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Why NOT run paid ads to grow your newsletter?
Well, for one thing, they might not pay you back. You need to know how much money you’ll get from the new readers you bring in (with all your revenue streams factored in!)
For example, if you are 100% reader-funded, then you need to know how much the average reader pays you.
But if you are sponsor or ad-supported, you might make money just from having more readers.
I’ve been running paid ads experiments testing out things like Facebook ads, beehiiv boosts and creator ads. The only way to compare them is to know how much money they generated (or will generate) for me.
That’s why you need to know your return on ad spend.
The calculator in this play is standing by to walk you through it! Use it on your next ad campaign.
In this play:
Calculate your return on ad spend (ROAS)
The Return on Ad Spend calculator will help you figure out how much money you make PER READER and then, how much money your ads will made you.
Grab the calculator (file→make a copy) and then finish reading these instructions.
💰️ First, find out your revenue per reader
- Start on Tab 2 of the calculator.
- Follow the prompts in the calculator (only change the white fields!)
- You’ll end up with the average revenue per new subscriber (annual)
What this number means
Average revenue per new subscriber is meant to help you understand how much a new reader (who isn't paying you) is worth. Even though some readers will never pay and other readers will pay way more and some readers won't pay all year, it's just a ballpark. You need this figure to calculate return on ad spend (ROAS).
Drawbacks and notes about how I calculated it for you
- Best if we know lifetime value of your reader: Ideally you would factor in how long an individual paying reader sticks around (this is called lifetime value) but it’s hard to do that, and unless you’re finding A LOT of your readers pay once and bounce forever, I wouldn’t sweat it.
- This calculator is showing revenue per ANY reader: Not just the ones who pay you. That’s for two reasons. One is that if you have revenue streams outside of paid subscriptions/contributions, you might have a free reader that’s worth money (think: sponsors). The other reason is that when you buy ads, most readers come in free and convert later. So we’re averaging together the value of all readers, free and paid.
- This is a projection. It’s not that common that you’ll make back this money RIGHT AWAY with your ad. Some readers might come in hot, but most will be cold and, if your revenue streams rely on them purchasing something, that might take weeks or months.
- Organic readers behave different than paid readers. Actually, readers from ANY source could behave differently so in an ideal world, you would know revenue per subscriber BY SOURCE. But who has the time? If you do, hit me up and let’s customize this calculator for you. Otherwise, this estimate will be good enough to get going with ads.
💸 Then, get your Return on Ad Spend
- Head back to Tab 1.
- Plug in your ad campaign cost and how many new subscribers you got.
- See that it calculates for you your cost per new subscriber AND the return on your ad spend.
What this number means
Cost per new subscriber is something you can use to compare ads to each other or ad platforms (like Facebook to Google).
Return on ad spend tells you whether your ad paid you back. Anything over 100% means it did. The higher the better!
🤔 So, what next?
If your Return on Ad Spend (ROAS) was over 100% (more ideally over 300%) and you have more money in the budget for paid ads, you can keep them going!
Otherwise, you can keep testing ads to see if you can beat these numbers. Check out my paid ads experiments for ideas and recommendations.
Got questions? Want to share challenges? or wins!?
I’d love to hear it! You can either comment on this post or send me a question.
