But get chatting at private events and you’ll hear endless complaints that “ads don’t work”.

In fact, it’s rare as hen’s teeth to find a creator business that successfully scales with ads.

Those who manage it have a secret ingredient.

But you’ll have to keep reading to find out what that is.

Unless you skip to the end…

But that would be rather poor form :)

Anyway…

No fireworks here – just a reality check that might help you reframe scaling opportunities with your business.

Trouble In Paradise

Personally, I dislike the term “Creator”.

I feel like the subtext of Creator is that money is a dirty word.

We’re not doing it for the money, we just wanna create!

Well…

Things may start like that…

But go full-time on your creator businesses and you’ll soon realise how much it sucks a*** to be at the beck and call of the algo, and how building an actual business is, in fact, rather a good idea.

And this is why creators start to run ads.

The thought process goes like this:

“If I can sell my products with paid ads, I won’t have to rely on the algorithm any more – I’ll be free!”

Great in theory.

In practice, it’s harder than lighting a cigarette in a hurricane with a book of damp matches.

But why?

To answer that, we’ve got to look at the underlying business model.

The Creator Business Model

Let’s take a typical Creator Business model:

YOUTUBER + ONLINE COURSES

Doesn’t matter if your business is different – just focus on the principle.

Here’s the underlying dynamic of this business model:

Put simply…

1. You build an audience
2. You sell your courses to a segment of your audience

Let’s assume that on any given day, your total organic audience yields $1,000 of sales.

(We’ll come back to this later.)

Once you grow a bit, and build a team, your finances look something like this:

At this stage, things are pretty good, and you’re flush with cash.

But how do you keep growing?

You know that your creator model is not scaleable. (I’ll return to this in a future newsletter.)

So you turn to ads for some growth.

And that’s when things get juicy…

When Creator Businesses Run Ads

You start running Facebook ads.

“Buy my course! It’s great!”

(You swore you’d never become that guy, and yet here you are! Funny how life works out.)

Now, remember how, in the organic model, your audience yielded $1,000 sales on any given day?

And it was basically free sales, because you’d already built your audience.

Here’s what happens when you try to replicate this with ads:

See what happened there?

That same $1,000 revenue that you took for granted from your “free” organic audience now costs you $1,000 to achieve from paid advertising.

Leaving you with the grand total of…

$0 profit.

Try paying your team with that!

(And that’s a best-case scenario. Most ads are loss-making at the start.)

Why does this happen?

Paid Traffic vs Online Courses

The brutal truth of the matter is this:

Creators trade on their reputation with their audience, not on true market demand.

In other words, a creator audience will buy because they like the creator, not because they’ve assessed all the products out there in the market and decided what best meets their needs.

None of this is to diminish a creator model – not in the slightest.

Rather, this is to explain why is that selling with ads is so hard.

Think about all the natural advantages you have in the creator model, by virtue of the audience you have built…

Now consider what’s happening with ads…

1. The don’t know who you are
2. They don’t trust you
3. You’re interrupting their day
4. You’re asking them to do something decide

And consider this:

They may not even know they have a problem in the first place! (Let alone want your solution.)

Now, this isn’t necessarily fatal.

But it does mean…

You need elite marketing skills to compensate for all the goodwill you took for granted in your organic audience, and achieve the same response from a humble ad.

1. Get people to trust you
2. Make them aware of the problem
3. Make them want your solution
4. Give a compelling reason to act now
5. Price your offer for maximum appeal
6. Maximise AOV with upsells
7. Follow-up to increase response
8. Build a product that fulfils on the promise and isn’t refunded

This is very hard to do.

And you’re competing with the best in the world trying to do the same thing.

There are other factors, too…

For example, if you’re in a particularly hot market, then you can capitalise on natural trends. (Think A.I. in early 2023, or crypto in 2020-21.)

But most creators are not in a hot market.

• “Learn to draw!”
• ”My Notion template system!”
• ”Invest in property!”

All good stuff…

But it’s nothing new, and you’re competing against the rest of the world, most of whom have a lot more experience than you.

Also…

Your products have been built to sell to an audience of loyal fans.

Products for a cold audience need to be built to very differently and tested against the wider marketplace – often a less sophisticated audience than you’re used to.

(Finally, it’s worth remembering that a lot of today’s hype around paid traffic today is a legacy from the early days of Facebook and Google, when it was very cheap to run ads.

Those days are no more.

So…

For all these reasons, and more, our fictional YouTuber has a mighty hard team selling their courses profitably on paid ads.

Conclusion

Today’s newsletter was a reality check on the dynamics of selling products in the creator space, compared to paid ads.

Creators turn to running Facebook ads to promote their products, thinking it will free them from reliance on the algorithm.

But it rarely works out that way, for a few fundamental reasons:

• Creators rely on goodwill from their audience. (You have none of that from cold audiences.)
• The marketing skill required to compensate for the “audience advantage” is extreme. (And you’re up against the best marketers in the world selling to your market.)
• Online courses are not well-suited to paid acquisition. (Unless they’ve been specifically designed that way through market testing.)

So what’s the message you should take from this?

Pack it all in and go work at Starbucks?

Heck no.

The lesson is a simple one:

Know the game you’re playing.

I’ve seen more than my fair share of creators tangle with paid ads like a sailors in a dockside dive, fists flying and bottles breaking.

And I consider it unnecessary suffering.

If you buy my view of the world, then I think you’ve got two choices:

1. Accept the natural limitations of the creator model, and just play the creator game at a high level.
2. Decide you want to learn to build business for scaleable paid acquisition channels, and commit to learning.

There’s no right or wrong.

But we all do ourselves a massive favour by just understanding what we’re up against and making informed choices.

Beats wishing things were different and banging your head against a brick wall trying to make something work for years on end.

Here in Hobbitshire, I had a similar experience recently.

Long-time readers will know that I fancy myself a bit of an amateur pilot.

At least, I’ve been studying for my PPL.

Nothing is better than driving up to the airfield on a sunny Wednesday morning, pulling the plane out of the hangar, and heading up into the skies…

I love it – gets me away from the computer, and gives me something cool to talk about on Twitter.

But the truth is…

The weather here has made it virtually impossible to fly recently.

Literally every lesson I had booked for 6 months has been cancelled…

Too wet… too cloudy… too whatever.

This is disappointing, naturally, and at times I get a bit fed up.

But then I think…

You live in England, for crying out loud! What are you expecting – weeks of uninterrupted sun and clear skies?

Reasonable that would not be.

So, rather than banging my head against a wall, wishing Hobbitshire was Florida…

Wouldn’t it make more sense just to pack it in and pick a simpler hobby?

Flower arranging, perhaps?

Crochet?

Perhaps.

Either that, or I should just make my mind up, go spend a month in Florida and just finish off my PPL training like I mean it.

Better to make a decision.

Wouldn’t you agree?

Namaste,

Olly