Newsletters Are Booming. Can Their Ad Products Catch Up?

Over the last decade, publishers’ drive to maximize their digital advertising revenues nearly ruined the open web, as the financial incentive to monetize every inch of digital real estate led to a whack-a-mole landscape of pop-ups ads that sacrificed sensible design for the sake of profit. Now, even as publishers have begun to prioritize user experience across their websites, many risk repeating their old mistakes in the channel of email newsletters. Newsletters have enjoyed a renaissance among media companies, thanks in part to their ability to build habits in readers and collect valuable data without relying on the fickle distribution of social platforms. Advertisers have also embraced the channel, according to Nicole Perrin, the vice president of business intelligence at Advertiser Perceptions. Across three surveys of 250 U.S. marketers—in August 2021, February and August—the percentage of respondents who said they advertised in newsletters rose from 37% to 49% to 65%, respectively. The New York Times Debuts 18 Subscriber-Only Newsletters But many publishers have monetized their newsletter program with programmatic display ads, automated solutions that place little emphasis on design, perform poorly and devalue their audience, said Jacob Donnelly, the publisher of Morning Brew. Email newsletters have very high engagement, and it's selling them short to treat them like a webpage in an email.Brian Morrissey, the founder of The Rebooting As a result, the industry has found itself in a familiar predicament, tasked once again with the need to strike a more sustainable balance between monetization and user experience. Otherwise, as they funnel readers toward their newsletters, publishers risk shoehorning subscribers into a product whose misaligned ad experience could create negative sentiment toward not only their brand but the medium in general. “Trusting somebody else to be responsible for the monetization of your business is insanity,” Donnelly said. “I’m glad to see publishers are beginning to move away from programmatic.” Trading user experience for convenience Vendors monetizing newsletters circumvent the technical limitations of the channel, such as its inability to support JavaScript or iFrame, by creating programmatic display products that serve targeted ads based on reader behavior and the context of the placement. Many of these products, like programmatic display more broadly, convert at low rates, generate little revenue and lead to a poor user experience, said Brian Morrissey, the founder of The Rebooting. “Native placements, from everything I've seen, far outperform display ads,” Morrissey said. “Email newsletters have very high engagement, and it's selling them short to treat them like a webpage in an email.” The small, boxy ad products, often featuring clickbait-style content, suspended in white space between paragraphs of text, clash with the minimalist, text-based design of email. And given that many readers gravitate to newsletters because they offer an oasis from the clutter of the open web, the visual mismatch can be particularly jarring. But the turnkey nature of programmatic solutions means they require almost no oversight. And for publishers whose distribution strategies would compel them to send newsletters either way, the allure of incremental revenue with little added effort can prove too tantalizing to refuse. Newsletter monetization poses organizational challenges The temptation to monetize newsletters with mediocre ad products affects legacy publishers in particular, as many developed their email programs long before the potential of the channel became apparent. A handful of newer publishers like Semafor, Axios, Puck, Morning Brew and Industry Dive largely eschew programmatic display ads, opting instead to populate their newsletters with direct-sold products, many of which feature custom copy and rich visuals. Puck, Channeling the Charm of Magazines Past, Nears 200,000 Subscribers Yet these are outliers. For most, retooling their newsletter monetization strategy would require new tech, as well as creating the organizational infrastructure necessary to sell ads directly, write copy and oversee campaign logistics. Even if a publisher crunched the numbers and determined the investment would be worthwhile, such a project would entail a larger, existential shift, according to Adam Ryan, the cofounder and chief executive of Workweek. Newsletter-first publishers drive attention to their emails, whereas legacy publishers drive attention to their websites. “I can sell a newsletter at a premium rate because I tell marketers this is the prime attention spot,” Ryan said. “If you do that, you can cannibalize other products—you can’t sell everything as premium.” Poor user experience jeopardizes the newsletter mission The ability of newsletters to develop habit in readers has led many publishers to acquire subscribers, in some cases exchanging access to paywalled material for an email address. But a negative user experience can counteract this benefit, as repeated exposure to a poorly designed product can quickly lead to churn. As a result, even for publishers who view their email products primarily as vehicles for traffic, monetizing newsletters with low-quality ad products risks jeopardizing one of the primary perks of the medium. “Publishers are getting smarter about their overall advertising strategy and how email ties into it,” said Dan Oshinsky, the founder of the email consultancy Inbox Collective. “They are starting to realize that it may be more profitable to make some short-term sacrifices in revenue if it means they can do a better job of attracting, engaging and keeping their audience through other channels.”

Newsletters

Newsletters Are Booming. Can Their Ad Products Catch Up?

In their bid to monetize email, publishers risk repeating the errors of the open web

Mark Stenberg

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Mark Stenberg