Newsletters are in the middle of a renaissance, so, naturally, advertisers want in.
Several independent writers, including journalists who defected from traditional news organizations, have launched their own email publications using services like Substack, Revue and Ghost. Many of these newsletters garner engaged, passionate, niche audiences — precisely the kinds of audiences that advertisers find attractive.
But the process for booking an ad in an independent newsletter isn’t so simple.
Take Brian Gerrard, the head of marketing at a startup that specializes in business tax automation. He wanted to try a new marketing channel in addition to the paid search and social ads he was already running, so he decided to give sponsorships in smaller, business-oriented newsletters a whirl. The whole experience, though, seemed a bit archaic.
“We were kind of just looking up obscure websites and hoping there’s a ‘contact us’ button,” Gerrard told Built In.
So rather than trawl the internet for relevant publications and send more cold emails, Gerrard signed up on a new website called Swapstack.
Swapstack is an online marketplace that connects newsletter creators with potential advertisers. It allows the two parties to find and contact each other, hash out campaign details, book advertisement placements and facilitate payments, all on the platform.
It’s just one of many ad-booking sites trying to capitalize on the personal newsletter boom, with competitors including Paved, Letterwell, Hecto, SponsorGap, AudienceHunts and Upstart. Each wants to make it easier for both newsletter creators and advertisers to get what they want.
For the former, that’s finding a revenue stream beyond charging for subscriptions; and for the latter, it’s the ability to target niche audiences in a cost-effective channel.
How Did Newsletter Ads Work Before?
Until sites like these came along, buying ads in newsletters happened in one of two ways.
If you want to advertise your business in the newsletters of big publishers — whose email lists have hundreds of thousands to millions of subscribers — you likely buy ad space through a programmatic advertising platform. These platforms ensure your ads get inserted into emails as the right audiences open them. But solutions like these tend to work best at scale.
So if you want to reach the people reading smaller newsletters, whose email list sizes range from hundreds to tens of thousands of subscribers, chances are you have to take a DIY approach and knock on doors yourself — or hope those newsletter creators reach out to you first.
But now that niche newsletters are becoming more popular, a third option has emerged — the advertising marketplace — which means advertisers aren’t forced to choose between scale and efficiency.
It’s Anyone’s Game
When it comes to ad buying in the independent newsletter ecosystem, “there isn’t really a single tool [that] everybody uses. [There’s no] consensus industry leader,” Dan Oshinsky, who runs Inbox Collective, an email consultancy, told Built In. “There is a lot of market share up for grabs.”
Paved, the elder in the space, started in 2017. About 800 newsletters and 2,500 advertisers use its marketplace platform, according to John McLaughlin, the company’s founder and CEO. The median audience size of newsletters on Paved is around 22,000 subscribers.
Paved allows advertisers to specify the type of audience they’re trying to reach, and recommends for them a “bundle” of newsletters to advertise in. Paved then takes the ad and “spreads it across” the newsletters, McLaughlin said. “It’s highly automated.”
Letterwell has accrued more than 370 newsletters on its site since its December of 2019 launch. The median audience size for newsletters hovers around 10,000 subscribers, according to co-founder Sohum Shah.
The site has gone through a couple different iterations. Previously it was a list of newsletters that advertisers could message through a contact form. Now it’s a marketplace, where advertisers search newsletters by audience size, categories and engagement metrics, and contact them directly to hammer out a campaign.
According to Shah, Letterwell is currently building a programmatic experience, akin to using Google AdSense or Facebook Ads, where advertisers can buy a specific number of views within an email campaign, rather than the whole campaign itself.
Swapstack joined the fray in December of 2020. Since then, the platform has been joined by around 125 advertisers and 300 newsletters, the median audience size of which is about 1,000, according to founders Jacob Schonberger and Jake Singer.
Advertisers create profiles on Swapstack’s website to gain access to a gallery of available newsletters to browse and search from — and pitch. If a pitch is approved, the two sides work out ad campaign details via direct messaging.
Swapstack intends to eventually make the process more automated, and “support something like a dynamic bundle,” Schonberger told Built In.
There’s also Hecto, which has about 60 approved newsletters (with a median audience size of about 1,500 subscribers) and 200 advertisers using its platform, started in June of 2020, with version two launching on Product Hunt in March of 2021.
In a similar fashion, Hecto allows advertisers and publishers to connect through the site’s marketplace and discuss details in the DMs. For now, programmatic options aren’t on the site’s product roadmap.
“To bring the supply side and the demand side together in one place is a challenge in itself,” founder Simon Bruce said.
There’s Opportunity in Independent Newsletters
Reaching the audiences of smaller, creator-driven newsletters excites advertisers for many reasons. Chief among them is how narrow these audiences tend to be — which makes it easier for advertisers to know which ones to go after, and how they can best tailor their messaging. A “spray and pray” approach isn’t necessary.
“You have targeting built in,” McLaughlin said. “If you join a newsletter about pets, chances are you have a pet.”
And these audiences tend to be highly engaged too. McLaughlin said smaller newsletters typically outperform larger ones when it comes to metrics like open rates and click through rates. (Open rates for newsletters on these marketplace sites tend to range from 30 to 50 percent on average.)
“You have targeting built in. If you join a newsletter about pets, chances are you have a pet.”
Many people who open newsletters often spend several minutes reading and digesting the content. Unlike in other marketing channels, advertisers are catching newsletter readers in a receptive frame of mind, Schonberger said.
“People doomscroll past [social media] ads,” the former Facebook employee added. When it comes to ads natively inserted into newsletters, though, readers are more likely to read and click through — they trust the writer. “That’s not a relationship that can even be compared to how paid social works.”
And for now, independent newsletters are a way for advertisers to stretch their marketing dollars.
Advertising in this space tends to be more cost-effective than other marketing channels, according to Oshinsky.
“It’s a little bit undervalued right now,” he said. “There are still lots of opportunities to place a really good ad in front of an engaged audience and see really good results.”
“There are still lots of opportunities to place a really good ad in front of an engaged audience and see really good results.”
McLaughlin said Paved’s revenue tripled between quarters two and three in 2020 — a bump he partially attributes to the service being inexpensive when compared to other digital marketing channels.
“Everybody was bidding up on Google and Facebook, to the extent that it was becoming unprofitable,” he said. “So they were just looking for somewhere else to spend. And at the same time, Substack is coming up and making newsletters cool again. So it was a perfect storm.”
But Some Challenges Remain
While running an advertising campaign on independent newsletters may be less expensive than buying ads on search and social, the lack of industry standard pricing is a commonly cited problem.
Pricing is “kind of all over the place,” Swapstack’s Singer said.
“One of my biggest critiques of the industry would be that you don’t know how much to pay,” Gerrard, the marketer, said. “It feels like it’s the Wild Wild West still.”
Because the space is so new, there is also a lack of integration between many of these marketplace platforms and the email service providers, which makes reporting data back to advertisers a manual lift. Asking the newsletter creators to take a screenshot of a campaign’s metrics and email it to advertisers is, for now, the common industry practice.
And although the rise of marketplace websites has made it easier for advertisers and independent newsletter creators to find each other and work together, some believe there is still too much back and forth that has to take place.
To contact the creator, agree to terms, write the copy, approve the creative and get data back after a campaign “could take four or five phone calls,” Gerrard said. “It’s not a very time-efficient way of marketing.”
The marketplace platforms may tighten up their processes to account for this.
Letterwell already has plans to move away from the marketplace listing structure to something that’s “way more automated,” Shah said.
The company recently rolled out an instant-booking feature, which allows advertisers to skip the negotiation process and accept the publisher’s set terms on the spot.
These hurdles may make buying ads in niche newsletters more work than their programmatic counterparts. But there’s an upside: In an increasingly competitive marketing landscape, the willingness to do some lifting can unlock new avenues for growth.
