A Brilliant Way To Automate Ad Sales

Key Takeaways

um [Music] hey what's up everyone welcome to the copyblogger podcast my name is tim stoddart thank you so much for joining us as always i am with my friend and my co-host ethan brooks what's up ethan what's going on man happy friday i feel like i say that every week yeah and it's like every time i do this i think to myself is it better to just have like a consistent opening that people expect and you just get through it you know and then you can just move on as opposed to some long-winded yeah meandering so i'm sticking with it especially because i memorized it at this point so i couldn't even change it if i wanted to all right i want to just jump right into this one because i am so excited about what i found over the week and i think you are going to be excited too so you know as is everybody who listens to this that i have never been a fan slash advocate of selling advertisement in blogs or even podcasts or in newsletters right well i found something over the last week that might have completely changed my mind and the way that the guy who we're doing the case study on today has put it together is so freaking simple that over the last couple of days i've been reevaluating this whole thing in my mind because it's like why didn't i think of that why didn't i think of that why didn't i think of that right and i've been especially thinking about how when in the last episode you talked about the hustle and you talked about the revenue numbers like yeah we do like a couple million a year like yeah well you guys have a million subscribers right and now i want to say in front of everybody that i take it back um like i i am more gung-ho on ads and sponsorships than i think i've ever been in my entire like entrepreneurial career and here's why so before i even go any further the look on your face is is pretty funny hearing me say that it's going through your head right now well yeah this is a big change man it sounds like you found something uh something big and uh it's like any time i hear somebody say that their change their thinking has changed this dramatically on something yeah i'm always curious to hear more so take me through what'd you get you are probably going to have a better experience if you listen to the if you watch the video on this one because we're going to do a lot of screen sharing and ethan and i have been talking i think we're going to do a whole lot of screen sharing from this point forward we're going to treat our podcast almost like a uh an exercise in learning and sort of teaching each other live on the screen so if you want to watch the video go to youtube just type in copy blogger podcast you'll find it right away okay so here's the newsletter it's called for the interested it's by josh spector i believe his name is you ever hear josh i've heard of for the interested but i don't think i had connected the newsletter with the name okay well let me find his name real quick so that i know i'm i'm saying his name right he and i have been chatting back and forth on twitter i actually bought a sponsorship from him on his newsletter because i wanted to test it out let me make sure i got josh spector yeah i got it right sorry josh and i've been talking all week and now that i'm live on the air i'm like forgetting what his last name is okay so his newsletter is or his brand is called for the interested you can find it at for the interested.com it is so simple what he does that it totally flipped everything that i thought when it came to monetizing through ads so i had i reached out to him and i asked him a few questions through email and he was really really cool he uh he actually said that i can read this out loud so i sent him a few questions i said how did you grow your list how did you experiment with sponsorships how much revenue and where are you planning to go he sent me back so much information i'm not going to read all about this looks great yeah it could be a legitimate blog post and like a case study within itself but i i will read some of it so here we go i launched further interested in 2016 as a weekly newsletter and i published every sunday since first off like most important part right there he hasn't missed a single sunday since 2016. and how many times do we talk about that right about a year i expanded into a one paragraph weekday edition as well so his newsletter is technically twice a week it's like a full scale long-form newsletter on sunday and then a really short form paragraph on wednesday which will be important uh he then kind of can i pause you for just one second to give people a little bit of context so just on the timing for this 2016 obviously six years ago was really before newsletters were like a proven business model so i think we'll probably end up talking about this again in a minute but uh you mentioned the consistency which was a huge point it's also important to note he was doing this before it was common to go build a newsletter business yeah and also he wasn't building a newsletter business at this point uh he talks even more about how he didn't realize what he had until recently once he combined it all and just decided to take it seriously so then he he then goes on to say that he had a couple other projects he was working on he basically combined them all into the one brand which is for the interested he said he lost a couple thousand subscribers when he did that but he knew that it was the best way to go all right my audience so combined i had about 7 000 subs though i guess about half or so eventually bailed because for the interested it was obviously a bit different than those other newsletters so i probably started with around 4k subs after the dust settled my audience primarily grew from a few different things i published at least one blog post a week for years and promoted the newsletter in it great that's what i do love to hear it i also cross posted each post to medium and built an audience there which converted into newsletter subscribers that's cool i've seen people have successful medium i i don't personally like medium i think it hurts seo i don't have any proof of that other than my own like confusion on how some of these links from medium don't seem to be working well but anyway he used medium and that's cool i ran for facebook ads in the early days created a facebook group for newsletter creators i was active on twitter he's grown his audience with 20 000 followers he did cross promotions and was interviewed on podcast so so basically he just he got himself out there which is what we talk about all the time we just got in front of people didn't necessarily know the best way to go about doing it but he did what seems like a little bit of everything and eventually he's landed into a weekly blog post and really active on twitter and i think he gets on podcasts whenever he can and it says here the last line of that section is the newsletter is up to 18 000. so 14 000 new subscribers over the last few years primarily through what you said just kind of getting out there getting after it and being visible online yeah that's exactly right and that the 18 000 subs is actually the part that has excited me the most because when i tell you how he's monetizing this thing like 18 000 subs isn't a small amount but it's not a huge amount either you know like i really think anybody listening to this can get 20 000 subscribers on a newsletter especially if they do it the way he's doing it which is what's so cool all right so question two i asked him how did you experiment with sponsorships he's got a lot of information here but this is what's so cool he said for the first several years i had no ads in my newsletter and was actively against them because i thought i annoyed readers i was like [ __ ] when i read that i was like god damn it that's so annoying but one day a subscriber reached out to me and she said she was a therapist who helped creative people she had run a classified ad in ann friedman's newsletter and got great results the best of any marketing she's done okay so he goes on to say that he started questioning if maybe ads were viable he did a poll people said that they don't get annoyed by ads as long as they're relevant because a lot of times it's really on topic with what they follow the newsletter for in the first place [Music] all right so here we go at the time my newsletter was only weekly so i offered five ad slots in each sunday issue i sold out the first several weeks and basically sold out ever since once i launched the weekday editions i launched one ad spot in each way weekday edition so now people who buy an ad get a sunday mention and then the loan sponsor on the weekday edition the following week they write a copy for the sunday ad i write copy for them for the weekday ad currently sponsors average about 250 clicks on their ads wow yeah so two things here that stood out to me one i can probably find an example of his newsletter but when i think of ads on newsletters i genuinely think that they need to be very robust the hustle does a great job of this where the ad itself is kind of like a story right they write the copy so that it fits within the context of the newsletter josh is like nah like here's a link and so now he has five ad slots in every newsletter so i mean the data's got to back it up obviously just adding links isn't necessarily gonna generate results but it seems like he's built a consistent culture in his ads that people know that these links are sponsorships and they look at the brief copy before the links and if they click them great so five ad slots per newsletter and then one ad slot per the wednesday newsletter okay this part i really really loved right when i launched the ads i purposely priced them low this is so cool i wanted them to sell out and be perceived as a hot product i knew i could always raise the price down the road and that's what i've done i started out at 50 bucks an ad and then went to 65 then 80 then 100 and then 200 a couple months ago they've continued to sell out way in advance i'm currently sold out until the end of may because i offer five ads a week at two hundred dollars it's currently a thousand dollars a week in 4k a month business assuming they continue to sell out at the new 200 rate all right a few things to go through here the fact that he started selling the ads so low really really stood out to me because one of the reasons why i've always been so apprehensive to get into the ad business is because the work of managing ads is just as labor-intensive as the work of managing a product or a service that you could just sell on your own so to me it was always like it cancels each other out because you don't get any ease by by managing ads again in fact ads are hard right like all their relationships and then some people pay you here and then some people don't get you the copy in time right but this brings me to i'm gonna stay here for a little bit but when i see uh the last question q4 and how he's actually processing these ads this is the real game changer for me but anyway he's starting to 50 bucks an ad and then went to 65 and then went to 80 and he created a real perceived promise of value and what i immediately thought of is a book i read some time ago when i was doing my t-shirt company called girl boss of uh sophia amoroso she was the founder of ah [ __ ] what was it called um nasty gal it was a clothing company and she got her start by thrifting and selling clothes on ebay and she was just one of the first people to realize that the tiny tiny little thumbnail image that you have on ebay is actually where the sale is made so she talked a lot about how this perceived value is like even more important than the product itself because it was just thrifting she was going to thrift stores in her neighborhood i think she grew up in california and just buying dresses and booths or whatever and putting outfits together and you know maybe stitching up some clothes here and there but she she just had a white light moment when she realized that that one little tiny featured image is where the perceived value comes along and so josh understood that as well he said instead of making money what i need to do is i need to ramp up my perceived value and then what all of a sudden people are getting emails every week with the ad slots completely stacked out and you're thinking oh damn like this guy really must be doing something this is generating revenue for the advertisers this is every single week there's five ad slots completely sold out like wow what a what an amazing product the perceived value was telling me an amazing product and like it's kind of a self-fulfilling prophecy right because the perceived value makes everybody continue to take it seriously which makes it more serious all right last question question four where are you planning to go the vast majority of bad clicks come from the weekday editions at some point i may need to scrap the sunday ads and create a new sunday ad product maybe a single sponsor for that issue at a higher price point and more premium featured placement i agree by the way i do think that when people read long-form newsletters having just a bunch of links seems out of place and people are used to the idea of the ad being part of the story right and being like more polished so i i agree with that i also think my ads are underpriced which i also agree with so it's likely i'll raise the prices again in a couple months i'm also going to launch a podcast soon which will create another sponsorship opportunity cool and of course my newsletter hopefully grows which i'm sure it will the ads will continue to increase in value so here's the real kicker and this is the part that was so stupidly simple when i saw it and completely changed the way that i think about it so what he did is he created an e-commerce store basically just to sell his ads so any like when i reached out to him uh because we were doing a swap and then i was like oh well i don't have that many subscribers this doesn't make sense i'll just buy an ad and i'm thinking there's going to be a call maybe like an assistant going to have to go over what my tone and where my message is like not really i just want to link on your newsletter to try to get people to my tim stodd site and that's all he provided he just sent me a link with this page and then he sent me a link where buy your sponsorship here and so he just real quick yeah real quick let me just for anybody who is not watching the video the last page that tim was just referencing is basically just a long text page maybe two three three 400 words a copy yeah and it's all about sponsorship opportunities you scroll down it's talking about what am i saying here so here's what you get as a sponsor there's a couple of bullet points there he's got some bullet points for your ad creative which is really important because as tim mentioned uh one of the keys for ad sales is just minimizing back and forth so making sure that the client is going to send the proper images text etc links all on time so you create the ad and then there's basically a button that says reserve your sponsorship here and that's what tim just clicked and that took us to what is this a squarespace page if i even squarespace it's just square it's just a pos yeah and so he just created an e-commerce store out of his ads because going back to the sales page it's so simple ads are text only no images or emojis and can include one link i love it i love that because it's actually funny in the newsletter business when people get into it they think they have to make their newsletters really creative when it's text like it's just images and text those are the most successful emails you will supply the copy for the sunday ad i'll write the copy for the weekday ad inspired by your by your own copy but in my voice all ads are subject to editorial approval all right cool so when you click on this reserve your sponsorship here and all you do is you buy these ads as though it's a product so so we're we're looking at a big page full of this basically it's almost like a calendar yeah yeah each think of like a normal e-commerce site where you'd come to a landing page there's 20 like listings maybe 20 different shirts so all the listings kind of look roughly the same laid out in that uh grid pattern but instead of a different product image for each one each one of these products is a date and so we're looking at the week of july 24th the week of july 31st the week of august 7th and just on and on out to what it looks like maybe the middle of september beginning of september and everything is literally sold out until the end of august right so what happens when you click one of these how does it what's the actual process look like for buying an ad well i think at first i thought to myself why use square because why not just do it with stripe but here's what's so cool about it square is typically like an in-person pos and you know there's a coffee shop down the street in east nashville called ugly mugs and they use square and square always has emails attached to it and so i already had an account with square as most people listening do as well you just don't know it so all i did was i click on it so right now i'm on the week of july 31st uh it's it's the we call this the product description because essentially i'm on a product page like i said it's an e-commerce store more or less and so the product description is is the same thing the product image is just a big image that says week of july 31st and then i click on add to cart and then when i click checkout that's it and like i'm not going to fill out this information but uh but once i put my email address in there my credit card auto populated and so like i just bought the ad without doing anything so i love the simplicity um and we got so much to talk about but there's one more quick thing which i want to go through the part that he didn't mention in the questions and answers where he says right here that um it's currently one thousand dollars a week and four thousand dollar a month business assuming they continue to sell out at the 200 rate which obviously they will because they sold out for weeks and weeks in advance but he actually sends daily emails through an autoresponder and every one of these daily emails has a sponsor and each one of them is so simple and i've i like to observe my behavior here i've opened every one and i've clicked on every single one and so i've i always thought newsletters need to be media-centric and robust right this is the email that i got this morning it's an email that says most products and services make promises that are too big instead see what happens if you promise smaller wins and promise smaller wins is the anchor text and all it does is lead to a tweet this is it it's just a a tweet with some good information but then underneath it today's email is sponsored by a service that will edit your blog post newsletter presentation and other writing in 24 hours or less use code fti to try it for free and that's it and i've gotten every one of these for the last 10 days and i've opened every single one so not only is he selling out he turned his newsletter to an e-commerce store but he turned his autoresponder into like a two sentence email that generates simple clicks curates content basically through twitter where he doesn't have to do anything like he doesn't have to write new blog posts or newsletters every time he just find something cool on twitter and links out to it and that's that's brilliant and who is this sponsor edit edit tops edit ops edit ops okay it's like that mad gab card game okay uh i have a bunch of things i want to dig into related to this this is really cool and i got to say you delivered like tim texted me the other night he's like i've got something really cool to talk about and i'm always i've always because he that's all he ever says it's like i've got something that's awesome and then it's just like all right what's it gonna be you delivered this is cool this is cool because i think this is a very unique way to solve the most difficult problem that uh comes up in ad sales which is how do you handle all the back and forth how do you handle the logistics of ad sales without it becoming overwhelming as a solo creator this is the first time i've ever seen this implemented at like this like this or even at this scale right because he's doing this much at a much smaller size than most newsletters would and i love it i think this is awesome i uh agree with him he's under probably under charging right so just he he clearly knows this too he's because he said it but just for our listeners i want to emphasize that like if you're not completely thrilled with the numbers you just heard you can charge more than this as well like we talked last week about alexis and how she's basically charging like thousands of dollars for a much smaller list really what it comes down to is do you know how to monetize well and um i think some people like everyone's gonna have different opinions on what that is it sounds like he's going through some experimentation and stuff but i love this implementation i think it's very cool and yeah let's break a couple things down the first thing i want to get into though is uh sort of a meta idea which is how can you talk people through how this exchange actually started because you asked four really interesting questions and what strikes me is that this is exactly the kind of interaction that is like so valuable that a lot of people never have because they'll never ask these questions and the people who do go through and do stuff like this benefit like enormously from it so how did you actually even get him to answer these questions how'd that conversation start i because i saw the first email it was literally just four questions there was like no prelude so i'm assuming before you sent that you were like yo can i send you some questions how what was this out to him on twitter i'm looking at it right now i just sent him a dm on twitter yep and would you say i said what's up josh you and i haven't spoken directly yet we've he knows who i am i know who he is we've uh yeah going back and forth now that i've seen his face i i recognize him from twitter too i don't i i hadn't uh remembered his name but he tweets a lot about how to build newsletters as well yeah he certainly does and so he sent me his website he said hey tim i do and they work really well i'm biased but it's true you can read about them and book them here what are you looking to promote and i was a little bit confused at first because he just sent me the sales page so i suppose if there is one critique his cta on the sales page that actually goes to and this is the copywriter in me because the fact that i couldn't see exactly where to buy the sponsorship instantly confused me and he said what are you looking to promote and i said my newsletter it doesn't say the price which right there as a copywriter i'm looking at and i'm thinking i didn't deliver my message clearly and that's when he sent me the link to his square site which is basically his e-commerce store and that was when i just i went down the rabbit hole on it i said whoa whoa whoa whoa wait a minute so you're just trying to get me to give you my credit card to buy an ad on your newsletter and so then you know there's a couple days of going back and forth just because i was so freaked out by this and i asked if i could ask him some questions and talk about it on the podcast and of course you said yes so that's that's i think the message right there that i would love to just key in on because this is such an important skill for people to develop this skill of like asking other people who have built the business that you want to build for their insight and i think it's something a lot of people struggle with i've struggled with it in the past there's a temptation to feel like you know what you're doing or to try and act like you know what you're doing and then a lot of people just won't ever ask for insight so what is you just said can you just read like what did you actually say when you said can i ask you some questions how is that email structured or how's that note written um i said i have a question i don't know maybe i'm just like overly blunt or something i said i have a question can ethan and i use you as a case study in the next episode of the podcast and i said what do you want to talk about and do you want me to come on i said no we've decided we're not doing guests but each week we're doing a case study as i've been getting your emails i've been so impressed and have so many questions i love i love how you sneak sponsorship links in there meaning the daily quick one-liner emails it's so simple and effective can you just give me the one two three and he said sure email me whatever questions you have to i'm not gonna give out this email address yeah i'll send over some answers and i said this is amazing thank you so much i'm buying an ad from you now okay i want to point out a couple of things for people real quick and then um dig into some of the logistics around the ad sales process as well because i think we can we can go even deeper here okay couple of things tim did great in that outreach people should keep in mind if they're trying to reach out to other people who are like busy and running exciting businesses first he offered value on two different levels right so first he said can i talk about you on my podcast which you know as long as the person you're reaching out to has reason to believe that you're not gonna like smear them on the podcast that's a valuable proposition you're basically saying can i help spread the word about your work awesome the other thing he did was like you know said oh this is great i'm going to buy an ad from you too not that you need to pay for advice all the time but if you're trying to stand out especially for busy people one great way to do this is to just kind of think about like what's going to help them a little bit in doing what they want so one thing i learned this from our podcast producer here at the hustle he's got a great before he came here he used to run an agency that was specifically focused on how to book guests on podcasts and they like major podcasts and one um thing that they would always do is they would if when they were doing outreach uh like say they had an author who just wrote a new book or something and you and wanted to get them a spot on the podcast they'd have the author reach out to the podcast creator and say hey so and so like loved your podcast like maybe just listened to the episode about blah blah blah and like left you guys a five star review over on apple like itunes whatever there's a quick compliment and then you're providing value up front by doing something that you know they're trying hard to develop for podcasts reviews yeah and obviously you want to be honest because like if you just give everybody great reviews and all of a sudden like your review doesn't matter anymore that's sort of shitty it's not going to carry a lot of weight but the big idea there is if you're going to reach out you can stand out by figuring out ways to provide value for the person that you're reaching out to the second thing is he kept it very short can you just give me the one two three not asking for his time i don't want to pick your brain i don't want you to come out of the podcast like for as cool as those opportunities are for people everyone's just too busy for a lot of that so starting with these couple questions is way better and then the last thing that i just love about this is that you asked in the first place i was just listening to sam's podcast this morning and he was talking about he's doing this right now for everybody who may not be familiar sam parr founder of the hustle really unique guy i think he's one of his superpowers is kind of like surrounding himself with people who uh know a certain business better than he does and they'll teach him everything they know and then he goes off and he starts it he does really well right now he's specifically spending his time reaching out to bankers asking them about different acquisitions that they worked on in a specific field where he wants to start a business so rather than being like like let's say you wanted to start a media company rather than just going out and reading everybody who's telling you how to start a media company uh go talk to people who've sold media businesses and and ask them like why'd this acquisition work like what almost didn't work what would you like what do you wish the founder had done different all these other questions that he had just going straight to the source like in this case the person who's eventually going to sell your company and asking for their advice so this is really useful and i think the way that you did this is is cool let's talk about ad inventory and then his process for sales so he talked about this in a couple different ways for the people who are listening there are three different types of ad inventories that you can include in a newsletter and i think it's not always obvious what those are but i'm happy to talk through them because if if we talk through them real quick i think it's going to make this business model a little bit more transparent to people and i can also kind of show people how they're priced and how they work together in order to maximize income do you want to go through that i want to hear about this yeah i'm all in on this um i need screen share sure all right so i'm going to talk through this in case you're not watching the video but if you do have a chance to go through and check out the video you're going to get a pretty cool insight here so let me share my screen okay for background at the hustle a couple of years ago or not a couple years ago i guess a year and a half ago we did this big deep dive on the newsletter business obviously we've been running a successful newsletter for years but we found that a lot of people were interested in that and so we were going to put together this big in-depth guide on how the business works so i spent maybe six months interviewing people all the way across the industry really breaking down how the business model works and one of the things we looked at was ads in particular and what i found was that there are traditionally three different types of ad inventory and at the high level they are a premium ad a down cell and then a loss leader and i'll explain what each is and how they work together in a second but the reason i think this is important to talk through is that if you're not aware that these are out there a lot of times your ad strategy can just be sort of like shoot from the hip right you create a kind of random number of ads i'm not sure where to price them not sure when to grow inventory and how these things kind of operate in order to grow your business so here is the high level breakdown you can start and run a very successful multi-million dollar newsletter with just one ad spot in fact the hustle grew to two million dollars plus in annual revenue with just one ad spot and what you're really leaning on there is the size of your audience so and your like ability to monetize at a high level when you increase ad inventory you are basically doing that for a couple of reasons one it can it can increase revenue right it can also allow you to sell to other clients who couldn't afford your primary ad spot and so this is how these three different types of ads work together there's your premium your downsell and your loss leader the premium is the biggest most expensive ad the price on that ideally never changes it's big it's expensive and even if somebody can't afford it when you come into a conversation about selling ads you always leave with the premium ad because it sort of anchors their mindset at this high price point and that's where you generate value for the like the perceived value of your of your advertising similar to what he was talking about in terms of like making his ads look like they're valuable because they're always filled that's one way to do it another way is like in the individual conversation you need to come in the door and be like this is expensive are you sure you want to advertise here now some people are going to jump on that they're going to say sounds great because advertising is expensive and sometimes your number is just going to fit right into their budget other times they'll be like i don't know if i can fit that and that's where the down cell comes in so you have a less expensive ad that you can typically offer to get them in the door and then finally there's the loss leader and i'm going to go through an example that's a visual example of this as well so people can see what this typically looks like in practice but the loss leader is incredibly inexpensive usually very light lift for your ad team to create and the idea there is twofold it can be a very low cost test right so if you say hey i get it two grand or whatever it's too expensive right now we also have this smaller ad the loss leader it's whatever 150 bucks give it a test see if it works right or instead of a test you can use the loss leader you can stack it on top of one of your other two ads in order to add value there for free so like you could say yeah hey okay well i get 2 000 like maybe that seems like it's right on the edge of your budget i'll tell you what i'll throw in two of these other mentions for free because it's such a light lift for your company it's you're really not going to be put out by doing that am i making sense by launching your product in that way yeah absolutely cool okay so that's how they work premium downsell loss leader again you can build a whole huge newsletter business you know several million dollars on just one ad spot it's possible um but there are strategic reasons for diversifying now let's look at how this works in practice so what i have here i'm scrolling for people listening i'm scrolling through this book that we wrote and we're actually going to release this soon too going through like a final edit round on it but we're looking at a screenshot of the ad rate card from the morning brew and i think this is from this is q3 2020 so this is a little dated they've grown since then but the structure of how these ads works uh or sorry the structure of the rate card will show you these ads in uh practice so they have basically we ignore the takeover column they have three different ads they have their what they call it primary they're secondary and then bruise bets and that is your premium downsell and loss leader so primary uh for their daily email was 31 000 the secondary or the down sell twenty thousand dollars right so about fifth what is that uh two thirds the price and then the bruised bets which are if you've read the brew bruce bets are like literally just one sentence very similar to what he's offering in the for the interested newsletter those cost ten thousand dollars a pop now how does this work okay your ad seller walks into the room the sales call you know they make sure the client's a good fit and they're you know going to benefit from running the ad comes time to talk about pricing and they come right out of the gate with that 31 000 and one or two things is going to happen then the client is either going to say okay great or they're going to say oh like that's a little high for me and that's where you have this opportunity to leverage those other two pieces of ad inventory to get the sale done so you can either say well hey great totally get it we also have this 20 000 option that might feel better or they can do this they could say if it really feels like it's going to be a stretch right they could say well hey bruce betts is a third of the price you'll still get attention in the newsletter you can use this as a test and then you can see if it's worth investing more here or they can say okay i get it 31 is like right on the edge of what you're comfortable with why don't we throw in a bruised bets as well and then they've just given the client ten thousand dollars in value for literally like practically no effort right because the bet is just a ten word sentence with a link in it uh which by the way you could definitely sell the way he's selling these like you could sell that type of ad just like this yeah that's kind of the behind the scenes on how ad inventory works and and how to think about whether or not to add it now there's one last thing people can consider when growing inventory and by the way the way that these grow is over time so very much yeah i mentioned you can build a huge business with just one ad placement uh you do not need to dive in with three different types of ad inventory if you haven't monetized ads at all yet but over several years this is kind of the progression that your business will typically go through and then there's another step which is called list segmentation and that's where currently you know if he sells an ad spot in the list i'm assuming i could be wrong about this but if the ad probably goes to the entire list so it's 200 bucks you get to his entire mailing list list segmentation basically what's going to happen is your list is going to get so big that at a certain point no normal advertiser could afford to reach your entire list for the type of feedback they're going to get right like they just is the numbers just don't work so what you do is this thing called list segmentation where instead of selling an ad to your entire list like let's say it costs like let's say your cpm is 40 bucks right so i'm scrolling down to show just like a little example right here if your typical ad sells for 40 dollars what list segmentation is is you can break your list into three different segments and then sell ads to each of those segments for say 15 apiece right so that if you sell all three ads rather than earning 40 for selling to the entire list you're now earning 45 but each of your advertisers is paying like a more reasonable rate the challenge there like the reason list segmentation is challenging is because with each of these progressively more complex models you need more people in order to pull it off that's got to work from a business standpoint i'm jacked up first off i need to laugh one more time about how you said because every day tim's always texting me about i got the coolest [ __ ] i got the coolest [ __ ] and so i'll be more mindful of that next time but well this it yeah it you like i said this delivers now they're sitting there wondering i'm like what's it gonna be it's always a mystery yeah all right so this time really flew by and so i guess to wrap this up there's something that i want to bring to the attention of everybody and that is it's very easy to look at these things from creator brands right and i suppose that is something that has held me back because i i just never wanted to be in the business of making content to talk about other content you know and like 10 ways to use linkedin and and selling linkedin courses i just something anything wrong with it just didn't appeal to me i always thought like let me use my content to build my companies and not necessarily create like a content flywheel type model and so i think i have been surrounded in that echo chamber of all of the people that i learn from and talk to are in this space but when i saw this model and how he sends out these daily short little emails the first thing i thought of is all the different industries that this would apply to and so this is a topic that comes up a lot in this podcast and every time it does i like want to continue to hit home on it right because right away i thought man fitness would be so good for this because there's so much fitness content out there and so like every day you find a great tweet or you find a great like fitness uh video on instagram about like how to do form you know you send out like an email that takes you honestly four minutes to write and then if you build up an audience you can sell sponsorship i was thinking about uh i mean anything right i think the opportunity here is not to get bogged down in creating another brand about brand building but creating a brand about something else that you're interested in and then finding out very very very quickly i think that there's the same attention arbitrage game in every industry in the world that there is within like the creator content creation industry and so i think there's like more opportunity out there for the industries and um communities let's call them that we don't have like the most exposure to so anybody listening to this it's like into gardening or that's into carpentry or like we use birds you know what i mean like hell yeah like i'm ready to build a newsletter about bird watching right now and some sponsored links like i just really i know that i'm laughing about this but i never thought that there was a way to streamline the managerial process of ad sales which was always the part that seemed like so stupid to me i was like why would anybody do that because you could take all of that time to build an actual business that like you got to spend the time anyway you're not saving any time you know but with seeing this and how streamlined it can become i'm i'm not ready to say i'm a believer but i'm i'm a little bit closer than i was last week yeah i think this is very cool there's there are some there are still some logistical challenges in this i would be curious to know how much of this week so uh one i would suspect there's probably a price limit under which people would be comfortable going through a process like this you are going to say and yeah even like so even in your situation you know it started with personal outreach so he's still fielding some level of personal outreach in order to get this done which makes sense that's how ad sales are typically done but i'd be curious to know what that is at some point people are going to want to be like i don't think i could sell a 30 000 ad using this model i could be wrong though and you know looking at morning brews team they actually built a very they custom built the tool to help streamline that that back and forth because there is quite a lot of it i think uh some of the other things that are typically involved so the ad sale process kind of breaks down into three steps there's sales account management and like copywriting and that account management piece is the most is the trickiest one well actually i should say i probably should have paused on this in the beginning but you you made a good point of this the voice of the ad matters a lot yeah the rule at the hustle was always when the reader wins like when your audience comes first everybody wins you know the reality is that sometimes it's tough to convince advertisers of that so they're going to come in the door they want to say their thing but you know your audience and you're going to be like well this like they'll send you an ad and you'll be like this copy sucks it's not gonna work you would never say that directly like that or maybe you would but the reality is there is still back and forth even in a situation like this i think if you are able to streamline it it's it's probably because of the low price point and at a certain point uh that's going to break down he's going to have to start bringing people into this because you have sales people who are going to help bring clients in the door with that high price point if account managers that have to go back and forth with the uh with the clients for assets your copywriters know your voice know your audience and they have to kind of sell their approach to the ad to your clients and then there's a whole like reporting side of this as well where you're telling the client how the ad performance stuff like that so i think this is great for uh just starting out and i would bet i don't know how how expensive would you be willing to buy i go like all the way up to 500 bucks for something like this i was thinking that same exact thing when you set the limit like yeah that is true when i'm not going to spend 20 000 it's not that i wouldn't spend 20 000 on an ad it's like i am definitely aching that like i'm not just swiping my debit card through it and i think that is one of the things about the ad business that once it gets so big to where you really make money like the bigness within itself becomes a challenge that you also need to navigate around right so this is really cool and flexible and like scrappy i think he could probably keep going until he's got like a hundred thousand subscribers i i think you could swipe a credit card for 500 bucks you know maybe like maybe a thousand if your ad is killing it to the point where it just has a reputation you know and yeah you have a track record where people trust you and they know that it's gonna be fine i i think you could probably do a thousand bucks on a credit card but but absolutely i never thought about that potential downside where um just logistically there's different processes involved when you get big so that's a challenge but either way i'm i'm still hyped on this well totally yeah this is a great this is a great way to step into that world i've never seen this execution before it's super creative and i think this is a great way for like a one-man team to make this business model work and then like the beauty of it is let's say we're right and there's a limit to how much people are willing to spend right it's going to be it's definitely higher than 200 he knows that it's let's say it's 500 so that's you know two and a half times what he's making now well at 500 that's you know 10 000 a month uh product now you have money to start bringing in some freelancers who can help with some of that back and forth so the the solution is still good enough to get the ball rolling and then as to get like if your biggest problem is that people are cutting you checks that are too big to handle this way like that's a good problem to have you know right it's like hey josh how was your week he's like oh you're never going to believe it i have to charge too much money yeah damn it yeah this was good i stumbled across this article that i love and it's i loved it because the it's about somebody who made money using a creator model more than a hundred thousand dollars a year uh using sort of like a patreon model and what i love about it is i think a lot of people execute on that wrong and i think this person solved it so the guy's name is caleb porzio are you familiar with him no can you send me the link sure this is uh the story is from a couple years back but the lesson is timeless so i'm going to share it here and he's a developer he's a software developer he was basically making like 80 or 90 000 a year at his job and he just he saved up some money and decided to go on like a sabbatical and while he was on sabbatical he fell in love with this new framework so he started making uh open source software and and like i said he ended up generating more than a hundred thousand dollars a year through github's sponsor program so github now has basically the equivalent of a patreon model where if you see software developers building things that you like even if they're not charging for them you can sign up to you can sign up to support them for like x number of dollars a month and he used that ended up generating a six figure income and i think the way he did it is really smart here's what he did you can think of his successes breaking into basically three different phases from zero to about seven thousand dollars he did what most people do which is rely on like really nice people to support him because they like him and i think i see media entrepreneurs doing this wrong all the time this is the same thing people do they'll say sign up for my sub stack and like if you pay an extra 20 bucks a month you become a supporter and like you get whatever maybe an extra step yeah yeah yeah sign up sign up if you want to support or maybe they'll throw in one more email and the reality is that's just not going to work what you're really doing there is you're kind of relying on charity right because people like you so they're supporting you but nobody really wants like more of the same thing for money right they'll they'll pay for something different but they won't pay for more of the same for long so this is something that i think a lot of sub type people struggle with he got up to about seven thousand dollars and then sales sort of tapered off then he had an insight where he was developing this product a lot of people wanted it he was going to make it open source because he's an open source code kind of guy which means for anybody who's not like a coder it was going to be free for the world to use and adapt however they liked yeah and he and a friend struck on an idea where they said no no i'm not gonna make this open source yet here's what we're gonna do they call it sponsorware we are going this is going to be only available to sponsors until i hit say 100 sponsors right each paying 25 bucks a month once we hit that level i'll open source it he called it sponsor where they kind of hashed this idea out on his podcast and it worked like crazy it grew his revenue in i think it was two days to seventeen thousand from seven to seventeen thousand so he almost tripled his revenue in like two days just by creating this better incentive and then that same model took him all the way up to 29 000 in about three months so that incentive worked well now here's the third big unlock he released that piece of software eventually hit the point where he had enough sponsors to open source it so now anybody can use it right because his sponsors piled on in order to make sure that it was available in order to get to the next level what he did was he started releasing sponsor only content and specifically what he did was he had some tutorials on how to use the software and they were all free and then he as he added new features he would add new tutorials but they were behind the paywall so in order to see how to use like this new feature or to do this new thing with the software you had to jump in and be a sponsor and that grew him from that 29 000 mark up over a hundred thousand dollars in three more months so between like january and june or so of this year of 2020 when he was building this he grew from like nothing to over a hundred thousand dollars in recurring rev or yeah annual revenue so more than what is that nine thousand dollars a month through smart incentivization and i love this concept because i think it leverages this really well but what i wanted to do to make this like helpful is break it down and make it just a universal model so what did he really do here but i'll before i do that i'll pause what's your take on this i think it's brilliant i it gets my brain thinking right away where what is premium content that can be viewed as premium not through like a paywall but just through sponsorships let me keep keep thinking about that because i thought about this a lot at first i'm like well how could you do this maybe if you're building a class or something like that here's where i ultimately landed this is this is what he really did if you want to abstract and i think this would work across industries and it would work even better in like niche industries because this relies on sponsorship so not a huge fan base right okay here's what he did first you have a product that does something useful that people want to use right so it's not really like having a course or something like that it's more like a piece of software you built or but this could be this could be something else it could be like canva templates that you're using to create social media content it could be spreadsheets that you use to analyze deals in your company or to do like to do something functional in your field or it could be like a notion doc that you use in order on a regular basis in order to get something done something useful that you've developed and the thought process that i love here i forget where i saw this it was a tweet but somebody said something to the effect of like everybody's got an extra 10 to 20 000 a month sitting on their google drive if you just go through and look at the documents that you use on a regular basis what can you templatize and turn into a product that's step one product that people want right you pay wall that and rather than selling it one off you only make it available to monthly sponsors using something like patreon or if you're like you know there's a like uh woocommerce can help do this can help make this possible all types of stuff yeah then once you hit a certain threshold of sponsorship that asset now becomes open to the world right so you're no longer selling access to it it's it's just out there for people to use and you release documentation alongside it and then a portion of the documentation like whether you're maybe you create new documentation each month in order to show how to do a new thing or maybe you're adding features each month and you're talking about how to do that the new documentation becomes that sponsor only screencast and that's what you use to continue to push people into your sponsorship sort of fold otherwise just having the product out there it's almost like the early group where you when you keep that product behind a paywall until you hit a certain level that early group is really subsidizing the production of whatever this thing is and then once you hit a certain level it's more about getting people excited about learning how to use it so they now anybody can use it but if you really want to be good at it you gotta be in the club and then you just keep releasing new documentation and new features and that becomes kind of the product update cycle so i think that could work across industries i don't really think that's limited to just software but i love that model and i what i really like about it is that he's thinking about the incentive structure well the incentive structure is definitely important and it's like the opposite of content marketing because content marketing at least traditionally from like a semantical point of view is you have a product and then you use the content content to sell the product but this is kind of like you're using the product to sell the content and then the leverage is in the content because people need the content to figure out how to use the product in the first place so like the incentive to read the content is already there because the product is free it's like i i've been on this kick the last well i shouldn't say a cake the last three years as i've been growing as an entrepreneur especially now this dodzi has you know really got like a lot of employees and stuff like that i think about incentives a lot and there's this charlie munger quote which i i might have talked about before but it's uh if you want ants then lay sugar right like everything in the universe can be determined by reward and so the incentive structure is so clear here because the incentive for attention is in the free product like who gets to use free products anymore like canva is the only one i can really think of right and even even then there's a limit on it which is is fine though like you can use canva forever the free version and be totally fine right but there's been many many times where i was like how the hell do i do this and you got to look at the docs on it and so it's like it's content marketing but exactly the opposite it's like product marketing so using the product to leverage the attention on the thing that what actually works and then of course who's incentivized to get in front of people reading those documents like other companies within that really specific niche community of whatever it is that your product is operating in so i i get it man like it's abstract for sure it's interesting that he thought of it this way he probably just stumbled upon it by accident you know like okay i guess i'll do this next but it's yeah you can literally work it you can literally listen to the podcast where they like dream this model up really together him and his yeah him and his co-host and they're just joking around and all of a sudden they kind of stumble closer and closer to this idea and i think it's a good one i'm a little bit uh torn on how i would feel as a consumer knowing that i was helping to make something free by paying for it yeah but there yeah there are certain cultures where that definitely is a thing like i mean he's a coder so coding is definitely one of them and i think there are other niches where that could be a thing too like the one that comes to mind would be like women in entrepreneurship right there's like a really strong solidarity there and i think a lot of people trying to make sure that other people have opportunities that they didn't necessarily have so if you're uh like a woman putting out information for female entrepreneurs and you're looking for a way to like monetize that i think one very legitimate option would be to reach out as effectively to the more successful members of your community and say hey i want to make this thing available to everybody but it's got to pay the bills and so here's how i want to do this uh like who wants to basically who wants to be part of making this available to the broader community i think there's a way to do that and then lastly to your point the higher tier monetization where you're where you're putting information behind a paywall is also a little bit complex because you don't want to piss off the users right like whereas i can't do anything without paying so there's a line that you have to tread there in order to make sure that what you're putting behind a paywall is like worth paying for it there's a psychology thing but also you said something which is like other companies in the space who are using this i think there's a lot of people i don't know i haven't seen his numbers but i would guess that a like a decent percentage of the types of people who would pay for access to just unlock a library probably going to be companies whose employees are using whatever product you're talking about and they're just like i don't even care how much it costs just uh just make sure that my people can do whatever they need to do with this product and if it's an extra 100 bucks a year or whatever to have access to the content library that's fine so that's something that doesn't happen as well uh his name is caleb porzio and he's on twitter we'll just shout him out real quick it's fine i want to talk i want to learn more from him he's really interesting he's got like classes out there now oh i should there's one other thing that i pulled up when i was looking at all this information because it's easy to look at models like this and assume that it would just work out of the gate but even his model is not immune to uh the the the rules that we've laid out many times on this show which is that if you want to make like a successful run at a business like this there's three steps the first step is your cash flow second step is your audience third step is products what we're talking about here is monetizing that third step in a really creative way but i went and i looked so i wanted to see how big his audience was when he did this so i plugged his by the way you can do this if you're interested if you're a nerd like me take his twitter page plug it into the wayback machine on archive.org and at the time he had about 15 000 twitter followers back when this was happening in 2020 now he's up to like 30 000. so that's one thing to keep in mind the other is that he had a podcast but you know for anybody who's considering this 15 000 is not unreachable like if you learn put your head down and and and work hard but he did have the audience before he started this and so you're not going to not going to break the physics of like product success hey cash flow distribution sales like that's how it is like we need to remind people every single week cash flow distribution sales if you got an idea it don't matter if you got no cash flow if you've got money it doesn't necessarily matter unless you got attention and if you have both of those things then you still need to have something worth selling so uh so that's really cool all right man i gotta wrap this one up but yeah this was always a pleasure this was my favorite episode yet i think we're really hitting our groove and um and i had so much fun i want to learn more about caleb though i'm going to reach out to this guy on twitter as well because i love making friends all the links are going to be in the show notes um thank you everybody for listening thank you for the kind words got even more dms this this weekend on twitter for people listen to the podcast we really appreciate it thank you so much uh please leave us a review really we don't have ads on this show we're not selling you anything the best thing you can do to support the show is to leave us a review especially on apple it just really helps with the algorithm alright we'll talk to you next week [Music] you