subscription, and then you have back end products, which is a higher price subscription.”
— Ethan Brooks [08:07]
Affiliate Deals: Ethan emphasizes that affiliate deals are one of the fastest ways to monetize a newsletter, especially with a small audience. He cites a case where a newsletter with just 1,000 subscribers generated six figures through affiliate partnerships.
Notable Quote:
“The size of your audience is not necessarily the most important thing when you're thinking about building a successful newsletter.”
— Ethan Brooks [07:23]
Platforms for Affiliate Deals: Ethan recommends platforms like ShareASale, Commission Junction (CJ), and Rakuten for finding affiliate opportunities. He also suggests reaching out directly to companies with whom the newsletter's audience would align, leveraging the performance-based nature of affiliate marketing.
Additional Affiliate Platforms Mentioned by Louise: Louise adds that platforms like ClickBank and JVZoo are excellent for info products, allowing high commissions (up to 80%) for niche-specific courses.
Audience Size and Engagement
A critical discussion centers on determining the optimal audience size for different monetization strategies. Ethan introduces a three-part framework to evaluate readiness for monetization:
- Audience Size
- Engagement Level
- Spending Power of the Audience
Notable Quote:
“There is actually no one spot. And the reason for it is there's a few reasons. First, there's no set value on a set of eyeballs...”
— Ethan Brooks [13:12]
Guidelines:
- Ads: Typically, newsletters should aim for 70,000 to 80,000 subscribers before approaching advertisers. This threshold helps in commanding higher ad rates and managing advertiser expectations.
- Affiliate Deals: Can be pursued with much smaller audiences since earnings are performance-based.
Case Studies:
- Morning Brew: With over 3 million subscribers, they command premium ad rates (e.g., a takeover ad at $55,000) due to their vast and engaged audience.
- Ferrari Market Newsletter: With just 5,000 subscribers, it generates approximately $2 million annually by targeting high-spending individuals.
Notable Quote:
“If you have a really big audience and they're super engaged, you can make a lot of money on that even if they're not spending a lot of money.”
— Ethan Brooks [18:49]
Pricing Models for Advertising
Ethan details various pricing models used to monetize newsletters through advertising:
- Cost Per Mille (CPM): Charging based on the number of impressions (typically $0.02 per subscriber).
- Cost Per Click (CPC): Advertisers pay based on the number of clicks an ad receives.
- Cost Per Open (CPO): Pricing based on how many subscribers open the newsletter.
Notable Quote:
“My list is 50,000 people. Can't guarantee how many people are going to open it or people. How many people are going to see it. But like, I will send your ad in my newsletter to 50,000 people for a thousand bucks or whatever it is.”
— Ethan Brooks [27:41]
Ad Inventory Diversification: To maximize revenue and appeal to various advertisers, Ethan suggests offering multiple ad types:
- Premium Ads: Large, prominently placed ads with images and substantial text (e.g., $10,000 per send).
- Downsell Ads: Smaller ads with less text, priced lower (e.g., $5,000).
- Loss Leader Ads: Minimalistic ads with a few words and links, ideal for testing and low-budget advertisers (e.g., $1,000).
Notable Quote:
“You have to charge enough and you're looking at these numbers. $50,000. Yeah, that's pretty standard.”
— Ethan Brooks [34:10]
Example:
Morning Brew’s Rate Card: A takeover ad costs $55,000 due to their extensive subscriber base.
Maximizing Revenue Through Value Ladder
Louise introduces the concept of the value ladder, where newsletters serve as entry points for higher-ticket products or services. By building trust and authority through consistent value delivery, newsletters can nurture subscribers towards more lucrative offerings.
Notable Quote:
“The concept is very similar to what is called the value ladder...We'll put them in your list and then you deliver some value to them and then you upsell them to, you know, a low ticket product and then eventually you can sell them to a high ticket product.”
— Louise [24:34]
Strategic Approaches:
- Start High: Some creators initiate with high-ticket offerings to quickly generate revenue, leveraging smaller but highly engaged audiences.
- Gradual Upsell: Begin with low-ticket products to build rapport before introducing high-ticket options.
Practical Steps for Selling Ads
Ethan provides a step-by-step approach to initiating ad sales:
- Initial Outreach: Simple email pitches to potential advertisers, highlighting subscriber count and audience relevance.
- Estimating Ad Value: Calculate potential revenue based on the advertiser’s customer acquisition cost and the expected conversion rate from the newsletter audience.
- Pricing Strategy:
- Early Stage: Use CPM pricing (e.g., $0.02 per subscriber).
- Scaling Up: Transition to more performance-based models like CPO to align better with advertiser ROI.
Notable Quote:
“A lot of creators are just way undercharging for ads because they start advertising when they're too small.”
— Ethan Brooks [36:17]
Case Example: Ethan references how Sam from The Hustle sold initial ads via email, securing deals like Casper Mattress by demonstrating value and relevance.
Advanced Monetization Techniques
Beyond basic ad sales and affiliate marketing, Ethan discusses sophisticated strategies to enhance revenue:
- Multiple Ad Slots: Diversify ad inventory by offering premium, downsell, and loss leader slots.
- High-Ticket Partnerships: Develop exclusive, high-value partnerships with brands that align closely with the newsletter’s niche.
- Service-Based Monetization: Integrate services as back-end products, leveraging the newsletter to attract high-paying clients.
Notable Quote:
“Once you know the rules, you can sort of break them in your favor.”
— Ethan Brooks [22:41]
Example: Travel influencers using Instagram to drive newsletter subscriptions, then upselling products like camera settings and luxury getaways.
Conclusion and Final Thoughts
Luis and Louise wrap up the episode by emphasizing the importance of understanding and adapting monetization strategies to fit the newsletter's unique audience and niche. Ethan encourages creators to experiment with different models and iterate based on what resonates with their subscribers.
Notable Quote:
“If you have a really big audience and they're super engaged, you can make a lot of money on that even if they're not spending a lot of money.”
— Ethan Brooks [18:49]
Ethan leaves the door open for future collaborations and Q&A sessions with the community, reinforcing the podcast’s commitment to providing continuous value and support to content creators.
Final Remark from Ethan:
“This has been a blast. Thanks for having me back and I'm happy to come back anytime, answer questions, anything like that.”
— Ethan Brooks [45:17]
Key Takeaways
- Diversify Monetization: Utilize a combination of affiliate deals, front-end, and back-end products to maximize revenue.
- Understand Your Audience: Evaluate audience size, engagement, and spending power to determine the best monetization strategy.
- Price Strategically: Start with CPM models and transition to more performance-based pricing as your newsletter grows.
- Leverage Value Ladder: Use newsletters as a gateway to higher-ticket offerings, building trust and authority over time.
- Adapt and Iterate: Continuously assess and adapt monetization strategies based on audience feedback and market trends.
By implementing these strategies, newsletter creators can effectively turn their content into a profitable business, aligning with the podcast's mission to entertain, educate, and convert content into profit.