Trends: An Inside Look at How 7-Figure Newsletters Make Money.

Presented by: Ethan Brooks

Senior Analyst, and Lead Researcher for Guides

@damn_ethan

Trends.co

Newsletters are having a moment...

Subscriptions are exploding at companies like NYT, The Atlantic, and Substack.

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There have been high-profile acquisitions of Morning Brew, The Hustle, and Revue.

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Major names at Vox, Buzzfeed, TechCrunch, Rolling Stone have left to start their own newsletters.

@damn_ethan

Trends.co

People want to know the inside secrets...

How does the business model work?

Paid or free… Which should I build?

How do you land your first advertiser?

How niche should my audience be?

What tech stack should I use?

What are the secrets to paid acquisition?

When do I start selling ads?

What ESP should I use?

How much should I charge for advertising?

How do I develop my unique voice?

How do I reduce churn & increase my open rates?

Which KPIs should we be measuring and what are good benchmarks?

How do you get from 0 to 10k subscribers?

How do you price paid newsletters?

@damn_ethan

Trends.co

We spent 6+ months interviewing the best in the biz...

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And drew on our own experience building multi-million dollar newsletters...

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@damn_ethan

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We compiled hundreds of pages of distilled research, dozens of interviews, and detailed answers to the most pressing questions…

@damn_ethan

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First things first...Who here already has a newsletter?

@damn_ethan

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One key question informs the rest...

How does the business model work?

Paid or free… Which should I build?

How do you land your first advertiser?

How niche should my audience be?

What tech stack should I use?

What are the secrets to paid acquisition?

When do I start selling ads?

What ESP should I use?

How much should I charge for advertising?

How do I develop my unique voice?

How do I reduce churn & increase my open rates?

Which KPIs should we be measuring and what are good benchmarks?

How do you get from 0 to 10k subscribers?

How do you price paid newsletters?

@damn_ethan

Trends.co

The simple answer is that you should (eventually) build both…

@damn_ethan

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There are 3 ways to make money from a newsletter...

All newsletter businesses draw on some mix of these three.

High-priced Subscriptions

(called “back-end” products)

Low-priced Subscriptions

(called “front-end” products)

Free Subscriptions

Monetized via ads or affiliate deals

@damn_ethan

Trends.co

On their own, each is nice. But together they’re worth more...

You grow your free list first, monetizing via ads or affiliate deals.��Then use profits to develop niche subscriptions people on your free list are willing to pay for.

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This diversifies your revenue, and grows the lifetime value of readers who join multiple subscriptions.

@damn_ethan

Trends.co

You start by building your free newsletter...

@damn_ethan

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We see a few really common questions about launching newsletters...

Growth

How do I scale my audience fast?

Technology

What tech stack should I use?

Audience

How niche should I go?

1

2

3

@damn_ethan

Trends.co

Growth

How do I scale my audience fast?

Technology

What tech stack should I use?

Audience

How niche should I go?

1

2

3

@damn_ethan

Trends.co

You don’t need a huge audience.

You just need the right one...

Focus on what you feel is missing from the world, rather than what you hope will be really popular.

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Look at these profitable audiences and notice:

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1. Value doesn’t scale linearly with list size.
2. You don’t need a huge list to make millions of dollars.

There are riches in niches.

@damn_ethan

Trends.co

Dan Oshinsky, Director of Newsletters at Buzzfeed and The New Yorker and founder of Inbox Collective

“I should be thinking, this thing feels like it was built just for me. Like, where has this thing been all my life?”

Click “play” to hear Dan discuss the 4 types of successful newsletters.

@damn_ethan

Trends.co

Growth

How do I scale my audience fast?

Technology

What tech stack should I use?

Audience

How niche should I go?

1

2

3

@damn_ethan

Trends.co

You don’t need the perfect tools.

You just need an easy one...

We found that newsletters tend to change their tech stacks at fairly predictable points. Don’t get stuck looking for the perfect stack.

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From 0-100k sends per day, any all-purpose platform will do.

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MailChimp is the most popular place people start. Substack is another option.

Your tech stack will grow as your audience does.

@damn_ethan

Trends.co

Growth

How do I scale my audience fast?

Technology

What tech stack should I use?

Audience

How niche should I go?

1

2

3

@damn_ethan

Trends.co

Focus on growing your trust inside your niche…

@damn_ethan

Trends.co

Codie Sanchez grew the Contrarian Thinking newsletter

to 10k readers in 30 days.

“I think the best way to get on podcasts is to say interesting things to the marketplace, and then people come to you.”

Click “play” to learn how Codie lands and leverages podcast interviews.

@damn_ethan

Trends.co

So… When is your audience big enough to monetize?

@damn_ethan

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You are ready to monetize a free newsletter when you have...

...at least 2 of the following:

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• A large audience (~80k+)
• High open rates (20% or more)
• Readers ready to spend money

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Your advertisers’ success, and therefore your success, depend

on these.

@damn_ethan

Trends.co

An audience that’s ready to spend money is crucial...

This dictates your audience’s value, and impacts how much you can charge for:

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• Affiliate fees
• Ad CPMs
• Paid subscriptions

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Historically, finance, business, work-related, and female audiences have higher LTV and therefor ad rates.

@damn_ethan

Trends.co

There are two popular ways to monetize a free newsletter...

• Affiliate deals in which you partner with a company and are paid a commission each time you sell one of their products.

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• Advertisements in which customer pay you in order to reach your audience (whether or not readers ultimately buy).

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@damn_ethan

Trends.co

Affiliate deals are easier to land and are a great place to start...

Advertisers only pay for performance so their risk is lower. You can find them through:

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• Affiliate networks (ShareASale, Commission Junction, Rakuten are the big names)

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• Direct outreach to brands you like. Many have programs in place (try googling “[brand name] affiliate program”)

Brands like Bankrate & Nerdwallet make $100m+ each year on affiliate deals.

@damn_ethan

Trends.co

As your audience grows to 75k+ you can start selling ads...

There are a couple popular ways to charge for ads:

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• Cost Per Send is common early on. A flat fee based on the number of recipients.

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• Cost Per Open is better for advertisers, but requires a larger list.

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CPM = Cost Per 1,000

$0.50 per email x 1,000 = $50 CPM

Sample cost per send pricing table

Sample cost per open pricing table

@damn_ethan

Trends.co

Finding advertisers can be easy...

The best places to find advertisers include:

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• Competing newsletters, look at who advertises in them

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• Recent funding reports found in Axios Pro Rata, TechCrunch or Crunchbase.

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• Cold email brands you love...

B.A.N.T. is a good framework for vetting potential clients

@damn_ethan

Trends.co

The Hustle’s early ad sale playbook...

Keep it simple, and focused on what’s in it for the advertiser…

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Namely, access to people looking for a product just like theirs.

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Check out Sam’s cold emailing workshop for more tips on making the first connection.

@damn_ethan

Trends.co

The Hustle’s early ad sale playbook...

It helps if you know some basic stats on your audience, like size, open rates, and click-through rates.

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Small tests are also common, and can lead to long-lasting, profitable relationships.

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You can grow quite large with one ad spot.

@damn_ethan

Trends.co

As your ad business grows, you want to develop 3 types of ad products...

These work together to close sales and maximize revenue:

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• Premium - Your most expensive ad which you never discount.

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• Downsell - A smaller, less expensive option.

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• Loss Leader used to sweeten the pot for clients on the fence.

@damn_ethan

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Notice the differences between Morning Brew’s premium, secondary, and loss leader (Brew’s Bets).

Here’s how the different ad types work together...

If a client is hesitant to buy premium, Brew has 2 options:

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• Offer a less expensive secondary placement.

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• Toss in a free Brew’s Bets placement to sweeten the pot.

@damn_ethan

Trends.co

You can manage ad inventory and pricing by segmenting your list.

As your list grows you’ll run into 2 issues:

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• Climbing ad rates that can can price out your advertisers.

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• Not enough ad inventory to keep your sales team happy.

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You can manage both of these and earn more by segmenting your list.

@damn_ethan

Trends.co

You can grow quite large with just free newsletters.

We broke down Morning Brew’s hiring roadmap

@damn_ethan

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Eventually, you develop paid newsletters...

@damn_ethan

Trends.co

The beauty of paid newsletters is that they generate recurring revenue...

If you sell $1m worth of ads this year, next year you need to do all that work all over again.

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...More if you want to grow.

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But if you sell $1m worth of subscriptions, and 50% of those people renew, you start next year with $500k.

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This unlocks a path to growth.

Assuming a 50% retention rate, revenue grows even if annual sales stay the same.

@damn_ethan

Trends.co

There are 2 types of paid newsletters...

The main difference is their price and level of specificity:

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• Front-end products which are low-cost subscriptions (typically $5-10/mo)

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• Back-end products which are high-cost subscriptions ($500/yr and up)

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Back-end products are specialized and attract smaller audiences.

@damn_ethan

Trends.co

Find things your free audience is willing to pay for...

These can be:

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• A deeper look at a narrower niche.

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• Parts of your free newsletter that could stand on their own.

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DON’T try to charge for more of the same content. Many Substackers struggle with this.

@damn_ethan

Trends.co

James Altucher’s Newsletters generated ~$20m in 2019

“Sometimes people offer products like 300, or $400, or $600. That's kind of like a dead man's land. Because it's expensive for people who could only who only want to afford the front end. And it's cheap for people who are investing, you know, more than $10,000.

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They might actually think it's lower quality because you're only charging $300 when other newsletters are charging one to $2,000.”

Click “play” to hear James discuss front- and back-end newsletters.

@damn_ethan

Trends.co

There’s no limit to the number of free, front-end, and back-end newsletters you can run…

@damn_ethan

Trends.co

Ryan Deiss, Founder of DigitalMarketer.com and Scalable.co

“What's the growth lever that worked the best?

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Promoting the new property to the existing properties within our portfolio”

Click “play” to learn how Ryan Deiss structures his companies for success.

@damn_ethan

Trends.co

Let’s look at a few case studies...

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Case Study: Morning Brew uses verticalized free newsletters...

Revenue: $20m/yr.

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Case Study: New York Times uses free newsletters to sell front-end subscriptions...

Revenue: $1.2B in 2020

@damn_ethan

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Case Study: James Altucher leverages all 3 product types...

Revenue: ~$20m in 2019

@damn_ethan

Trends.co

So the real answer to this question is...

How does the business model work?

Paid or free… Which should I build?

How do you land your first advertiser?

How niche should my audience be?

What tech stack should I use?

What are the secrets to paid acquisition?

When do I start selling ads?

What ESP should I use?

How much should I charge for advertising?

How do I develop my unique voice?

How do I reduce churn & increase my open rates?

Which KPIs should we be measuring and what are good benchmarks?

How do you get from 0 to 10k subscribers?

How do you price paid newsletters?

@damn_ethan

Trends.co

“Both”

@damn_ethan

Trends.co

Start with a free newsletter, then develop niche paid subscriptions for that audience.

@damn_ethan

Trends.co

Want to learn more about this space?

How does the business model work?

Paid or free… Which should I build?

How do you run an editorial team?

How niche should my audience be?

What tech stack should I use?

What are the secrets to paid acquisition?

What is the hiring roadmap?

What ESP should I use?

How much should I charge for advertising?

How do I develop my unique voice?

How do I reduce churn & increase my open rates?

Which KPIs should we be measuring and what are good benchmarks?

How do you get from 0 to 10k subscribers?

How do you build referral programs?

@damn_ethan

Trends.co

Be sure to check out Trends.co…

@damn_ethan

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Check out these great resources for more...

Trends Articles

Guide to Community

5-Part Framework for Building Brand Community

Sam’s Cold Email Workshop

Solo Founder’s Guide to PR

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Other Great Resources

Doing Content Right

Grow Getters

Not a Newsletter

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@damn_ethan

Trends.co