How to Make Back Your Ad Spend in the First 7 Days

Most newsletter owners judge a subscriber by what they might earn over three years. Louis Nicholls cares more about how fast you get your acquisition cost back. He has been around newsletters for about seven years, and he came on the show to talk about what to do in the first seven days after someone signs up. This is a general newsletter expert's take, and Louis says it hasn't filtered into local yet. I think that's the opportunity.

Why cheap local subscribers are worth more to someone else

Louis points out that local newsletter operators are getting subscribers on Meta at 15, 50, even 75 cents. National newsletters with big ad teams can't get close to that. The reason is simple: the content is so close to the audience that ads work.

Those same subscribers are worth more to other newsletters. Say you run a local newsletter in the Bay Area. A tech company might pay $3 to get a subscriber you paid 50 cents for. So you pay Meta, then show the new reader a widget with other newsletters they might like. You get paid for each subscriber you send through.

On the low end, Louis says, that might be about 50 cents per subscriber, which is still pretty good in local. Spark Loop is where that happens, but he spends most of the episode on what else you can do in that first moment.

The payback period is the number that matters

If you spend a dollar on Meta today, Louis says, you don't actually pay for it for about 30 days. Make the dollar back inside that window and you've effectively paid nothing, so you can scale as far as your credit limit allows.

Then he gives the timeline. When he came in during 2018, a good payback was about six months. In 2022 it was three months. This year it's about seven days, and the best are doing it in about five minutes.

His point is that lifetime value matters, but while you're still growing the list, how fast you earn the money back matters almost as much. A $50 subscriber over three years doesn't help if your ad budget is stuck waiting six months for the first dollar. He prefers to call the goal a "zero day payback" rather than negative CAC, because the math behind that phrase gets fuzzy.

What Louis tested on his own newsletter

His newsletter is a weekly one about the newsletter industry. He looked at the 200 best newsletter operators he knew and how they monetized new subscribers. About 20, or 10 percent, used paid recommendations. About 15 percent had a trip-wire offer, meaning a heavily discounted one-time product or upgrade right after sign-up. Only one of the 200 was doing lead gen.

That one showed new subscribers a free offer from another brand. In the finance example Louis saw, the offer was "five top stock picks," and the brand paid $10 or more for each person who opted in.

Nobody had all three, so he built a flow with all of them. First paid recommendations, then welcome offers from brands he'd asked to pay $2, $5 or $10 a lead, then a made-up $5 a month upgrade as a test. He spent about $2,000 a month on ads to test it, paid about $1.80 a subscriber, and earned back about $2.15. About 80 cents came from paid recommendations, about the same from lead gen, and about 50 cents from the trip-wire, which he admits was a weak product he invented for the test.

Will local readers actually take the recommendations?

I pushed on this one. Spark Loop only pays when the subscriber shows engagement, and I worried that people in a place like Omaha aren't newsletter people. Louis doesn't buy it. Local readers skew a bit older, and they probably already get sports or finance news in their inbox. He named The Pour Over, a daily news newsletter with a Christian perspective, as a likely fit for Midwest readers.

His math is simple. If every reader found one of the newsletters offered, you'd make about $2 a subscriber. If only every second reader did, it's still about a dollar. And I told him that at 30 cents a subscriber, you'd only need roughly one in five people to find something they like to break even.

The two kinds of lead-gen offers that pay

Louis says lead gen works best at one of two extremes. One is a broad offer that most of your audience will like, worth about $1 or $2 per opt-in. The other is narrow and qualified, where only a small share of readers want it but the business will pay $30, $50 or $100 plus for the lead. The middle is a dead zone: you take on the work of qualifying leads but don't get the big payout.

I brought up med spas as a high-lifetime-value target. Louis's caution is intent. He has about $1,500 of unused med spa vouchers in a spare room, so he says people will happily claim an offer and rarely use it soon. That makes a med spa a good low-intent offer, maybe $2 to $5 a lead, and a better one if the price on the offer screens out people who can't afford it. Someone asking about a home valuation or tree work, especially with a deadline discount, is a much hotter lead.

Offers first, survey second

I asked whether I should send people to a survey right after sign-up and use it to segment offers. Louis says surveys kill engagement, and completion rates tank if the survey comes before the offers. Put the offers in front.

The exception is a survey that is really there to qualify leads, framed as "tell us about yourself so we can show you the right welcome offers." That can raise completion rates. Keep it to a few one-click questions, then put the longer questions after the offers.

Which local businesses fit

Louis says offers should feel like free money: a coupon code, a free consultation, a checklist or a guide. Think of something you'd cut out of a magazine for a friend. His examples:

• Home services: trees, drains, roofing, interior design and garden work.
• Local events and sports: a discounted or free first ticket for a small team.
• Other fits: car dealerships, healthy lunch meal delivery, gyms, yoga studios and Pilates.

His way to pick: ask five people what they spent $300 or more on last month. Then talk to the 10 or 15 kinds of businesses that come up.

Show the offers on the thank you page, one above another or one at a time with a claim or skip button. If someone doesn't claim them, send a follow-up email with the offers they didn't take. Louis says you can build the claim flow yourself. He made a tool for his own use and says others can use it for free.

Sales is the hard part

I'll say it plainly: for local, the hardest part by far is convincing businesses to do this. Louis agrees that sales is the hardest part, and the offers take real conversation with each brand.

His encouraging take is that local businesses already understand paying for leads. They've bought them from directories. It's also lower risk for them than a monthly ad deal, since they only pay when you send someone.

The second welcome email

Louis has worked closely with roughly a thousand or two thousand newsletters. He says the one thing he's never seen anyone regret is sending more emails early, as long as the email is good. People tell themselves they can't email again until tomorrow. Louis says that's not true.

His reasoning: people sign up while drinking coffee or sitting at a red light, and they don't have time to open the welcome email. A nudge a couple of hours later reminds them what's waiting. If they did see the first one, it makes you easier to remember.

Some people will unsubscribe, and Louis says that's fine. If 100 people sign up, maybe 50 won't become good subscribers, and it's better to learn that in 24 hours than six months. He tells operators to compare active subscribers 30 days later, with and without the extra email. And you can't overwhelm someone who doesn't even remember who you are yet.