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Aug 21, 2003
Case Study

How to Sell $300 Online Subscriptions to Consumers -- StreetAuthority's Low-Cost Tactics

SUMMARY: After years in the marketing trenches, helping big names like Louis Rukeyser launch subscription newsletters, Lou Betancourt took the plunge and launched an online subscription publishing company. This Case Study is the story of his first year in business. If you have ever wondered if you could make it on your own with no financial backing, click here for practical inspiration.

"I have two kids, car payments, all that stuff," says
Lou Betancourt.

Despite this, after years of serving as marketing director for
newsletters such as Louis Rukeyser's Wall Street, Betancourt had
the entrepreneurial bug real bad. It was time to own a company
instead of just working for one.

He convinced friend Paul Tracy, an experienced managing editor,
to come on board as his business partner. Together the two were
ready to conquer the world.

Unfortunately they did not have any name-brand celebrities ready
to write for them, nor much cash to invest in the launch, and the
stock advisory newsletter marketplace was in a definite downturn.

Can you create a profitable online subscription business in a
year with little more than chutzpah and experience?


Salaries can run anywhere from 40-75% of any online
content start-up, so that was the first area of concern. To save
on taxes and HR costs, the partners agreed not to hire any full-
time staff (not even themselves) until the company had steady
cash flow to warrant it.
Instead, they surfed moonlighter and freelancer job boards,
posting for IT and editorial help. In lieu of a steady pay
packet, Betancourt convinced writers and techies to take a cut of
net sales, payable on a monthly basis. For example his IT team
agreed to take 5% of the net.

"We won't be doing these deals forever," he notes. "When we get
the cash flow to have staff, I will hire a team."

Last but not least, Betancourt kept issue production costs and
work low by publishing in text-only. His promotions were in
colorful HTML, but the actual issues were not. (This is actually
a time-honored tradition from the print newsletter world as

-> Building a list from nothing

The advisory newsletter community has a long history of working
together; competitors frequently barter postal lists, ezine ads
and email blasts. After your own house list, your competitor's
is going to be your next-best file.

However, the one thing competitors won't do is help out a new
launch because that launch has nothing to barter with. Plus,
established pubs will not take CPA deals from an unknown when they
have more proven ways to profit with their ad space.

Betancourt figured he needed a critical mass of at least 40,000
buyers and trial-takers to get competitors to allow him to join
their barter club. The key was to get there.

He went to second-tier list owners (folks without famous
name brands or paid pubs of their own) and convinced them to run
CPA ads for him.

It was a calculated risk. Some of these emailers might not be as
exquisitely careful about list source as they should be.
Betancourt did his best to police things, asking for permission
names only, requiring the "from" was the list owner's true name,
and that every mailing included a way to get off the list.

In all cases he ran a very soft offer: A trial with an enticing
premium requiring no credit card up front. The goal was to
maximize takers and build his house list as quickly as possible.

After just four months he hit 40,000 names, and flipped the
switch to competitor barters while ending all but one of his CPA

-> Testing trial marketing tactics to find what works

Betancourt tested running offers in three different media:

a. Email blasts (link to samples below)

When prospecting for print launches in the past, Betancourt had
had best results with long copy DM packages. He translated this
style to an email format, placing order buttons at regular
intervals through the letter so when people tired of reading they
could act immediately.

When they clicked, they landed on a registration form with brief
copy that restated the offer in order-form fashion. "Yes, please
sign me up…"

b. Ads in email newsletters

Betancourt tested both text-only and HTML ads in newsletters of
varying sizes, from tiny niche lists to famous lists with over a
million names. He asked for mid-week sends and top placement
when possible to maximize results.

When working with a new letter, he always asked first what other
financial publishers had not only run ads in the newsletter, but
which had run repeat campaigns. "If there's no continuation,
that tells me it didn’t work."

Since copy was limited to only a handful of lines, Betancourt
sent clicks to information-rich landing pages that included
testimonials and long, lavish copy. Then viewers had to click
again to get to the order page.

c. Paid search marketing

Betancourt tested "more than a dozen terms" on both Overture and
Google with an average bid of about 35 cents per click. Again he
sent clicks to long-copy landing pages.

-> Testing trial offer variations

Although he did not have the budget or time to test every aspect
of his campaigns completely scientifically, Betancourt did the
best he could to run a few different offers and gut-out what
worked best.

His standard offer was a trial of three weekly issues.

Betancourt figured consumers needed an extra push to sign up for
a trial to an unknown newsletter, so he always gave them an
immediate premium beyond the trial itself. Sometimes it was a
special report PDF, other times it was an educational "course"
(i.e., a series of written lessons sent via email autoresponder at
regular intervals for a short period).

Since the common wisdom in sub site marketing now is that you will
have a much higher conversion rate by asking credit cards up
front, Betancourt tested it. He also tested "No Hassle
Trial" offers that turned not asking for a card into a huge
selling point.

-> Maximizing conversions from trials to buyers

Because he initially relied so heavily on soft offers, Betancourt
poured his heart and soul into creating conversion marketing

Along with regular weekly issues, and an autoresponder "course"
(if the offer included one), each trial received a series of
emailed sales letters. Here is sample timing:

At sign up -- current issue (via autoresponder, next issue
comes on regular schedule sometime in the next 7
7 days out -- 1st sales letter, fairly soft sell
14 days out -- 2nd sales letter
18 days out -- 3rd sales letter
22 days out -- letter from editor saying he's extended their
trial for one more week "as a courtesy"
28 days out -- 4th sales letter
32 days out -- final sales letter

People had a wide array of term choices, from month-to-month at
$29 to two-years at $447. The longer a term they chose, the
better their per-month discounts and gifts-with-order would be.

Betancourt always put his "Best Deal" (i.e., longest term) as the
top choice on order forms. The month-to-month option at the
bottom looked blah in comparison to the glittering offers above.

-> Building profits with cross-sales offers

Even though Betancourt and Tracy were extremely time crunched,
both holding down day jobs while launching StreetAuthority, they
decided to start as many newsletters as possible in their first

"Our first launch was Labor Day 2002, our second December 9 2002,
and our third March 2nd 2003," says Betancourt. "As soon as I
can put these deals together with writers I roll them out."

Why? Because as we said above, cross-marketing to your house
list is the most profitable thing you can do. You can not do
it if you only have one product to sell them.


In its first year, StreetAuthority's invaluable house lists of trial-takers and buyers have grown from zero to
more than 120,000 names. Betancourt says the Company's trial
conversion rates are "anywhere from 1.5% to as high as 6-7% and
the average order is over $300."

More data:

- In general, text-ads ads in smaller newsletters have worked
better than HTML banners in very large circulation newsletters.
Betancourt bets this is partly because when newsletters go HTML
they often add in more sponsorships that compete for attention.

"I used to go to an 800k text-only file that only had three spots, top, middle and bottom, and it was great, better than 1%. Now
they're at 1.3 million and HTML, with skyscrapers, islands,
buttons… and I got 149 trials and not one single conversion."

- Search marketing was not a winner for StreetAuthority. "About
30-35% of people who clicked from those little ads would sign up
for a trial. I think it sucks. If I'm paying 35 cents per click,
it becomes a dollar a lead. And they didn't convert well. I
never recovered my investment in any of those programs."

However, bear in mind, Betancourt tested fewer than 20 search
terms. He does plan to test search again in future.

- While special reports are nice, people really adore the course
offer premiums for trials. Courses convert better too possibly
because the prospect's received more value and touches.

- Confounding common wisdom, Betancourt gets better overall
results from his soft no-card offers than harder trial offers.
We expect that is because his conversion series is far stronger
than most online publishers'.

- During the trial conversion series, most people from the final
efforts. "I see orders in the third and fourth week."

Betancourt also notes, "You should see all the thank-you letters
we get for giving them that extra fourth week."

- Average month-to-month buyers hang on for only about five
months. According to ContentBiz research this is shorter than
normal, but not that much shorter. Publishers who get a full 12
months or longer from these buyers are few and far between.

- Betancourt's cancel rates for longer terms are "under 9%. In
Rukeyser days cancellations could be 10-15% or more depending on
the list. The reason it’s lower now is that people spend more
time with the product before making a purchase decision."

Although the Company's been successful, and not required any
outside investment to continue, Betancourt and Tracy are still
putting in long hours without much take-home pay yet. "I'm
working seven days a week. You can reach me here at 10 o'clock
at night."

He and his family look forward to a day two-three years from now
when things will be a little easier.

Useful links related to this article:

o Creative samples of three of Betancourt's email campaigns:

o IT Moonlighter:

o StreetAuthority:
See Also:

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