Leaving chips on the table

Getting up from a blackjack table and leaving your chips behind? Never! But in entrepreneurship, it happens more than we'd like to admit. Sometimes, it's wiser to take what you can and run.

From 1996 through 2000, I witnessed the rocket-ship-like growth of the Internet and partook in 24/7 Media's ascension from three small ad rep firms to a company with thousands of employees around the globe. Then came the 2001 web bubble burst. After seven rounds of layoffs, my name got called. I went from being a paper millionaire at 24 to leaving with two weeks' severance and $15k in stock options. Others were less fortunate.

I used my severance and $15k to start my first company, eBrokers, and parlayed that into a VP title at MaxOnline and eventually to running a division at IAC Advertising.

At Wellput, we’re leaving money on the table by not capturing the full value of ad impressions. Our CPC model relies on clicks, ignoring the impact of endorsements by newsletter writers to engaged readers who don't immediately convert.

Determining the value of a click is based on the likelihood that the click will result in a down-funnel conversion and the value of that conversion to an advertiser. According to Shopify, most e-commerce brands see a 2.5% (conversion rate). That means 97.5% of the people who read a newsletter sponsorship, click on it, and come to a brand's website won't buy immediately.

Let's break it down with some math. Imagine an ad is seen 1,000,000 times, generates 10,000 clicks, a customer is worth $100, and you have a 2.5% conversion rate (CVR):

• 1,000,000 impressions x 1% CTR = 10,000 clicks
• 10,000 clicks x 2.5% CVR = 250 customers
• 250 customers x $100 per customer = $25,000

Marketers aiming to break even will pay up to $25,000 for 10,000 clicks or a $2.50 CPC. But what about the other 990,000 people who saw the ad but didn't click? Or the 9,750 who clicked but didn’t buy immediately?

If just 1% of those clickers convert later:

• 9,750 clicks x 1% CVR = 98 future customers
• Total: 348 customers x $100 = $34,800

Now, those marketers should pay up to $34,800 for 10,000 clicks or a $3.48 CPC. Ignoring future value means we’re getting $2.50 per click, leaving nearly 40% of the value on the table.

Smart marketers know this and are taking advantage of newsletter sponsorships to unlock incredible profits.

To more efficiently distribute this value, we need a competitive marketplace where marketers compete for sponsorship inventory. Only then will publishers recognize their fair share of the full impact that newsletter sponsorships create.

At Wellput, we’re building that competitive marketplace. As Willie Nelson's song "The Gambler" goes, "You've got to know when to hold 'em, know when to fold 'em, know when to walk away, and know when to run." There are still a lot of chips on the table, and we're working with newsletter publishers to capture them.

Where are you leaving money on the table today? Is it worth it, or can you capture more value somehow?

Thank you for reading my newsletter. Please let me know what you think.

Sincerely,

Craig Swerdloff