How Paid Lead Magnets Are Changing Online Business

Hello there, Jordan here 👋

It’s obvious right?

Everyone does it, so it should be true.

For the last 5 years, I believed one simple thing:

Your Lead Magnet Should Be Free

This makes your very first offer to your customer super-accessible. Gets your foot in the door with a massive list of leads you can potentially help.

Pretty good right?

No.

Let me tell you the story of free mobile games.

Mobile gaming is now a cesspool of free “games” that I would be ashamed to be called a game designer if I made.

But it didn’t start that way.

Long ago, before the Fire Nation attacked (about 2010) mobile games were in their infancy.

Everyone was into browser games for their quick 5-minute fun.

Games like Achievement Unlocked, Doodle God, or Bloons Tower Defense. Quick, fun little things you can spend a few minutes on. Typically free with ads or having a way to pay to get more of the game to play.

But then the gaming industry saw the potential in mobile games. We started porting everything we could to phones. Game engines like Unity (❤️) grew in popularity.

The mobile gaming industry got industrialized.

They got really damn good at making money from a free audience. Their products barely resembled games now, but they were powerful. No marketer can come in close to how powerful some of those games were.

You could see every trick in the book inside:

• Quick initial wins

• Careful pricing and anchoring

• Time gating and artificial delays

• Building a daily consumption habit

• Skinner Boxes (think Slot Machines and Loot Boxes)

And so much more.

And they made a LOT of money from that.

But that also made the mobile gaming industry what it is today.

It’s bad.

There is too much psychology and too little value at the end.

So 3 groups of users formed:

1. The casual payers.
   A small group of busy people looking for a quick way to relax (3%-5%). They don’t have the time to look for the few good games or wait forever on timers. So they spend a few bucks on every game.
   Great users, but very high churn.
   Business Analogy: The users which purchase a cheap offer and let it rot in their inbox, never getting any value from it.

2. The cash cows.
   An even tiny group of people (<1%) that generate all the money. They’re addicted to the game. Those are making 90%+ of the profits.
   Business Analogy: Your superfans. They’re addicted to you.

3. Everyone else.
   Everyone else is doing their best to:
   a/ not pay
   b/ pay the least amount of money humanly possible
   They are happy to invest time (or can’t stop themselves because of the, you know, predatory psychology behind) but not money.
   Business Analogy: Free users that saw some value behind what you do, but can’t justify paying. Bad price to value ratio.

The mobile gaming industry has burned out most users. They don’t want to pay.

So, they’re leaning more and more into the few paying users, employing even more psychology just to keep their profits.
(note: there are brilliant outliers in the space, like Slay the Spire, Wild Rift, or Genshin Impact with great businesses and great games; they’re just rare)

So, has marketing burned out users with free offers?

No.

Of course not! Not even close.

But there are a lot of them out there. We’re following a similar path with free offers but we’re many steps behind.

But you can take the next steps in that game and apply them now for disproportionate gains.

And the next steps?

Make your first offer paid. Establish yourself as someone who’s attention and effort cost money. All of it.

Will this get you fewer leads?

Yes.

Will 100% of them have undeniable proof that they’re willing to pay for your products/services?

Also yes.

Something interesting to think about this Sunday.

Your biggest fan,
Jordan

💡 Idea of the Week

⚙️ Tools, Apps, 'n' Gadgets

Here are today's picks:

• ChatGPT Plugins — ChatGPT Plus is still one of the worse implemented paid programs ever. Even with users who paid to show their interest, you need to manually opt-in for new features. And the plugins are way too good for you to miss.

• Descript — What I use to edit my short videos. If you can write, you can edit using Descript. Fast. The free version is kind of limited, but it’s one of the tools I’m happy to pay for.

• Go High Level — After testing every damn funnel building software on the market, I found High Level – they not only build funnels, but do pretty much everything else that an online business needs. Super powerful.

🔦 Creator Spotlight

Parker, the friendliest janitor to (almost) a millionaire on Twitter finally started his newsletter!

(Seriously, I challenge you to find a friendlier person. Try it.)

📰 Last Week with Jordan

Here’s how to build a lead qualifying survey 👇️

That was it for today. Have a great week and I'll see you next Sunday!

— Jordan

PS: Help me out by sharing this with a friend who'll find it useful 🫶