👋 Hi friends -
Welcome to The Newsletter Growth Memo. Twice a month, I share short reflections with my newsletter clients + other operators.
Zero formality, ads, or affiliate links - just a guy sharing learnings from working with media operators doing $25k-$1M+ / month with newsletters.
New reader highlights: Isaac, Founder @Tangle News | Rhiannon, Group President @ Questex | Matt, Senior Managing Director @ POLITICO | Ben, CEO @Black & White Zebra
I want to share two things with you today:
Why over-indexing on CPL will hurt your business, using a side-by-side test we’re running with one of the most popular founder-focused newsletters
How we’ve scaled up Red Ventures to the same paid acquisition spend as a handful of newsletters like 1440 that have made paid ads work at scale
Bad leads = bad business
We’re running a head-to-head test for a prominent founder newsletter vs. another agency.
I love testing against other agencies because:
It pushes our team to perform at its best
If we do well, I get to brag how much I love my team (shout out Humza - you’re the man!)
But I don’t like this test.
It’s all CPL-based.
I believe (+ write, often) that entirely CPL-based reader acquisition is flawed.
And I couldn’t have asked for a better example than today’s. Look at these numbers!
L30D: Us - $2.43 | Agency 2 $2.67
L7D: Us - $2.08 | Agency 2 $2.08
We’re tied!
Until you look at reader quality.
The highest spending ad below, with a 45% open rate, is a The Feed Media ad; the other two highest spending ads are from the other agency.
Bringing in readers with 18-23% open rates like this is extremely dangerous to a sponsor-monetized newsletter:
I don’t know who these readers are, but you don’t want them in your newsletter.
This is, by the way, one of the reasons the work beehiiv is doing is so important - it would be impossible to see this dramatic difference in results without their native analytics.
When I invited one of the Workweek co-founders to join this newsletter a few weeks back, they (cheekily) asked me something to the effect of:
“Are you going to send me emails on what you think or what everyone else will agree with?”
So, I want to be extremely clear - this email is not a dig at this other marketer.
He’s extremely bright and one of the kindest/sweetest people I know.
But I fundamentally disagree with marketing that doesn’t consider LTV, and because this person comes from big newsletter companies, I worry our industry rewards marketers who ignore LTV.
We’re winning this test, but I’m frustrated because its design incentivizes us both to make decisions that aren’t best for the client.
Anyway.
When you do things the right way, it can create millions of dollars of value.
Let’s get to that part.
Enter Red Ventures
RV is a multi-billion-dollar, bootstrapped business - they own lots of properties like Bankrate, The Points Guy, etc.
We’ve been incredibly lucky to partner with them on The Points Guy.
It’s a completely performance-driven business - TPG only makes money when you open a Chase/Amex card.
This means it is mechanically impossible to hide behind low-cost, low-quality leads.
You MUST acquire readers who buy things.
And so in the first 90 days of working together, we delivered:
ROAS up 35%
CPL down 10%
ARPU up 25%
Spend +300%
To 3x the dollars you spend AND see a higher return on each of those dollars is gigantic - it has an extremely meaningful impact on a business’s P&L.
(The results year-to-date are even stronger, FWIW)
It would be impossible to achieve these results without the brand reputation / content-trust TPG has built up.
But our paid approach has also played a large role:
Raw creative beats polished. Text-over-video and less branded content has consistently outperformed polished ads. This has been the case in 80% of ad accounts.
Copy and specificity matter more than design. Hyper-targeted messaging that calls out specific audience segments with precise problems. Showing the right person in the video. Describing their problem in language they use.
Deep audience research. We have an in-house process, but the TPG team also does incredible work pulling insights from its web business/reader surveys. They know their reader extremely, extremely well.
Data-driven decisions. We created custom dashboards together to measure cohorted revenue + CPL over the first 6 weeks a reader joins. This means every ad-level decision we make is ROAS-based. We make better decisions than 90% of 7-9 figure newsletters just by measuring the right things.
The Bigger Picture
When I started this company, I felt imposter syndrome for not coming from the media industry.
I was a BCG consultant and then ran an 8-figure mobile app portfolio - both very nerdy, LTV/retention curve-y places.
But I’ve watched that become our biggest asset.
I truly believe we’re bringing a BCG/McKinsey-level of service to newsletter/media brands.
I rarely make asks in this newsletter.
But if you:
Are doing $1M+ in revenue
Want high-quality readers who buy from you and your sponsors
Like a partner working alongside your existing marketing team who thinks about your business as a whole
We should chat.
If you’re back-to-back reading this between meetings, reply “ads” and I’ll reach out directly.
That’s the letter.
- Nathan May
P.S. If you’re running ads yourself, this is an extremely tactical piece of content you can watch to scale to $100k/month in spend profitably
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