"How do I do paid growth for newsletters?"

This is one of the most popular questions we heard while researching the Newsletter Guide.

So we interviewed our growth team @theHustle, plus experts from all over.

Let me break down what we found...
Over and over we heard the same thing from growth experts:

"When it comes to paid growth, the MOST important thing is understanding your Target Cost Per Acquisition (CPA)."

No matter where you& #39;re advertising, knowing your Target CPA is crucial to success.
To figure out your Target CPA, you need 2 things:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="1️⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> The lifetime value of your readers (CLTV)
https://abs.twimg.com/emoji/v2/... draggable="false" alt="2️⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> Your desired profit margin or pay-back period

Buckle up... we& #39;re gonna explore math in tweet form (apologies in advance).
Let& #39;s start with CLTV.

In a normal business, CLTV is simple -- it& #39;s just the amount of money you can expect to make from a customer.

Let& #39;s say you sell a widget for $1k. Each customer buys only 1.

That means each customer is worth $1k to the business. Their CLTV is $1k.
Newsletters aren& #39;t much different.

You& #39;re calculating how much you earn from each reader, based on:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="1️⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> Revenue per Engagement
https://abs.twimg.com/emoji/v2/... draggable="false" alt="2️⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> Engagement Rates
https://abs.twimg.com/emoji/v2/... draggable="false" alt="3️⃣" title="Tastenkappe Ziffer 3" aria-label="Emoji: Tastenkappe Ziffer 3"> Length of Subscriber Lifetime

Let& #39;s break these down...
https://abs.twimg.com/emoji/v2/... draggable="false" alt="1️⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> Revenue Per Engagement is the money you earn each time a reader carries out some crucial activity.

For example, a newsletter might charge advertisers based on:

-Cost Per Send (CPS)
-Cost Per Open (CPO)
-Cost Per Click (CPC)

Therefor, each send, open, or click is worth money
For this thread, let& #39;s assume you charge advertisers based on the number of people who open the email (CPO)

If you charge $50 per thousand opens:

$50 / 1,000 = $0.05 per open

So every time a reader opens your email, you get a nickel.
As you can see, this means the value of a reader keeps going up the longer they stay subscribed and reading.

Cumulative Income:
Month 1 - $0.50
Month 2 - $1.00
Month 3 - $1.50
etc...

But readers don& #39;t stay forever. So we estimate how long they stick around...
https://abs.twimg.com/emoji/v2/... draggable="false" alt="3️⃣" title="Tastenkappe Ziffer 3" aria-label="Emoji: Tastenkappe Ziffer 3"> Subscriber Lifetime

Let& #39;s say you find that most readers stick around for about a year and a half before eventually unsubscribing.

That& #39;s ~350-400 sends at 5 days per week.
The last step is to combine these 3 to calculate your CLTV:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="1️⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> Revenue per Open = $0.05
https://abs.twimg.com/emoji/v2/... draggable="false" alt="2️⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> Open Rates = 50%
https://abs.twimg.com/emoji/v2/... draggable="false" alt="3️⃣" title="Tastenkappe Ziffer 3" aria-label="Emoji: Tastenkappe Ziffer 3"> Subscriber Lifetime = ~400 sends

400 sends x 50% opened = 200 emails opened.

200 x $0.05 = $10 earned.

Your CLTV is $10.
The last step is to combine these 3 to calculate your CLTV:https://abs.twimg.com/emoji/v2/... draggable= Revenue per Open = $0.05https://abs.twimg.com/emoji/v2/... draggable="false" alt="2️⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> Open Rates = 50%https://abs.twimg.com/emoji/v2/... draggable="false" alt="3️⃣" title="Tastenkappe Ziffer 3" aria-label="Emoji: Tastenkappe Ziffer 3"> Subscriber Lifetime = ~400 sends400 sends x 50% opened = 200 emails opened.200 x $0.05 = $10 earned.Your CLTV is $10." title="The last step is to combine these 3 to calculate your CLTV:https://abs.twimg.com/emoji/v2/... draggable="false" alt="1️⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> Revenue per Open = $0.05https://abs.twimg.com/emoji/v2/... draggable="false" alt="2️⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> Open Rates = 50%https://abs.twimg.com/emoji/v2/... draggable="false" alt="3️⃣" title="Tastenkappe Ziffer 3" aria-label="Emoji: Tastenkappe Ziffer 3"> Subscriber Lifetime = ~400 sends400 sends x 50% opened = 200 emails opened.200 x $0.05 = $10 earned.Your CLTV is $10." class="img-responsive" style="max-width:100%;"/>
Now that you know how much you expect to earn, you need to decide how much you& #39;re willing to pay to acquire that reader (this is your Target CPA).

To do that, you consider 2 things:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="🗓️" title="Spiralkalenderblatt" aria-label="Emoji: Spiralkalenderblatt"> Your desired payback period
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🤑" title="Gesicht mit Geld-Mund" aria-label="Emoji: Gesicht mit Geld-Mund"> Your target profit margin
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🗓️" title="Spiralkalenderblatt" aria-label="Emoji: Spiralkalenderblatt"> Your desired payback period is how quickly you want to earn back the money you spent acquiring a reader.

It& #39;s crucial because you need that money in order to keep growing/paying the bills.

There& #39;s no rule for this, but 6-12 months is common.
You& #39;re constantly balancing these 2 forces when setting paid growth goals.

If you& #39;re willing to take a longer payback period https://abs.twimg.com/emoji/v2/... draggable="false" alt="🗓️" title="Spiralkalenderblatt" aria-label="Emoji: Spiralkalenderblatt">, or lower profit margin https://abs.twimg.com/emoji/v2/... draggable="false" alt="🤑" title="Gesicht mit Geld-Mund" aria-label="Emoji: Gesicht mit Geld-Mund">, you can spend more on acquisition and grow faster.
So, you have your Target CPA... Now what?

Test, test, test.

Most people want to know the BEST way to grow. The truth is, there isn& #39;t one.

Your growth will depend on your industry, audience, budget, goals, etc...

But there are a few industry standards...
https://abs.twimg.com/emoji/v2/... draggable="false" alt="1️⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> Most people start with Facebook ads because they& #39;ve got the best targeting.

You can learn a lot about your ideal audience, then use that information to test other platforms more effectively.

You can spy on competitors& #39; ads with FB& #39;s ad library: https://www.facebook.com/ads/library ">https://www.facebook.com/ads/libra...
https://abs.twimg.com/emoji/v2/... draggable="false" alt="2️⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> Paid search is a popular next step, but also a blood bath.

You really need to understand your keywords, and search intent to be successful there.

The best resource I& #39;ve seen on understanding search intent is @stephsmithio& #39;s book: https://doingcontentright.com/ ">https://doingcontentright.com/">...
No matter which method you choose, your Target CPA is your guiding light.

You& #39;re always trying to get *high quality* subscribers at or below Target CPA. So test everything.

Quality is crucial, and worth talking about for a second...
There are lots of possible growth methods. Not all of them result in quality subscribers.

For example, giveaways can bring in lots of signups.

But if people only care about the giveaway, they may never open the email after they sign up. Money wasted. No bueno...
As your growth program evolves, you may account for different levels of readers. For example:

Low Quality Subscribers - 10% open rate
Average Subscribers - 50% open rate
High Quality Subscribers - 80% open rate

Each have their own CLTV, and by extension, their own Target CPA.
I& #39;m preparing a talk on this, so feel free to DM questions if you like.

I& #39;m also joining @davenemetz, @janelSGM, and @danshipper to talk more about growing and monetizing newsletters.

Come hang with us!

https://protect-us.mimecast.com/s/6Dk4C1wMm9cZz8PJSLzlIl?domain=lu.ma">https://protect-us.mimecast.com/s/6Dk4C1w... https://twitter.com/davenemetz/status/1384585708543913984">https://twitter.com/davenemet...
You can follow @damn_ethan.
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