As Newsletter Ad Revenue Heats Up, 6AM Plans to Double Revenue and Followers

As the newsletter ecosystem heats up, the battle for inbox dominance could be headed to your backyard. The newsletter company 6AM City recently announced its expansion into Richmond, Va., the ninth location for the five-year-old media organization. The newsletter-based publication will also launch its Nashville, Tenn., branch this week and will debut in Richmond by May. The expansion efforts are part of a more ambitious project for 6AM City to double in scope in 2021, said chief operating officer Ryan T. Heafy. It plans to expand from nine markets to more than 14, 400,000 free subscribers to 750,000 and from $3 million in projected annual revenue to over $5 million. The 40-person company plans to achieve profitability this year. Tapping into local and regional ad markets The publishing industry has seen its grip on the digital ad market weaken over the last decade, but as newsletter appetite has grown, newsletter advertising has remained a bright spot. As a result, the latest expansion from 6AM City comes as the city-specific newsletter ecosystem continues to crowd, with Axios Local and City Cast launching in the last three months. 6AM serves both local and regional clients, including Publix, Lowe's Foods and the YMCA, though the advertising breakdown is 70% local 30% regional, Heafy said. On average, its daily newsletters have an open rate of between 25% and 35%, which tops the 22% average for a media newsletter, according to Mailchimp benchmarks. Ninety percent of its subscriber base reads at least one email a month. Jeff Kupietzky, the chief executive of the multichannel messaging platform PowerInbox, says that newsletters that serve local publications can struggle to meet the needs of larger clients, simply because of budgeting challenges. An advertiser with a large marketing budget, for instance, would have to "spread out" its spending across several smaller markets. The more markets 6AM expands into, the larger its potential audience becomes. "It's hard for national advertisers to buy into [local] inventory, because they typically have a lot of money that they have to put to work," Kupietzky said. "You need an ability to absorb that campaign across multiple geographies." A 'covid-recovery mechanism' 6AM City has spread like kudzu across the Southeast region of the United States, and the company says it's evaluating over a dozen cities for additional 2021 launches. It has also released an initiative called PickMyCity that allows residents to nominate their locale as a future hub. The newsletter-publisher has also drawn interest from the cities themselves, due to the focus it places on small businesses and cultural coverage. The publication casts itself as an economic booster to local economies, a "Covid-recovery mechanism" that can spur consumer spending. Cities are now in a race to stand out as attractive locations.6AM City Many cities saw economic activity plummet during the pandemic, and the flight from metropolitan areas has raised questions about the future of urban living. The leisure and hospitality industries have been particularly hard-hit, according to a Brookings Institute report. As the country prepares for a return to normalcy, 6AM City has positioned itself as a tool for cities to attract new residents and prompt spending. In some markets, 6AM City has received financial incentives from city organizations to lure it to launch. In Lakeland, Fl., an economic development council recruited 6AM City by financing its expansion; in Nashville, 6AM City has partnered with the Nashville Downtown Partnership. “As more professionals and retirees are evaluating their options for which cities they will call home, cities are now in a race to stand out as attractive locations,” the company said in a release. “6AM is a marketing machine for the cities it serves.” Growing through 'micro acquisitions' and 'politically unbiased' content With several expansions now under its belt, 6AM City has routinized the process of moving into a new city. The company needs $250,000 to launch in a new market, but through a combination of paid marketing and "micro acquisitions," can nearly guarantee it will reach 50,000 subscribers within six months, according to Heafy. On three occasions, the newsletter-publisher has expedited the process by acquiring the assets of local content creators who have developed loyal followings but lacked the tools to monetize them. In these exchanges, 6AM City buys the assets, such as email lists, advertising relationships, and occasionally the talent themselves, to gain an audience foothold in new markets. "As we go into all these cities, we're not only looking for audience; we're looking for editorial talent to help us in the market," Heafy said. To finance its expansion, the newsletter-based publication closed a new round of funding, led by Harbright Ventures and VentureSouth. 6AM City has raised more than $4 million in venture capital financing since its inception. The New York Times to Writers: Check With Us Before You Start a Newsletter