← Content Is Profit
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- [00:00]
Luis
Hey, and welcome back to continuous profit. This is Luis, half of the bees res and I'm welcoming you to this incredible start of 2025 in the 10 episode series on where we go all the way from frameworks to how to monetize your content in a very specific way. Even how to outrank Google or how to land your dream sponsors. So I think these 10 episodes are going to really help you. If you haven't listened to any of the other ones, go back and they start on January 3rd all the way to January 12th. So super excited to share these with. Enjoy.
- [00:34]
Ethan
Hey, I'm Louise.
- [00:36]
Louise
I'm Louise.
- [00:37]
Luis
And you're listening to the content is Prophet podcast. I'm excited today.
- [00:46]
Louise
Part 5 Bonus part.
- [00:49]
Luis
Bonus.
- [00:50]
Louise
Surprise. Surprise. Today we are, we're. We're hitting the part five of the newsletter segment we've been doing with the one and only. I know you guys remember his name.
- [01:00]
Luis
Ethan brooks. Welcome back, Mr. Ethan. Let's go.
- [01:07]
Louise
Audience is going wild.
- [01:09]
Ethan
What's going on, guys? It's gonna be back.
- [01:12]
Luis
It's like, I. I can't believe I'm back. Why am I back?
- [01:18]
Ethan
Your poor audience, they've been stuck with me for days now, so hopefully they're loving it.
- [01:24]
Louise
They have you on a loop, on repeat.
- [01:26]
Luis
I know, it's.
- [01:27]
Ethan
I mean, well, does that mean my grandmother listens to you?
- [01:32]
Luis
Well, you've been sharing. Even the last few days has been incredible. You know, coming from me. I remember just leaving the first recording that we did and I was like, oh, my gosh, this has, like, reignited a fire around this thing. Because sometimes content can be repetitive, right? We talk about consistency and just the part of the process, when it does become a process, it can become some boring. Some boring sometimes, right? Sometimes. So it just reignited a fire. And I've heard good feedback on the back end as well. So thank you for that. This has been super awesome. And then we're ready to wrap it up.
- [02:03]
Ethan
Right?
- [02:03]
Luis
Last episode. There's a few things through your Twitter thread, which, by the way, is in the links below.
- [02:08]
Louise
Well, never says the last one. Well, the last one. I have a feeling, you know, we're gonna have another episode eventually with Ethan.
- [02:15]
Ethan
I'm retiring after this.
- [02:17]
Luis
It's like, done. No more podcasts.
- [02:20]
Louise
Yeah, this is, this is your warmup for the real deal.
- [02:24]
Ethan
Like, like, Quentin, I got. I'm gonna do five episodes and then that's it. I'm hanging up. I'm never ending my career.
- [02:31]
Louise
You know, that's that scarcity element.
- [02:34]
Luis
Yeah.
- [02:35]
Ethan
Did you know that he did that early on. Tarantino, I have no idea. He. Yeah, he apparently, like, call his shot super early on when he was just starting his career. I don't remember exactly the number, but it's like seven or maybe 10. He says, like, I'm gonna do 10 movies, and that's it. And he called it super early. And now every single one of those has gone on to be just, you know, so maybe there's something to it. Maybe I will really hang it up after this.
- [02:59]
Louise
Yeah, look at that. I like that approach.
- [03:01]
Luis
If you, if you make this series, you know, the masterclass that goes attached to the trends. Amazing thing that you guys are doing. Again, you know, we're not going to be angry at that. But anyways, I think there's a few important points that we want to hit before, you know, we wrap up the series right on the side of the ads. How do we sell? There's an amazing framework that you guys share in here that's very, very powerful. So Fonzie was writing a question, and I just, like, slapped his pen as we're going. So you want to start there?
- [03:27]
Louise
No, it's not a question to start with, but is, you know, I think we were diving in the part of post niching down, we were diving a little bit more into the monetization type of deal. I feel like we. We skipped a little bit over the tech stack side of things, but we can, you know, dive in that as well. But let's, you know, people want to know how to. How to make the. This macaronis, right? They want to learn how to make that money. So you, you know, you mentioned that there's three different ways to. To do this, right. Obviously, at the hustle you guys had what I feel like is your preferred way, which is, you know, kind of like monetizing with ads. But let's go both ways. Let's tackle both ways, right? Like somebody that is writing for, you know, building an audience, how can they monetize? How can they start? And maybe at what point of the audience can they start potentially monetizing? And then somebody that's on B2B, you know, maybe super niche down, they have services. Maybe what is a better way for them to monetize that list?
- [04:27]
Ethan
Yeah, great question. So I'll tackle both. And for anybody who I guess maybe didn't hear the last couple of episodes, what we were talking through is 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. And the way that the model works is your free audience is always going to be your biggest. And then ideally you use your free audience to help sell your front end product and then your front end product helps sell your back end product. And so it's kind of like a chain that pulls people deeper and deeper into your ecosystem. So that's like the two second wrap up from the last couple of episodes. And yeah, I think. Great question. What we should dig into here is like, how big does the audience have to be for each one? And then specifically how do you actually monetize them? So why don't we start with free? And like I said, there's, there's, there's sort of two ways to monetize a free newsletter. You have ads or you have affiliate deals. And for anybody who's unfamiliar, ads. I don't know if you guys can hear. My dog's asleep and she's like talking in her sleep. So ads are sort of like, when I say ads, I'm talking about display ads. So if you read a newsletter like Morning Brew, and somewhere in that newsletter it says, hey, you know, today's newsletter is brought to you by whatever, the Motley fool. That's one way to monetize. But then there's another way which is affiliate deals. And an affiliate deal for anybody, again, who may not be super familiar with this, is an arrangement that you work out with a company where you'll link to their products inside your newsletter or somewhere on your site. And rather than paying upfront for the link, they pay you a portion of all the money that they make from sales from your readers. And so the reason I take a minute to just kind of highlight those up front is because hopefully it will help show that there's actually a lot of opportunity here. And this was another big theme from our conversation last week. The size of your audience is not necessarily the most important thing when you're thinking about building a successful newsletter. So if you think about outcomes first and what you really want for it, you can monetize extremely early or with a very small audience. And so one of the things we talked about last time was this newsletter that's generating six figures on an audience that's a thousand people. That's a great example of a newsletter, well, of a newsletter that's monetized via affiliate deals. And so when you're thinking about how big does the Audience have to be. And how do I actually make money on this? I'll give you the simple answer, which is for affiliate deals, it doesn't matter because you're, you're basically being paid for performance. So people don't care how big your audience is. And they, yeah, all they basically care is, is, are people buying.
- [07:24]
Luis
Yeah.
- [07:24]
Ethan
And real quick, I have a couple of recommendations from this. So I actually Talked to Jordan DiPietro, who he ran one of the products at Motley Fool. It was called, I think it was called Blueprint. And that was an entire publication. The whole purpose of it was just to recommend software to people. So, like, if you were trying to figure out what's the best software to run my website on, or what's the best software, like what's the best CRM, Right. Blueprint would compare a whole bunch of them. And then that publication made money on affiliate deals for those pieces of software. So when people said, oh, I think, you know, maybe like HubSpot is the right software for me, clicks through and then buys it, boom, HubSpot kicks a portion of that over to those affiliates.
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Louise
Yeah.
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Ethan
So they were running like a multi million dollar affiliate business. And he told me that the three places that you can look for or that you want to look for affiliate deals early on is Share a Sale, which is a website. Commission Junction, which is often referred to as just cj but Commission Junction is the full name. And then Rakuten, I think, is how you pronounce the third one. It's R, A K, U, T, E, N. So let me make sure I'm lining this up in a way that makes sense. If you're talking about monetizing a free newsletter, one of the earliest ways that you can monetize is via affiliate deals. And the reason for that is because the size of your audience doesn't matter. The only thing that matters is whether or not they want the things, you know, that your affiliates offer.
- [08:55]
Louise
Yeah.
- [08:56]
Ethan
Now there's two ways to get affiliate deals. The first is through these sort of like platforms that I just mentioned, which you can, in a lot of cases, you can just go and sign up for them. Right. You don't even necessarily have to apply or go through a lot of hoops. But another way is to just find companies that you love or that you know your readers will love. And very often they're going to be willing to work out some kind of affiliate deal on the back end as well. And the reason for that is because a lot of companies, especially now, you know, they're paying for ads. And so they know how, how much ad spend it's going to take them roughly to get a customer. And so if you, if you come to them and offer to send them customers for that price or close to that price, maybe even a little bit less, you know, they know that they're getting a deal on that. And the fact that they. Yeah, the fact that they don't even have to pay unless they get a result, it just, it, it stacks all the chips in your favor for, for creating these kinds of deals.
- [09:53]
Louise
Yeah.
- [09:54]
Ethan
So affiliate is probably the fastest way to monetize a newsletter with a small audience. It can be big depending on the couple of actually it can be big depending on a couple of factors. And I'll talk through those factors next if you're interested because they're going to help determine at what point you can monetize other types of audiences too. So should we get into that?
- [10:18]
Luis
Sure, absolutely. I think like in part of it you mentioned that the point where you should start selling ads as well. Right. So like how can we use this as a leverage to bring in more people into the newsletter or your publishing platform and then going into how, how big is big enough to start going after these advertisers?
- [10:38]
Ethan
Right? Yeah, for sure.
- [10:39]
Louise
And I like before we continue real quick, sorry then I really like the affiliate side of things. We kind of like got our education on email marketing around affiliate. You know, we, we come from the, I don't know, call it the click funnel school. But you know, we learn a lot from, from that company and they do a lot of affiliates. Right. And you mentioned a few pages here. I just wanted to add a few other marketplace in terms for maybe people that are looking to do affiliate with, you know, other different type of companies. You got clickbank.com right. You got JV Sue. So usually these ones are more on the info product type of things. Right. So if you got somebody, I don't know that is interested in gardening and somebody has a course on gardening and you have a newsletter on gardening, guess what, you can potentially partner with them and sell that course for them and you get like pretty good commissions. Honestly. There's some, I've seen some that are like 80% commission. Right. It's pretty impressive on very high ticket programs. So I can definitely see how the size doesn't matter. Right. That's the ad that we're going to place. Size doesn't matter. So also thank you. I just wanted to bring it back a little bit on that B2B sense because it really helps. And honestly it sounds scary, but at the same time it is such a great opportunity.
- [12:02]
Ethan
No, great point. And just to double down on what you were saying there in terms of like the fact that the size of your audience doesn't necessarily matter and there's a big opportunity here, I think a lot of people probably underestimate how much you can make on affiliate sales. Like, you know, as one example, like wire cutter is an affiliate or no, actually maybe not wire cutter, but Nerd Wallet. So Nerd Wallet is, is entirely affiliate based and they do 100 million plus per year on affiliates. And so these can be like incredibly big businesses if you structure them well and if you really understand the opportunity here. So yeah, definitely don't underestimate affiliate. Now, as for how big your audience has to be, let me give you like a kind of a three part framework that people can use to think through. And the reason I like to kind of line this up for people is because this is one of the most common questions people ask about newsletters. They say, how big does my audience have to be in order to monetize? And it, it always kind of sucks for them because the reality is that the real, real answer is it depends. Right. And that's the worst answer, but it's the, oh, it's the only honest one.
- [13:13]
Louise
Yeah.
- [13:13]
Ethan
So I can give you some basics, right. Like one of the guidelines that I give in, I think that same newsletter thread is if you're running sort of a general news audience, right, you're probably going to want to build to somewhere between 70 and 80,000 subscribers before you even think about doing ads. And there's a few reasons for that, but the biggest one is just when you look at the overall market for ads and the amount that you can charge for certain ads and the amount that you'll make versus the time it takes to land those advertisers. There really is kind of an uphill battle. Until you get to like the 70 or 80,000 subscriber mark below that, it's very hard to charge what you're like, what your time is really worth. And I see this, I have to caveat this too by saying a lot of the research that we did was in six, seven and eight figure newsletters. So if you're not looking to earn six or seven figures from your newsletter, you can break all these rules. Right. But when I say this, I'm coming at it from the, from the position of, well, I'm assuming you're going to try and build like a multimillion dollar company here that can pay you a full time salary and pay for growth and pay for other employees and stuff like that. So if that's the case, very often you're going to target that 70 to $80,000 range to sell ads. You can still start affiliate much earlier. But the real answer when I say it depends is like, there's 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, right? And so like the kind of, the, the best proof of this is you'll see companies that have very different size audiences and they're doing very different sized revenue or even like similarly sized audience with very different revenue. So, you know, example I think I mentioned last time is the Ferrari Market newsletter. They got 5,000 subscribers. They do about $2 million a year last time I checked. Yeah, that's, that's, that's a lot. When the hustle had 5,000 subscribers, we weren't doing $2 million a year, you know. So your ability to monetize actually matters more than the size of your audience. But because there's no set value on the side on a set of eyeballs, and there's really no set value on an ad, it's better for somebody who's really going to make a go at this to have the frameworks in mind that will help them figure out for themselves when they can start. So I can give you like a soft number, which is that 70 to 80,000. If you're just selling normal ads, that's where it's going to really start to make sense. But here's how you actually think through it so you can answer the question yourself. There's basically three things that come into play when it, when it comes to monetizing your audience. How big is it, how engaged are they? And are they spending money based on your recommendations? Right. And so those three factors are really the most important things to consider when it comes to when to monetize. And, and the good news is you only need two of them, right? So if you have a really big audience and they're like super engaged, you can make a lot of money on that even if they're not spending a lot of money. Right. And I think that's a good, like the good example there would be like Morning Brew, right? So their audience is huge, but they're not necessarily advertising like super expensive products. You know, they'll have, yeah, you know, like Wrangler jeans or something like that.
- [16:43]
Louise
I mean, I Feel like they sell the Morning Brew with the idea of, hey, we're distilling the news for you so you don't have to spend hours, you know, searching for them. Right. So like you go, I personally, when I signed up to the Morning Brew, it wasn't with the mindset of like, oh, let me see, you know, how I get an edge with some products that they might be referring. It was more about, I just want to be efficient with my time and at the same time be aware of what's happening around me.
- [17:11]
Ethan
Yeah, exactly. And that's kind of key in terms of figuring out how you're gonna monetize too. Right. Like in their case, they're building kind of a general purpose audience, right. Young people who are interested in the news, specifically money. So you know, they're, they're the, the threshold for spending is probably lower with them than it would be for a newsletter. Like there's a newsletter for, I'm blinking on the name of it, but I think it's like Engineering Lead Weekly, something like that. And you know, it's a, it's a, it's an email newsletter for people who lead engineering teams. Well, their audience is going to be a lot smaller, but those people are in control of multi million dollar budgets in a lot of cases. And so their ability to spend based on a recommendation is much higher. So, so you have those three components. How big is your audience, how active are they? And, and are they spending, like, how much are they spending? Basically of them, you need two. And the most important one really is that spending one. Right. Because if you have a huge audience and they're super engaged, but they're spending no money, it doesn't matter. You don't have a business. Right. And this is where I think some creators struggle because they'll, they'll, they'll look at something like, you know, we want to do a newsletter for, I don't know, like teen culture or something like that. Or like, you know. Yeah, like, let's just say a newsletter for tea. Like young teens. Yeah, that's great. But young teens generally don't have much of their own money to spend on anything. So your real customer in that case would be probably their parents, right?
- [18:50]
Louise
Yeah.
- [18:50]
Ethan
And it's just, it's kind of hard to thread that needle. So, size of your audience, how much money are they spending, how engaged are they? Those three things need to come into play. And once you have two of those things, you are ready to monetize. So if you have, you could even be it could be a small audience, but they're super engaged and they have a high spending threshold. You, you have the makings of successful like media business, advertising business.
- [19:14]
Louise
Absolutely.
- [19:15]
Ethan
That makes sense.
- [19:16]
Louise
Absolutely. I'm thinking this right now. My brother got obsessed with Drive to survive the F1 show on Netflix. I don't know if you've seen it.
- [19:24]
Luis
Became an instant fan, have like, yeah, watch every single race I'm racing on simulator. I'm good, I'm good.
- [19:32]
Louise
So he spent so much money since he became a fan, right?
- [19:37]
Luis
Invested, invest.
- [19:38]
Louise
And honestly, all I'm thinking is I'm sure there might be some F1 newsletter out there. I don't know, I would have to do the research. But in my mind I'm like, that'll be a pretty cool like niche to go into because I mean usually the people that like if one I would say they like to spend, right? The people that go, I mean going to those events is not, is not cheap at all. And it's such a hard like hardcore fan base. Especially since that show on Netflix, which they literally help you build more of an audience, which they're kind of new as well and they're getting into the sport. So there's a lot of education to make, right? A lot of like news. Maybe there's some news channels out there. But you know, people are still, I feel like they're still finding what is like their one go to source. So maybe an F1 newsletter could be.
- [20:31]
Luis
I just added it here to the list. But I also even like we're going.
- [20:35]
Louise
To end up with like 20 newsletters.
- [20:38]
Luis
This is, this is wonderful, right? Because like on our side, right, We, a lot of people that listen to it or even ourselves, right, we, we have business, a service based business, right? And we use the podcast as a platform, obviously. But in my head, what I'm looking at the newsletter, right, or like how to build that initial funnel, right, of maybe an audience of people that can be interested, whether that's an affiliate product or on the back end, right. I see it as a very powerful tool to first obviously build your rapport, your trust, your authority within that audience. And the same time within those affiliate offers on the back end, you can also offer on the service side, right? So we do, you know, mid to high ticket, right? And that's how we've been able to monetize a podcast immediately from like we, we have this, the platform profit formula, right? One of the things, one of the elements is audience and people forget that the person that you're talking to Is your number one person in that audience. Like line doesn't matter if you have 2, 3, 4, 5, that one person still matters, still audience, they're consuming your content because they're having a conversation with you. So with your newsletter it still applies, right? So if you have a service like that, right, maybe, maybe some of these numbers might discourage you because okay, well maybe the advertising, you know, you know, a thousand, two thousand, three thousand, four thousand. Obviously as you grow with consistency and execution, right, that will grow. But initially, right when, when we first started, it'll probably going to be a little bit uphill battle. But you can think about, okay, how can I acquire these people on the front end to consume my content, to learn from me, to share different things in the community right to the same time having that other tier, like that fourth tier on the back end with services which you know, with the examples that you've, that you've mentioned is total different industry, right, because they're, you know, most of them are investor backed and there's probably different objectives. But for a lot of people that are starting, I think it's super valuable because at the same time you are able to monetize in the back end with the contacts and information of these people that might be interested in your service. So you know, on, on the contents, profit special, we'll add that fourth tier in there on the service side.
- [22:41]
Ethan
Yeah, well that's a great point. And I think this is a really good example of another sort of like major theme of the last conversation we had, which is that when you know the rules to this game, you can sort of break them in your favor, right? So you know, the general rule here is that yeah, if you want to build a six or seven figure newsletter company like newsletter specifically, you're gonna need that audience, right? But you're gonna need that 70 to 80, 000 person audience because it's just, it's very difficult to monetize ads over that rate. But if you know the rules, like hey, actually our audience spends a lot of money so we could advertise, you know, multimillion dollar products in our newsletter or something like that. Well then now all of a sudden the rules are changing and you can adjust your expectations accordingly. You're not beholden to these benchmarks if you kind of understand how the game is played. And to your point, you know, we laid out this kind of model of free front end, back end, the back end product. What that really is is your high ticket product. So inside the context of newsletters specifically, that's a high priced paid newsletter. And there are some people like James Altucher, he's got several, you know, multi thousand dollar per year newsletters. But that can also be a service. It can also be, I mean I've seen an example where, you know, there's these really interesting travel influencers who, their free content is coming in the form of Instagram content. They've got like 2 to 3 million followers on Instagram. And then their front end products. So the low priced paid product are camera settings where you can pre buy camera settings that are going to make your photos look just like theirs. And then the back end product is this luxury getaway, Airbnb in Bali, which they're renting out for 700 bucks a night, which anybody who's been to Bali knows that's like you can rent a place for 700 bucks a month or something like that. Like it's.
- [24:37]
Luis
Yeah, it's. Yeah, pretty much, yeah.
- [24:39]
Ethan
So you, it's the same exact model over and over and over again. Free front end, back end. And if you, once you know it, you can bend it to your will. And in your guys's case, I think that that service company absolutely is a backend product. It's a great example of how people can use this to their advantage.
- [24:58]
Louise
Yeah, absolutely. I mean in their response is, it's very similar to the concept of what is called the value ladder. Right. Like you try people to get people into your ecosystem through a free product lead magnet. Right. Which elite magnet can be built in your list, honestly. Right. You 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. And I will say this, for us, it was a big realization. The fact that we always thought we had to start with the free at the bottom. And when we kind of like came across the message that it's actually maybe more efficient to start with the high ticket product. Right. That changed the game for us because now you have resources. So in terms of, you know, having a smaller list might actually be an advantage because you can, your goal can be to eventually have those 80,000 and sell them ads. But if you have, let's say a 500 people list and you have a good affiliate product or your own product that you can sell them right on a high ticket, you can start, you know, getting resources to then invest, keep growing the list, eventually getting to the point where you can sell them some ads.
- [26:16]
Ethan
Definitely. And maybe this might Be a good point to pivot a little bit and talk about how you actually sell those ads.
- [26:22]
Luis
I was about to like, go there. I have like the framework in front of me and I'm like, let's dive in.
- [26:28]
Louise
Yeah, yeah, we got, we, we got about like 15 minutes, so. Yeah, let's do this.
- [26:34]
Ethan
Yeah. So I think the big message here for, for people who are just starting out would be that this can be a lot simpler than you think. One thing I think people sort of do is they like, they, they build this up in their head to be like quite a complex endeavor. And by the time you're running a multi million dollar business, it certainly can be, you know, like the Hustle. Like, I think two thirds of the staff were sales, you know, back when we were doing advertising. And that's important because sales is a, like a complex process. Not just sales, but it was, you know, you have your sellers, you have account managers who are kind of managing the relationship back and forth with the client. Then you have copywriters who are in charge of taking all the assets the client does and turning them into ads. So by the time it's a full fledged business, it's quite complex. But early on, you know, Sam, who is the founder of the Hustle, just sold our ads and he did it via email. And I actually, one of the things that we do when I sort of like give this talk on newsletters is I have slides that show his super early emails. Like literally how he sold the first ad. He just sent me the email chain.
- [27:41]
Louise
Yeah, we have those on Twitter. So I'm gonna, I'm gonna link them in the notes. So if you.
- [27:46]
Ethan
Perfect. Yeah.
- [27:47]
Louise
If you're listening right now and you want to see those emails and they're awesome because they have some notes on them as well. I'm gonna link them below, so just make sure to scroll down and check them out.
- [27:56]
Ethan
Perfect. Yeah. And the one thing I just like to call out about him is that it's really simple. You know, he reaches out to this person, he says, hey, you know, we got this list. Here's kind of like roughly how big it is. I think they'd be a great, you know, fit for what you're trying to sell. It was Casper Mattress at the time, and I just think, like, Casper would be a good fit for it. Are you interested? And they just kind of went back and forth. I think people are, are they're tempted or they kind of want there to be like a perfect, like, equation for how much I should charge for an ad and what the outreach looks like. And the reality is super early on there isn't. You're gonna, you're gonna have to estimate that. And the way you kind of estimate it is based on how much your reader is worth to the advertiser if they buy. You know, so like, again, if, if, like Casper Mattress, you can. I don't know what their, what their margin is, but you can kind of estimate. Or maybe you could look it up and you just kind of figure out what you think the value of a purchaser is.
- [28:56]
Louise
Yeah, it's perfect. I was just buying mattresses recently. Recently, and I was looking at. You can tell us Casper's, you know, know, I mean, they're like cheaper. Queen is like 800 bucks. Right. And usually people keep their mattresses for quite, quite some time. Right. So let's say in five years, like, the lifetime value of somebody is like around, let's say, 1000, 1500. I don't know the margins either, but let's just assume. And I'm. I'm pretty sure it's way more than this, but let's just assume it's like 30% of that.
- [29:26]
Ethan
Right. Perfect. Yeah. So. So you can just kind of do the mental math there to estimate for yourself how much it would be worth to them if a single one of your readers clicked or, or rather if a single one of your readers bought. And then you kind of work backwards to figure out, well, you know, here's how many people typically click links and in my newsletter. And then here's how many of those, like, let's just say some small percentage of those buy. I, I could probably sell like five mattresses right through my, through my newsletter or more than that.
- [29:54]
Louise
Yep.
- [29:55]
Ethan
And then you have a rough estimate for how much that ad is worth to them. And so super early on, that's how you're going to set your pricing. And then eventually that gets worked into, you know, like, so, by the way, when it comes to selling ads, there's a few different ways people charge for them. And what you tend to see is that the way people charge evolves over time as their, as their business evolves. So one really simple way to do it is what we call it cost percent. And that's basically you say, hey, 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. Yeah, cost per send. Right. And then what you're really doing there is you're assigning, like some marginal value to every single person on that list. And then as the list continues to grow, the price for your advertising continues to go up. Now, that's a good way to do it, especially early on, because it's super simple and advertisers know what they're going to pay so they don't get blindsided. But then at a certain point, your list is going to be big enough where advertisers are paying a considerable amount to reach them, but you're never going to get 100% open rate. And so typically, in order to price this a little bit more fairly based on who's actually seeing the ad, you have to shift models. And the two other models that are the option there are like, cost per click or cost per open. And like cost per open? Well, cost per click is typically favored by advertisers because then they're only paying for performance. Right. But it's not really fair to you as a creator because sometimes people see ads in your newsletter and then they'll go buy somebody somewhere else. Right. Because you gave them the awareness, but they bought somewhere else.
- [31:43]
Louise
Yeah.
- [31:43]
Ethan
This is the thing that, like, podcast hosts struggle with and other types of creatives, because the, the, the ability to sort of like, see who really drove a sale just isn't quite there yet for the creator community. So what a lot of people prefer, and this kind of is the best of both worlds, is cost per open. So you're reporting on how many people open the newsletter that day? Yeah, each of those opens is worth a certain amount and then you just tally them up and that's what the advertiser pays you after the fact. And the good side of that is that you're getting paid for, like, everything. So if people click or not, you're still getting paid and they're still only paying for ads people see. But where it gets a little dicey is that some days you have a newsletter that's just wildly popular for some reason. And so advertisers can get hit with a charge that's like, more than they were expecting. So you have to figure out how to navigate that well.
- [32:36]
Louise
Yeah, yeah, yeah, absolutely. So that, that actually kind of answers the question that I had at the very beginning I was going to ask you, how do you guys establish that if it was like a cpm? So this obviously makes a lot of sense, right? Cost per click, cost per open, or just cost per cent? Do you work that numbers backwards too? How do you assign that value kind of like per person that you have in your email list? Right. And I'm asking this because, you know, you have an image here of the, the pricing card of Morning Brew. And I mean, it's, it's insane. And I'm guessing this is per email, right? I mean, and I say insane, maybe it's just because since I'm not in the industry, this might just be super normal. Right. But in here it says the takeover ad, which is kind of like the biggest one for the daily brew is $55,000. So is that a one time send?
- [33:32]
Ethan
Yep.
- [33:33]
Louise
Wow. So, yeah, I mean, they have a massive list. And this was 20, 20 years ago too. Years ago. Do you know how many people did they have on their list?
- [33:45]
Ethan
I think they're over, they're either over 3 or 5 million at this point. I just saw a recent update, but I can't, I can never remember at that time. They were probably somewhere between 1.5 and 2 million. And I know they're. Yeah, they're definitely north of 3. I think they were 3 when Business Insider bought them.
- [34:00]
Louise
Yeah.
- [34:00]
Ethan
So they're killing it. And they're. But here's the. Okay, so here's the challenge. Did we talk about ad pricing last time? Like your, your, your normal sell, your upsell, your or your downsell and your loss leader?
- [34:09]
Louise
No, no, we didn't.
- [34:11]
Ethan
Okay, so part stakes, incoming. This I get. I, I can explain it pretty quick, but this will be, this is a, this is a good sort of like preliminary wrap to this topic for people. So you're, you're sitting at a point, you're thinking, okay, well my audience is pretty big and I know that they're pretty engaged. So I think I could start selling ads. I'm just gonna, you know, I'm gonna send kind of an email. I'm just kind of going to ballpark what the price of the ad is going to be. One thing I kind of touched on this, but I really feel like it should be stressed is like a lot of creators are just way under charging for ads. And part of the reason they're doing that is because they start advertising when they're too small. And it's a problem because it takes a lot of energy to manage those ad clients. It's not just selling the ad. There's a whole like process in there of getting assets from them. So we need, we need like a description of your company, we need logos. If there's an image that we need to insert, we need to make sure all that's in and ready to go for the newsletter. Right. Because newsletters are deadline driven business. So there's a whole bunch of stuff that can complicate this now. It doesn't have to. I know there are some people who have automated this really well and so they're basically have like a stripe store on the back side of their, of their newsletter website where you, if you want to buy an ad, you can just go do that. So you know, there's different ways to do this, but the big thing I want to say for people is like charge enough and you're looking at these numbers. $50,000. Yeah, that's pretty standard. I would bet the brew probably makes more. I mean they definitely make more than that. Well, actually, I don't know definitely. But there's, there is a point at which they will, their list is so big now that they have to be making more than that. So they probably took other steps to continue to increase the amount that they're making per send without pushing the price much beyond that. But yeah, that's, you know, for these major, major, major newsletters, fairly standard spend is going to be somewhere between like 10, 20, $30,000 for an advertiser. And you know, they're, but they're reaching millions of people and they're going to be ideally seeing much more than that in return.
- [36:18]
Louise
Yeah.
- [36:18]
Ethan
So yeah, the spend is significant. Okay, so let's talk. You're at this point you're thinking about selling ads. How do you actually set them up? Well, there's, there's kind of an evolution to the ad business too. In the very early beginning for newsletters, one of the most common things you'll see is you'll see a single ad, the newsletter. Hey, this issue is brought to you by so and so. You know, shout out to them, go check out their stuff if you're interested.
- [36:44]
Luis
Yeah.
- [36:45]
Ethan
And that's kind of like what Morning Brews rate card would call like the, what is it like the premium ad or whatever the big one is. It's not the full takeover necessarily. It's just an ad spot. Right. But you've only got one. Having one ad spot can get you really far. I believe the Hustle got to about $2 million a year in business with just one ad spot. Right.
- [37:08]
Louise
Wow.
- [37:08]
Ethan
Yeah. But at a certain point it becomes challenging because as your list continues to grow, that ad spot becomes more and more and more expensive to the point where it's harder and harder to find clients to fill it. And, and by differentiating your ad Inventory, you can actually get a lot more out of your advertising business. So here's how that typically works when you decide to make the move from 1 AD to multiple ad slots. What we found is like this. There's kind of a strategy to it rather than just having a single premium ad. There's three types of products that work together in order to make you more money and also make it easier to close deals. And here's what they are. So you have your premium ad, which is like your biggest ad. It's going to be kind of at the top of the newsletter. Usually it'll include an image, the most text of any of the ads, and then, you know, sometimes like a logo as well. It's your biggest, most expensive product. Then there's what they call a downsell, which is a slightly smaller ad. And if you look at Morning Brew, you can typically pick this out inside their newsletter. It's another ad. Maybe it'll have an image and it'll have like half the text of the first ad. So it's just a slightly smaller ad. And then you have what they call a loss leader. And in the Morning Brew, these are specifically brews bets. So if you're looking at that email, you can go check this out live. And what that is is it's just a very quick mention in the bottom of the email, a couple of words of text with a link. No image, no. No logo, none of that. Now, the way these work together is when you're walking into a sales call, you lead with your premium ad. And so you say, hey, I'm so glad you're thinking about advertising. To our F1 fans. It's going to be, you know, like, we have this great ad package. You get your, your logo and you, we mentioned you right up top in the, in the subject line. And you get this big image and 120 words of text and like a call to action button. And that whole thing is $10,000 for the day. Now, a couple of things are going to happen. Either the advertiser is going to say, great, sign me up, or like, great sign me up for 10. Right. Because sometimes you're just talking to people who are used to spending so much more than that on ads.
- [39:19]
Louise
Yeah.
- [39:19]
Ethan
That even what you would consider to be a lot of money is like a rounding error in their ad budget. Yeah. But if that doesn't happen, if they kind of like balk a little bit, then you have two options. Right. You can try to sell them the downsell. You say, hey, I get it. This is like a little bit more than you're looking to spend right now. We have another option which is still get an image. You get 60 words of text and that is five grand. Right. Or, and, or you can try to use the loss leader, that super small snippet of text to introduce more value or to like get the deal closed. So a couple of ways that could work. You could say, well, if 10 grand's right on the edge, we also have these like text based ads. Let's just say they're a thousand bucks a pop.
- [40:06]
Louise
Yep.
- [40:08]
Ethan
Why don't we throw in two more of those so that you're actually getting three placements. We'll give you one like big hero placement and then we'll mention you two more times throughout the course of the week. We'll give you those ones for free. Now you've just thrown in like $2,000 in additional value.
- [40:20]
Louise
Yep.
- [40:21]
Ethan
And it doesn't really cost you that much. Right. Like it's, it, it, there is work that goes into it, but to write 15 words of copy in a link is a low lift for you, at least for the amount that you can charge for it.
- [40:34]
Louise
Absolutely.
- [40:35]
Ethan
The other thing that you could do if none of that works is you could say, well, hey, look, have this really low price ad. It's a thousand bucks. Why don't we just do one of those? You can test it and if it works really well for you, we can come back to the table and we can think about, you know, a bigger, a bigger placement. Those clients that opt for that, sometimes they go, become big clients. Most of the time you're not going to hear from them again because they just don't, they don't have the budget to really make this kind of advertising work. Yeah. But it is an option as well. So those are the three types of ads that you can build out. And that takes time. People don't like, don't, don't jump straight into those three types.
- [41:11]
Luis
Yeah.
- [41:13]
Ethan
And then there's a third type which we can get to in a second, but it's probably where Morning Brew is. Just based on the size of their audience. Maybe they might not be.
- [41:21]
Louise
Absolutely. Oh no, that's awesome. I, you know, I did, I pulled the calculator here and I looked on the, you know, that 55. That 50. Yeah, it's pretty big, that 55,000, you know, price point. I'm guessing it's cost percent and it comes out to $0.02 percent, right?
- [41:41]
Ethan
Yeah.
- [41:41]
Louise
And then I was like, okay, well if I had a 80,000 list. Right. Which is kind of like when you recommended to start looking for those ads, that would be 1600%. That's, that's pretty significant, honestly. Right. Imagine you, even if you're doing it once a week, imagine you're sending one email a week and you're pulling 1600. And that's for one spot. Now if you had some other spots, that again, that is pretty significant.
- [42:08]
Ethan
Yeah.
- [42:08]
Louise
And that's two cents the reader.
- [42:12]
Ethan
Yeah, yeah, yeah, yeah. That, that actually sounds like pretty much on point. It could even be a little bit more expensive than that because sometimes what you end up pricing in is the fact that, you know, like, not all your readers are opening. So like it's not unusual to see CPMs that are like a little bit above that, but it really depends on what industry you're talking about. So like for Morning Brew, you know, a lot of their readers are tech people. And so it's kind of like a higher end industry. There are more expensive industries where you're going to see much higher CPMs. Yeah, like there was a really interesting one. I did the math one time. I'm going to forget the exact numbers, but this was, it was on a clown, a clown magazine. And actually if we have a second, I'll pull it up here because I'm literally, I just, by happenstance, this happens to be in the background right now that I'm working on. Yeah, yeah. But let me just, while you search.
- [43:04]
Luis
That, I want to make a quick, you know, mention here for the people listening. Obviously we've talked a lot about the consumer side of things, but also if you're a B2B right on the back end, this is what you can encounter. Right. And at the same time it's like, what an amazing opportunity for you to put your brand, your company, your, your, your business right in front of a lot of eyes. And now you have an advantage going into this. This calls. Right, because we know a little bit about the rates. How do we handle, how do we, what's the conversation, what are the topics? And I think it's a win, win for everybody, whether you are somebody that's developing a newsletter or a publishing platform. Right. There's, I see a lot of similarities with the podcast inside. I'm gonna, I'm gonna go through like all the episodes and be like, hey, how can we apply this to the podcasting on the side? Because I think that's obviously our main platform, but I see a lot of similarities and the frameworks can apply as well. And this has been awesome. This is awesome. So do you have the example in there?
- [44:01]
Ethan
I do. I have a real quick just to give people a final like wrap up idea of how, how varied this can be. There's a clown magazine called Clowning around and I got to look at their rate card. They charge their CPMs are between 50 and $200 per CPM. So to put that in perspective, their circulation is like 2000 readers. But their ads inside cover ad cost 400 bucks a pop. Full page is 375, half page is 225 and an eighth page is 100. And so it just goes to show you that like depending on your ad inventory and the industry that you're serving, there's a lot of variety in here. You're going to have to kind of figure it out. But as you mentioned, those frameworks hopefully definitely are helpful to people.
- [44:41]
Louise
Yeah. So I feel like the more niche down you are, those prices probably increase at the end of the day.
- [44:47]
Luis
Definitely man. Incredibly thankful for this like multi part episode that is really a masterclass on newsletters. Don't go to any other podcast, just send them our way. You'll be like, hey, everything you need to listen is just. Content is private. No, I'm kidding. We wish you the best of luck in sharing this with the people and I'm sure when that guide is ready, we'll be the first ones to to get it. I'm sure people are already signing up for that, for that wait list, but anything else you want to add, Ethan, before we, we let you go? I know that you have a. A big presentation in just a few minutes.
- [45:18]
Ethan
No, I. Yeah, that's it. I, I appreciate, I appreciate you keeping me on point here because I totally forgot about it, but this has been a blast. Thanks for having me back and I'm happy to come back anytime, answer questions, anything like that. I hope this was useful for people.
- [45:31]
Louise
We, we should, I'm gonna put out there. We should do a Q and A with the community. Yeah, that'll be fine. We'll keep you posted on that.
- [45:38]
Luis
Damn it. I keep, I keep committing to these brothers.
- [45:41]
Louise
Can't escape these guys.
- [45:42]
Luis
Can't escape these guys. But yeah, hopefully we'll see you soon, my man. Fon. Anything else that you want to add?
- [45:47]
Louise
No, thank you man. Really appreciate it.
- [45:49]
Luis
All right. With that said, guys, thank you so much for tuning to the Content Profit podcast. Go ahead and follow the show in your favorite platform and on social media at Biz Bros. Co. That is right.
- [45:58]
Louise
And if Ethan here help you move one step closer towards your dream newsletter. Please don't forget to share this episode and and leave a five star review. See ya.
- [46:07]
Luis
Bye.
- [46:08]
Ethan
Gu.