Newsletters 101 Part 5: How To Build & Monetize Them with Ethan Brooks

[00:00:00] Hey and welcome back to Content Is Profit. This is Luis, half of the BIZBROS 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 outrun Google or how to land your dream sponsor. So I think these 10 episodes are going to really help you. If you haven't listened to any of the others, go back and they start on January 3rd all the way to January 12th.

[00:00:30] So super excited to share these with you. Enjoy. Hey, I'm Luis. And I'm Luis. And you're listening to the Content Is Profit podcast. I'm excited today. Part 5? Bonus part. Bonus. Surprise, surprise. Today we are hitting the part 5 of the newsletter segment we've been doing with the one and only. I know. You guys remember his name?

[00:00:59] Ethan Brooks. Let's go. Let's go. Welcome back, Mr. Ethan. Let's go. The audience is going wild. What's going on, guys? Good to be back. It's like, I can't believe I'm back. Why am I back? No, Ethan, where? Your poor audience, they've been stuck with me for days now. So hopefully, hopefully. They're loving it. They have you on a loop on repeat. I know. It's, I mean, well, you did.

[00:01:28] I was going to say, does that mean my grandmother listens to you? What you've been sharing in 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 sometimes, right? So it just reignited a fire.

[00:01:56] 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, right? Last episode, there's a few things through your Twitter thread, which by the way is in the links below. Well, never say it's the last one. Well, the last one I have a feeling, you know, we're going to have another episode eventually with Ethan. I'm retiring after this. It's like done. No more podcasts. Yeah, this is your warm up for the real deal, which is to come in an hour. Like Quentin Tarantino.

[00:02:26] I'm going to do five episodes and then that's it. I'm hanging up. I'm never ending my career. You know, that's that scarcity element. Yeah. Did you know that he did that early on? Tarantino? I have no idea. 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 going to 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, a legend.

[00:02:55] So maybe there's something to it. Maybe I will really hang it up after this. Yeah. Look at that. I like that approach. If you, if you make this series, you know, the masterclass that goes attached to the trends, amazing thing that you guys are doing in the back end, you know, we're not going to be angry at that. Uh, 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, 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, uh, Fonzio is writing a question and I just like slapped his pen as we're going.

[00:03:25] So you want to start there? No, it's not a question to start with, but it's, 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. Uh, 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 macaroonies, right? They want to learn how to make that money.

[00:03:51] 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, uh, 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, how can they start? And maybe at what point of the audience can they start potentially monetizing?

[00:04:18] 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? Yeah. Great question. So, um, 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.

[00:04:44] You have what they call front end products, which is a low price subscription. And then you have backend 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 sells your backend products. 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, um, yeah, I think a great question.

[00:05:14] 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, um, why don't we start with free? Uh, 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, well, if you guys can hear my dog's asleep and she's like talking in her sleep.

[00:05:39] Um, 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 newsletters brought to you by, uh, whatever the Motley Fool. Uh, that's one way to monetize, but then there's another way, which is affiliate deals in an affiliate deal.

[00:06:01] 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, uh, from your readers. And so the reason I take a minute to just kind of highlight those upfront is because, um, I, hopefully it will help show that there's actually a lot of opportunity here.

[00:06:31] And this was another big theme from our conversation, uh, 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, um, 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.

[00:07:01] And so when you're thinking about how big does the audience have to be and, uh, how do I actually make money on this? I'll give you the simple answer, which is, um, 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, um, yeah, all they basically care is, is are people buying? Yeah. And, uh, real quick, I have a couple of recommendations from this.

[00:07:27] So I actually talked to Jordan, uh, DiPietro who, uh, he ran one of the products at Motley Fool. It was called, I think it was called blueprint. And that was a, 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.

[00:07:51] 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. Yeah. So, um, they were running like a multimillion dollar affiliate business.

[00:08:12] 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, um, share a sale, which is a website commission junction, which is often referred to as just CRM. It's a TJ, but commission junction is the full name. And then Rack U10, I think is how you pronounce the third one. It's R A K U T E N. So, um, let me make sure I'm lining this up in a way that makes sense.

[00:08:40] 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. Yeah. Now there's two ways to get affiliate deals. The first is through these sort of like platforms that I just mentioned, which, uh, 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.

[00:09:10] Um, uh, 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 backend 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 much ad spend it's going to take them roughly to get a customer.

[00:09:32] 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. Yeah. So affiliate is probably the fastest way to monetize a newsletter with a small audience.

[00:09:59] It can be big depending on the, a 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? Sure. Absolutely. I think like in part of it, you, you mentioned that, that point where you should start selling ads as well. Right.

[00:10:25] 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? Right. For sure. And I, and I like, before we continue real quick, sorry, then I really liked the, 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 if you call it the click funnel school.

[00:10:55] So, you know, we, we learn a lot from, from that company and they do a lot of affiliates. Right. And you mentioned a few pages here. Um, 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.

[00:11:20] 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, uh, programs. So I can definitely see how the size doesn't matter. Right. That's the ad that we're going to play. Size doesn't matter. Uh, so awesome. Thank you.

[00:11:50] I just wanted to bring it back a little bit on that B2B sense because it, it, it, it really helps. And honestly, it sounds scary, but at the same time, it is such a great opportunity. No, great point. And, and, and, uh, just to double down on what you were saying there in terms of it, like the fact that your, 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, you can make on affiliate sales.

[00:12:17] Like, um, you know, as a one example, like wire cutter is an affiliate, um, or, uh, no, actually not, maybe not wire cutter, but nerd wallet. So nerd wallet is, is entirely affiliate based and they do a hundred 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, uh, the opportunity here. So yeah, definitely don't underestimate affiliate.

[00:12:43] 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, um, this is one of the most common questions people ask about newsletters. They say, well, 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 old, it's the only honest one. Yeah.

[00:13:13] So I can give you, um, some basics, right? Like one of the guidelines that I give, uh, in, I think that same newsletter thread is if you're running sort of, um, 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.

[00:13:34] But the biggest one is just when you look at the overall market for ads, uh, and the amount that you can charge for certain ads, uh, and the amount that you will 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.

[00:13:58] 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.

[00:14:23] So if that's the case, um, very often you're going to target that 70 to $80,000 range to sell ads. You can still start affiliate much earlier, but, um, the, 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.

[00:14:47] And so like the kind of the, the best proof of this is you'll see, uh, 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. Um, so, uh, 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. Um, yeah, that's, that's, that's a lot. When the hustle had 5,000 subscribers, we weren't doing $2 million.

[00:15:15] You know, um, so your ability to monetize actually matters more than the size of your audience. Uh, 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. Uh, 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.

[00:15:44] 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, uh, when it comes to monetizing your audience. Uh, how big is it? How engaged are they? And are they spending money based on your recommendations? Right. Um, and so those three factors are really the most important things to consider when it comes to when to monetize. Yeah. Uh, and, and the good news is you only need two of them.

[00:16:14] Right. So if you have a really big audience and, uh, 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. Um, but they're not necessarily advertising like super expensive products. You know, they'll have, you know, uh, like Wrangler jeans or something like that.

[00:16:42] I mean, I feel like they, 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. Yeah, exactly.

[00:17:11] And, and that's, um, kind of key in terms of figuring out how you're going to monetize too. Right. Like, uh, in their case, they're building kind of a general purpose audience, right? Young people who are interested in the news, specifically money. So, um, you know, they're, they're the, the threshold for spending is probably lower with them than it would be for a newsletter.

[00:17:36] Like there's a newsletter for, um, I'm blanking on the name of it, but I think it's like engineering lead weekly, something like that. Um, 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 multimillion 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?

[00:18:06] How active are they? And, and are they spending, like how much are they spending basically of them? You need to, and the most important one really, uh, 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.

[00:18:22] 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, um, I don't know, like teen culture or something like that. Or like, you know, uh, yeah, like let's just say a newsletter for teens, 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. And it's just, it's kind of hard to thread that needle.

[00:18:52] So size 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, um, 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're, you have the makings of successful like media business, advertising business. Absolutely. That makes sense. Absolutely. I'm thinking this right now. My brother got obsessed with drive to survive the F1 show on Netflix.

[00:19:22] I don't know if you've seen it. I became an instant fan. I have like, yeah, watch every single race. I'm racing, uh, on a simulator. I'm good. I'm good. So he, he, he, he spent so much money since he became a fan. Invested, invested. And, um, 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.

[00:19:51] Because I mean, usually the people that like F1, uh, I would say they like to spend, right? The people that go, I mean, going to those events is not, it's 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.

[00:20:19] 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, could be it. I just added it here to the list, but I also, even like this. We're going to end up with like 20 newsletters. This is, uh, 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.

[00:20:48] But in my head, what I'm looking at the newsletter, right? Or like how to build that, that initial funnel, right? Of maybe an audience of people that can be interested, whether that's an affiliate product or on the backend, right? I see it as a very powerful tool to first, obviously build your rapport, your, your trust, your authority within that audience. And at the same time, within those affiliate offers on the backend, you can also offer on the service side, right? So we do, uh, you know, mid to high ticket, right?

[00:21:15] And that's how we've been able to monetize a podcast, uh, immediately from like, we, we have this, uh, the platform profit formula, right? And 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 two, three, four, five, 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?

[00:21:42] Maybe, maybe some of these numbers might discourage you because like, okay, well, maybe the advertising, you know, you know, a thousand, 2000, 3000, 4000, obviously as you grow with consistency and execution, right? That, that will grow. But initially, right? When, when we first started, it was probably going to be a little bit of an uphill battle, but you can think about, okay, how can I acquire these people on the front end? And to consume my content, to learn from me, to share different things in the community, right?

[00:22:08] To the same time, having that other tier, like that fourth tier on the backend with services, which, you know, with the examples that you've, that you've mentioned, it's 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 backend with the contacts and information of these people that might be interesting in your service.

[00:22:33] So, you know, on, on the content profit special, we'll add that fourth tier in there on the service side. Yeah. Well, it's a great point. Right. 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 going to need that audience.

[00:23:03] Right. But you're going to 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.

[00:23:33] And to your point, you know, we laid out this kind of model of free front end backend. The backend 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.

[00:23:58] 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 two to three million followers on Instagram. And then their front end products are 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.

[00:24:20] And then the backend 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. Yeah, it's pretty much. Yeah. Or more. So it's the same exact model over and over and over again. Free front end, backend. And if you, once you know it, you can bend it to your will.

[00:24:48] And in your guys' 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. Yeah, absolutely. I mean, in their response, it's very similar to the concept of what it's called the value ladder, right? Like you try people to get people into your ecosystem through a free product, lead magnet, right? Which a lead magnet can be built in your list, honestly, right? You put them in your list and then you deliver some value to them.

[00:25:17] 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.

[00:25:44] 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,

[00:26:12] eventually getting to a point where you can sell them some ads. Definitely. And maybe this might be a good point to pivot a little bit and talk about how you actually sell those. I was about to like go there. I have like the framework in front of me and I'm like, let's dive in. Yeah, yeah. We got about like 15 minutes. So, yeah, let's do this. Yeah. So I think the big message here for people who are just starting out would be that this can be a lot simpler than you think.

[00:26:42] One thing I think people sort of do is they like they build this up in their head to be quite a complex endeavor. And by the time you're running a multimillion 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 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.

[00:27:11] 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.

[00:27:41] We have those on Twitter, so I'm going to I'm going to link them in the notes. Oh, perfect. Yeah, 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 going to link them below. So just make sure to scroll down and check them out. 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 where you're trying to sell. It was Casper mattress at the time.

[00:28:10] 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 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 going to you're going to have to estimate that.

[00:28:30] 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 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. Yeah, it's perfect.

[00:28:56] I was about I was I was just buying mattresses recently recently and I was looking at Casper's, you know, I mean, they're like cheaper. Quinn 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, a thousand fifteen hundred. I don't know the margins either, but let's just assume and I'm pretty sure it's way more than this. But let's just assume it's like 30 percent of that. Right.

[00:29:27] 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 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 in my newsletter. And then here's how many of those like, let's just say some small percentage of those by I could probably sell like five mattresses. Right. Through my through my newsletter or more than that. Yep.

[00:29:55] 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. Yeah. 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 a cost percent.

[00:30:20] 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.

[00:30:50] Now, that's a good way to do it, especially early on, because it's super simple. And like advertisers know what they're going to pay. So they don't get blindsided. But then at a certain point, you know, your list is going to be big enough where advertisers are paying like a considerable amount to reach them. But you're never going to get 100 percent open rate. And so typically in order to price this a little bit more fairly based on like who's actually seeing the ad, you have to shift models.

[00:31:17] 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. Yeah.

[00:31:42] This is the thing that like podcast hosts struggle with and other types of creators, 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.

[00:32:11] 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, yeah, yeah, yeah. So so that that actually kind of answers the question that I had at the very beginning.

[00:32:41] I was going to ask you, like, how do you establish that? You know, 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 send. Do you work that number backwards to like how do you assign that value kind of like per person that you have in your in your email list? Right. And I'm asking this because, you know, you have an image here of the pricing card of Morning Brew.

[00:33:10] 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 fifty five thousand dollars. So is that a one time send? Yep. Wow. So, yeah, I mean, they have a massive list. And this was twenty years ago to two years ago.

[00:33:40] Do you know how many people did they have on their list? Oh, geez. I think they're over. They're either over three or five 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 one point five and two million. And I know they're they're definitely north of three. I think they were three when Business Insider bought them. Yeah. So they're killing it. And they're. But here's the OK. So here's the challenge. Did we talk about ad pricing last time, like your your your normal sell, your upsell or your downsell and your loss leader? No, no, we didn't.

[00:34:10] OK, so. Part six in common. I can explain it pretty quick, but this will be this is this is a good sort of like preliminary wrap to this topic for people. So you're sitting at a point. You're thinking, OK, 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 going to you know, I'm going to send kind of an email. I'm just going to ballpark what the price of the ad is going to be.

[00:34:38] 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.

[00:35:04] 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 backside of their of their newsletter website where if you want to buy an ad, you can just go do that. So, you know, there's different ways to do this.

[00:35:30] But the big thing I want to say for people is like charge enough. And you're looking at these numbers. Fifty thousand dollars. 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.

[00:35:53] 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 newsletters, fairly standard spend is going to be somewhere between like ten, twenty, thirty thousand dollars for an advertiser. And, you know, but they're reaching millions of people and they're going to be ideally seeing much more than that in return. Yeah. So, yeah, the spend is significant. OK, so let's talk. You're at this point.

[00:36:24] 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 in 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. Yeah. And that's kind of like what. Morning Brew's rate card would call like the was like the premium ad or whatever the big one is.

[00:36:53] It's not the full takeover necessarily. It's just an ad spot. Right. Right. But you've only got one. Having one ad spot can get you really far. I believe the hustle got to about two million dollars a year in business with just one ad spot. Right. Wow. 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.

[00:37:20] 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 one ad to multiple ad slots, what we found is like there's kind of a strategy to it.

[00:37:39] 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.

[00:38:07] 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 Brew's 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.

[00:38:37] No image, 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 logo and we mentioned you right up top 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.

[00:39:07] 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. Yeah. 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.

[00:39:37] 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 get the deal closed. So a couple of ways that could work. You could say, well, if 10 grand is right on the edge, we also have these like text-based ads. Let's just say they're a thousand bucks a pop. Yeah.

[00:40:07] 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. Yep. And it doesn't really cost you that much. Right? Like it's, it, it, there is work that goes into it. Yeah. 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. Absolutely.

[00:40:34] The other thing that you could do, if none of that works is you could say, well, hey, we 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're just, they don't have the budget to really make this kind of advertising work. Yeah. But it is an option as well.

[00:41:03] 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.

[00:41:39] Yeah. Yeah. That would be 1600%. That's, that's pretty significant, honestly. Right. Imagine you're, 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 have some other spots that again, that is pretty significant. Yeah.

[00:42:08] And that's a two cents the reader. Yeah. Yeah. Yeah. Yeah. That, that actually sounds like pretty much on point. Um, it could even be a little bit more expensive than that because, uh, sometimes what you end up pricing in is the fact that, uh, you know, like not all your readers are opening. So like, it's not unusual to see, uh, 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.

[00:42:37] 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. Oh, I'm going to forget the exact numbers, but this was, it was on a, uh, clown, um, a clown magazine. And actually, if we have a second, I'll pull it up here. Cause I've literally, I just, by happenstance, this happens to be in the background right now on something else that I'm working on. Yeah. Yeah. Um, but let me just, why do you search that?

[00:43:04] I want to make a quick, you know, uh, mention here for the people listening. Obviously we, we've talked a lot about the consumer side of things, but also if you're a B2B right on the backend, 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, um, your, your, your business right in front of a lot of eyes. And now you have, uh, an advantage going into these, these, these 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?

[00:43:33] And, uh, I think it's a win-win for everybody, whether you are somebody that's developing a newsletter or a publishing platform, right? Um, there's, I see a lot of similarities with the podcast inside. I'm going to, I'm going to go through like all the episodes and be like, Hey, how can we apply this to the podcasting on the side? Because, uh, I think that's obviously our main platform, but I see a lot of similarities and the frameworks can apply as well. Uh, and, uh, this has been awesome. This has been awesome. So do you have the example in there? I do.

[00:44:01] I have a real quick, just to give people a final wrap, like wrap up idea of how, how varied this can be. Uh, there's a clown magazine called clowning around and I got to look at their rate card. Uh, 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 costs 400 bucks a pop full page is 375 half pages, 225 and an eighth page is a hundred.

[00:44:28] And so, um, 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. Yeah. But as you mentioned, those frameworks hopefully are helpful to people. Yeah. So I feel like the more niche down you are, those prices probably increase at the end of the day. Definitely man. Incredibly thankful for this like multi-part episode that is really a masterclass on, on his letters. Uh, don't go to any other podcasts, just send them our way.

[00:44:57] You'll be like, Hey, everything you need to listen is just content is private. No, I'm kidding. Uh, we wish you the best of luck in, in, um, you know, sharing this with the people. And I'm sure like 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, uh, anything else you want to add, Ethan, before we, we let you go? I know that you have a big presentation in just a few minutes. No, I, yeah, that's it. I, uh, I appreciate, I appreciate you keeping me on point here because I totally forgot about it. But, um, this has been a blast. Thanks for having me back.

[00:45:26] And I'm happy to come back anytime, answer questions, anything like that. I hope this was useful for people. We should, we, we should, I'm putting up there. We should do a Q and a with the community. Oh, yeah. That'll be fine. We'll keep you posted on that one. Then it's like, damn it. I keep committing to these brothers. Can't escape these guys. Can't escape these guys. Uh, but yeah, hopefully we'll see you soon, my man. Fancy, anything else that you want to add? Uh, no. Thank you, man. Really appreciate it. All right. With that said, guys, thank you so much for tuning into the Contents Profit Podcast.

[00:45:53] Go ahead and follow the show in your favorite platform and on social media at Biz Bros Co. That is right. 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. Bye, guys.