Latest / The Newsletter Podcast with Fexingo: Substack, Beehiiv, and Email Newsletter Business / How Newsletters Use Paid Ad Buys to Acquire Subscribers
Transcript
- Lucas: So there's this assumption I keep hearing from newsletter writers — that the only real way to grow a paid subscriber base is through organic channels: referrals, cross-promotions, SEO. And I get it, because that's how most of the big Substack and Beehiiv success stories got their start. Luna: Right, the 'write great content and people will find you' model. But you're saying that's not the full picture. Lucas: No, it's not. And honestly, if today's episode helps you think about growth differently, maybe it was worth a coffee to you — you can find us at buy me a coffee dot com slash fexingo. But the point is: paid advertising is actually a viable channel for newsletter growth, but almost nobody does it well. And the reason is they treat it like they're selling a product, not growing a relationship. Luna: That's a really interesting distinction. What does that look like in practice? Lucas: Okay, so let me give you a concrete example. I talked to a writer who runs a business strategy newsletter — about 50,000 free subscribers, around 2,000 paid. He decided to experiment with Facebook and Instagram ads to grow his free list. His goal wasn't immediate paid conversions. It was to get high-quality free subscribers who would eventually convert. Luna: So he optimized for the free sign-up, not the paid one. That's a key difference. Lucas: Exactly. He spent about $3,000 over a month. He got 1,200 new free subscribers. That's a cost per lead of $2.50. Now, that sounds reasonable, but here's where most people screw up: they don't track what happens after. They just look at the cost per lead and either celebrate or despair. He tracked which of those 1,200 eventually converted to paid over the next three months. Luna: And what did he find? Lucas: About 4 percent converted to paid within 90 days. That's 48 new paid subscribers at $100 a year each, so $4,800 in annual recurring revenue from a $3,000 ad spend. That's a 1.6x return in the first year alone, not counting whatever those subscribers stay for subsequent years. And that's a solid ROI. Luna: So the math works, but it's not a slam dunk. You need to be patient and track over months, not days. Lucas: Right. And you need the right targeting. He used lookalike audiences built from his best free subscribers — the ones who had opened more than half his emails in the last 30 days. That's a stronger signal than just 'people who signed up once and never opened again.' Luna: That makes sense. You're feeding the algorithm the data of your most engaged readers, not just any subscriber. How does that compare to simply targeting interest-based audiences? Lucas: Much better. Interest-based targeting on Facebook has gotten weaker over the years because of privacy changes. Lookalikes from a custom audience of engaged readers are typically more accurate. But you need at least 100 to 500 people in your seed audience for Facebook to build a decent lookalike. So this strategy only works once you have a moderate-sized engaged list. Luna: So it's not for brand-new newsletters with zero subscribers. But for a newsletter that's, say, six months old with a few thousand engaged readers, it could be a growth lever. Lucas: Exactly. And the other mistake I see is that people try to drive paid subscribers directly from ads. They put a 'subscribe for $100/year' call to action in the ad. That almost never works because the audience hasn't built trust yet. The ad is a cold touch. You need to warm them up with a few free emails first. Luna: So the funnel is: ad → free sign-up → nurture sequence → paid conversion. How long should that nurture sequence be before you ask for the upgrade? Lucas: At least three to five emails. The writer I mentioned had a seven-email welcome sequence. He didn't pitch paid until email number four. And he found that subscribers who came from ads actually converted at a slightly higher rate than organic subscribers — 4 percent versus 3 percent. He thinks it's because the ad pre-qualified people who were already interested in the topic. Luna: That's a nice bonus. But what about the ad creative itself? What kind of ad worked for him? Lucas: He tested several. What worked best was a simple video of him talking about a recent newsletter topic — something like 'the one metric most CEOs ignore' — and then a call to action saying 'get the full analysis in my free newsletter.' No hard sell. The ad that was just a static image with text had a much higher cost per lead — about $4.50 compared to $2.50 for the video. Luna: So video ads outperform static. That's consistent with broader ad trends. Did he try different platforms or just Facebook and Instagram? Lucas: He stuck with Facebook and Instagram because that's where his target audience — business professionals aged 25 to 45 — spends time. He considered LinkedIn, but the cost per click there is significantly higher. For a $2.50 cost per lead, Facebook is hard to beat. Luna: Right. LinkedIn ads can be five to ten times more expensive per click. So for a free newsletter sign-up, the math probably doesn't work unless you have a very high average revenue per paid subscriber. Lucas: Exactly. If your newsletter is a $500 a year B2B research publication, then a $10 cost per lead might be fine. But for the typical $100 a year newsletter, you need to keep that cost per lead under $3 to make the math work. Luna: So what's the one mistake that kills ROI in your view? Lucas: Not tracking the full funnel. I've seen people run ads, get a bunch of sign-ups at $1.50 cost per lead, think they're geniuses, and then six months later realize none of those subscribers have opened a single email. They didn't track engagement or conversion. The cost per lead is a vanity metric. The real metric is cost per paid subscriber acquired, which you can only calculate if you track the entire journey from ad click to paid conversion. Luna: So you need to set up proper tracking — maybe UTM parameters and conversion pixels — and then wait long enough to see the results. Patience is key. Lucas: Exactly. And I think a lot of newsletter writers are afraid of paid ads because they've heard horror stories of wasted money. But if you start small — say $500 — and you track everything, you can learn what works. The upside is that paid ads are scalable. Organic growth eventually plateaus. Paid ads can be turned up or down. Luna: That's a good point. Organic growth is great but it's not always predictable. With paid ads, you can control the flow. So for a newsletter at the right stage, it's worth testing. Lucas: One last thing: the writer I mentioned started with just $500 to test. His first test had a cost per lead of $5, which was too high. He iterated on the ad creative, the audience, and the landing page, and got it down to $2.50. That's the process. You don't need to spend big to learn. Luna: So the takeaway: paid ads can work for newsletters, but you need to optimize for the right metric — cost per paid subscriber, not cost per lead — and you need a solid nurture sequence. Plus, start small and iterate. Lucas: Exactly. And for anyone listening who's been on the fence about trying ads, I'd say: pick one platform, set a $500 budget, and run a two-week test. Track everything. You might be surprised.