👋 Hi Reader,

​Manny Reyes spelled out what I was unable to articulate for the last month.

I was at the New Media Summit at Austin in Feb, where Robin Re, VP of Marketing at Industry Dive, dropped a truth bomb. She mentioned that Industry Dive does not mind paying as much as $50 to acquire their subscribers.

I was attending the same talk as Manny did, and I still remember gasping on hearing that number. When writing my NMS takeaway newsletter issue, I also made a note of following up to check, how Industry Dive is able to absorb that high acquisition cost. Of course, like all notes I make, it got lost in the heap of endless ramblings I make on Apple Notes.

But the conversation kept lingering on the back of my brain. Until I saw Manny bring that up on LinkedIn this week.

Honestly, I was envious of the way he summed it up so succinctly:

Manny and his agency Boletin Growth have been the growth engine behind the biggest newsletters you know and read every week. He, and all the agencies I know in this space, live and die by acquisition metrics, because he knows his clients are watching that like a hawk. For him to admit this was an audacious-but-long-term-sustainable way of looking at email list growth, is refreshing.

So I need not worry about high CPAs?

It depends.

No, this is not me copping out. Let me explain.

To answer that question, you and I would need to look at a different metric: audience quality. Understanding who is getting on your email list is vital to determining how high can your CPA be, and how soon would you get a payback on your Meta ad spend per subscriber. The ideal customer profile (ICP) your newsletter is attracting might be limited in numbers, but if each subscriber you attract is an exact match on the ICP, that you do not need a million subscribers - even a few thousands would do.

​Niklas Wenzel drove home this point on the LetterStack podcast where he described how CJ Gustafson, who runs the Mostly Metrics newsletter, built his media business by going after CFOs.

That’s a niche ICP. But it has led to multiple lucrative revenue streams like in-person events and dinners, which would not have existed, had CJ not been so disciplined about keeping his ICP tightly bound.

Listen to the episode below to understand CJ's approach:

​

So how high is too high for my CPAs?

Once you lock on what ICP you are focussing on, and the potential revenue opportunities it brings, you would then place your bet on how much are you willing to pay for those subscribers who will unlock these opportunities for you.

​Nathan May had been on the LetterStack podcast last year. He helped us do a simple back-of-the-napkin math to understand the payback timeline, so you know how much can you afford to pay.

Listen to the episode below to understand the payback math:

​

Be informed that these are not a one-and-done calculation.

Once these metrics start developing over a given time period, you would need to put in the work to monitoring these metrics to find out how to optimize your ad spend and reduce wastage.

Would the optimized CPAs ever hit $1 or lower? Maybe not.

Would you be at peace knowing the math, that its ok to have a higher CPA? Yes.

If the math has always overwhelmed you and you did not know how to compute these metrics, I would be happy to help. Hit ‘Reply’ on this email, or send a note to marketing@letterstack.co.

This newsletter is sponsored by The Alien Design

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