Placing Ads in Email Newsletters

How Top Digital Publishers Generate Revenue with Premium Newsletters

The new year is all about working smarter, not harder. As digital publishers search for ways to generate more revenue from their existing editorial content, a solution they’ve stumbled upon is the premium newsletter. One of many add-on products publishers are making available to subscribers for a fee, premium newsletters capitalize on the trusted relationships that publishers have developed with their audiences and provide a new source of revenue beyond the typical online website subscription or banner advertising.

Whereas most email newsletters are considered marketing vehicles—designed to encourage people to click onto a website or share content—premium newsletters are products to be sold directly to consumers. As such, they can generate revenue without any advertising required.

Premium newsletters also premium content. Readers aren’t going to pay for articles they could read for free elsewhere, but they will pay for extended versions of articles with more information added, or for content that’s been packaged in a way that makes it more accessible and easy to consume.

Just look at the Financial Times. The daily newspaper, which focuses on business and economic news, charges more than $500 a year, or $10.25 per week, for a Premium Digital subscription. Included in that is access to the company’s dozens of premium newsletters, which are curated by editors and accessible only to paying subscribers. Auther’s Note is a premium newsletter with original analysis sent after the closing bell each day.

Original content is one of the keys to the Financial Times’ ability to turn email newsletters into a revenue stream. Because newsletter subscribers already read, editors have had to get creative in developing new content that goes above and beyond what’s available elsewhere. The Motley Fool also publishes a number of premium newsletters, charging subscribers $199 per year for access to stock picks and other information they can’t find on the company’s expansive website.

Here are six steps that publishers should take when building premium newsletters.

1. Understand the difference between paid and free.

The goal of a free newsletter is generally to drive traffic to a website, where traditional digital advertising helps pay the bills. To encourage this, publishers will fill their free newsletters with short articles or blurbs that include links to read more on the web. With premium newsletters, readers expect to find all the information they need in one place. (That’s what they’re paying for, after all.) Keeping this major difference in mind goes a long way when deciding how to design a premium newsletter.

2. Develop a content strategy.

What exactly are subscribers paying for? It might be articles or research they can’t get anywhere else or it might be expert analysis of previously published information. Some publishers are even coming up with educational modules available only to email subscribers. Readers aren’t going to pay extra for services without an added value, so developing a content strategy is a key step in that process.

3. Set a reasonable price.

How much readers will pay for premium newsletters depends on the clientele and the value. For example, Financial Times readers are likely to spend more on an email newsletter subscription than the readers of a publication aimed at librarians or students. Publishers catering to a clientele that doesn’t have a lot to spend can go the micro-sponsor route, asking readers to donate a small amount (usually between $3 and $25 per month) in exchange for top-quality content sent directly to their inboxes. Publishers who are seeing a lower-than-expected number of subscribers might be charging too much or they might not be doing a good enough job promoting the value that readers will find in their premium products.

4. Choose the right subscription management platform.

In addition to collecting email addresses, publishers with premium newsletters also need to capture their subscribers’ billing information and process payments on a recurring basis. A number of platforms are available for just this purpose, automating the billing process and allowing publishers to take a hands-off approach. For example, Memberful is a tool that collects fees for email newsletters. Publishers who are already using WordPress for their websites can also take advantage of WooCommerce’s free plugin.

5. Keep track of the metrics.

Reader feedback is important, but raw data tells an even more detailed story about the health and sustainability of a premium newsletter program. Most email marketing platforms, including Mailchimp and Sailthru, provide users with advanced reporting features so they can see how many subscribers opened their emails and where exactly they clicked. The savviest publishers will utilize this data to determine what types of content their readers are most interested in receiving and which articles they should place near the top of each newsletter to facilitate growth and promote social sharing.

6. Focus on the big picture.

When publishers start charging for their newsletters, the number of subscribers becomes less important to the overall equation. That’s because it takes thousands of free subscribers clicking on embedded ads to generate the revenue that a publisher can bring in from hundreds of paid subscriptions. Take this example: A newsletter with 100,000 subscribers with two dedicated ads per month—at $100 to $250 CPM—could reasonably expect to bring in $60,000 to $80,000 in revenue per month. A premium newsletter charging subscribers $20 per month would only need 3,000 subscribers to hit the same mark.

Selling premium newsletter subscriptions as an add-on product is a strategic way for local publishers to diversify their revenue. Putting in the effort and developing a comprehensive strategy upfront can help alleviate many of the pain points in selling this type of subscription and provide publishers with a reliable foundation as they build on these programs in the coming years.