As Newsletter Advertising Grows, Advertisers Opt for Quality Over Quantity

Does size matter? In the world of newsletter advertising, not so much. As the newsletter economy heats up amid the looming disappearance of cookie-enabled ad targeting, advertisers intent on reaching precise, opted-in audiences have shown a willingness to pay for smaller email lists. The pandemic has encouraged marketers to embrace methods of outreach promising direct access, leading the newsletter advertising ecosystem to expand. Newsletters saw a 5-34% increase in engagement in 2020, according to a report from Tidings. Transparency Market Research predicts that email marketing will be a $22.16 billion global industry by 2025. As publishers have benefitted from newsletter advertising revenue windfalls, more creators and advertisers are exploring sponsorship opportunities that center quality over quantity. Alex Kantrowitz, a former BuzzFeed News reporter who launched his Substack newsletter Big Technology last July, has seen increased demand from advertisers to reach his relatively small audience of 9,300 free subscribers. When Kantrowitz first opened his newsletter to outside advertisers in January, he found immediate interest, selling out his inventory five months in advance: Three months to Mediaocean, one to MainStreet and the fifth to a yet-unnamed partner. He charges $4,000 a week or a discounted, low five-figure sum for advertisers looking to sponsor the entire month. The monthly package includes an advertisement at the top of his weekly newsletter, whose average open rate is 33% (the average for publisher newsletters is 22.15%, per Mailchimp), as well as an ad-read at the beginning of his podcast, which listeners have downloaded 84,700 times, according to Kantrowitz. Unlike other success stories in the world of independent newsletter advertising, such as Packy McCormick and his Not Boring newsletter, which reaches around 45,000 free subscribers twice weekly, Kantrowitz primarily trades on the caliber of his readership, rather than its size. Big Technology readers occupy decision-making positions at technology companies, and the majority are educated and affluent, according to audience data collected by Kantrowitz. As such, he has succeeded in charging top-shelf prices for reaching them, a reality that Brian Georgi, the CRO of the publisher CRM Boostr, attributes to a number of qualities. “If I'm advertising within a newsletter, my reach may be somewhat limited, but there is no doubt about the passion of the audience that I'm reaching,” Georgi said. “If I want that contextual association, it's hard to think of a better way to do that than through a newsletter.” Multiple ways of monetizing Newsletter writers are not the only party interested in capitalizing on advertiser interest in niche audiences. If you have an email list, you can drive revenue from it.Christopher Sopher, co-founder, WhereBy.Us The startup Swapstack released a new feature on Thursday, called Plug and Play, that provides qualified newsletters with a referral link to embed in their emails. These links send readers to larger newsletters, such as Morning Brew, The Daily Upside and Secureframe, who sponsor the ads because “the best newsletter readers come from other newsletters,” said Jake Schonberger, the cofounder of Swapstack. In the arrangement, Swapstack takes a 25% cut on the affiliate revenue generated, and writers can earn anywhere from $1.50 per referral (Morning Brew) to $37.50 (Secureframe) based on the specifics of the deal. While the links are unlikely to generate windfall returns, they offer fledgling newsletters an opportunity to trade in on the desirability of their audiences, no matter their size. Likewise, Letterhead, a newsletter advertising platform built by the creators of WhereBy.Us, quietly unveiled its new Starter package last week, allowing newsletter writers of any size to incorporate ads into their products in exchange for a small percentage cut. The software aims to help anyone with an email list—of virtually any size—monetize it, said cofounder Christopher Sopher. It currently has "about 50" publisher clients and recently surpassed $30,000 in monthly revenue, according to Sopher. “We have people with 500 readers, we have one newsletter with 30 readers, all the way up to ones with hundreds of thousands of readers,” Sopher said. “If you have an email list, you can drive revenue from it.” The challenges of friction and sub-par analytics The problem Letterhead aims to solve has been the primary impediment in the growth of independent newsletter advertising: Friction. Substack, the most popular option for solo newsletter writers, offers no framework for inserting ads into emails. As a result, creators must jerry-rig them into their newsletters, a process that has proven a substantial enough headwind to discourage more widespread adoption. Email service providers like Substack also offer varying degrees of user insights, meaning it can be challenging for creators to collect the kind of audience data that digital advertisers have come to expect. Kantrowitz side-stepped this problem by surveying his readership, a method other newsletter writers have employed, but it is far from perfect. Plus, the kind of superficial demographic data collected in a survey still pales in comparison to the kind of granular insights that drive modern advertising. Until newsletter platforms can offer independent writers in-depth insights into their readers, advertisers will have to rely on the reputation of the writer to cast a positive association of their product. Nonetheless, the directness of email advertising has helped the medium remain an oasis in an otherwise contracting ad market. As marketers continue to seek out new ways of reaching targeted audiences, the ecosystem stands poised for future growth, benefitting newsletter writers regardless of size. Newsletter Platform Substack Goes Local