Struggling to solve the newsletter sponsorship pricing puzzle?
If you’re a newsletter creator, you probably get sponsorship requests from companies that want to advertise in your newsletter. While that may seem like a great opportunity to make extra money, it’s important to think carefully through the decision and pricing before you accept a sponsorship offer.
Today we will guide you through pricing your newsletter sponsorship so you can achieve fair compensation for your amazing newsletter list you've built.
Pricing Factors for Sponsorships
There is no hard and fast rule. On episode 44 of the Newsletter Crew podcast, Pete Codes does have a general rule for pricing. Which is 5% of your subscriber list. But there are a lot of factors to consider when setting the price for your sponsor ads. You want to make sure you create a fair value for both the advertiser and the reader, while at the same time maximizing your own profits. Here is a list of factors that play role in pricing your newsletter sponsor ads.
Number of subscribers
How many subscribers do you have on your mailing list? This is the first question that any advertiser asks. The bigger list allows you to charge more.
This is the second metric sponsors care most about. Basically, this is the percentage of your newsletter subscribers that will view their ad. In other words, advertisers judge your sponsorship rate based on the open rate multiplied by your number of subscribers.
For example, you have 1000 subscribers and your open rate is 53%. So advertiser will try to justify your sponsor ad price by considering 1000*53%= 530 actual impressions.
The email click-through rate is calculated by the number of subscribers that have clicked on at least one link in your newsletter issue.
Many ESPs automatically calculate CTR, but you can also calculate it by taking the number of people that have clicked on your newsletter issue and divide that by the number of emails you have sent. Then multiply it by 100 to get the percentage.
CTR = (No. of unique clicks / No. of emails sent) x 1000
A niche is a specific topic you are writing about in your newsletter. The more general your niche is the smaller sponsor ad rates are. On the other hand, more specific niches, sponsor ad price is higher.
Take for example a newsletter about general investing versus a newsletter about angel investing in software products. The latter will command a higher sponsor rate versus the general investing newsletter since the topic is much more focused.
Thousands of newsletters started in 2020 alone. And newsletter niches are getting saturated. Now many newsletters are offering sponsor ad placements, so this competition has decreased the costs of sponsoring a newsletter. And when a niche is saturated, people try to sell cheap and make money, resulting in even lower sponsor ad prices.
Few newsletters have more than one main sponsor. Usually displaying these ads on top as well as at the bottom of the newsletter. In this case, ads on top get more exposure so they are expensive as compared to ads at bottom of the email.
Text-based ads are less intrusive, require less space as compared to media included ads. Thus they are cheap as compared to ads with supporting images.
Duration of sponsorship
If a brand is sponsoring your newsletter for a long duration, they may insist you lowering your sponsorship rates. Now this can be a big benefit to you, as you don’t have to worry about finding a sponsor for a few months.
Types of Sponsorships
Classified ads are affordable ads with 150 to 180 characters shown in each issue of the newsletter. It normally allows only one hyperlink within the whole text. And newsletters generally offer four classified ads. And add them at the bottom of the email. Here is an example from Indie Letters.
In contrast to classified ads, sponsor ads allow advertisers to add an Image, tagline, and lengthy ad-copy. It can be 300 characters like Dense Discovery is doing or it can extend above 700 characters considering your sponsor price and length of your newsletter. As it is shown on top of the newsletter, and sponsors can add multiple links, so it’s more rewarding for newsletters.
Morning Brew newsletters are more lengthy. It allows their sponsor to write a detailed ad-copy as compared to Dense Discovery and charge more for it as well. Here is an example of Morning Brew’s sponsor ad:
Popular Sponsorships Models
Classified ads have fixed rates normally whereas sponsor ads can charge a flat fee or CPM.
Just like classified ads, sponsors are charged a flat fee for their ads. It works great for small newsletters. Dense Discovery is also using this model by charging a flat $375 per sponsor ad. But it has automated the entire sponsor booking process by using an ad-booking sheet. You can also automate your ad-booking process by setting up your own ad-booking sheet. To do so, grab the Ad-booking sheet template.
According to Wikipedia, Cost per mille (CPM), also called cost per thousand (CPT), is a commonly used measurement in advertising. It is the cost an advertiser pays for one thousand views or clicks of an advertisement.
To calculate your CPM, check other newsletter sponsor ad rates in your niche. This way you can offer a competitive price and understand the general cost of a sponsor. You can also calculate CPM by this formula
CPM = (Cost of sponsor ad / No. of email subscribers) x 100
Generally speaking, cost per thousand views is more rewarding for newsletter creators unless the sponsor is very relevant to the newsletter niche. Only go for cost per thousand clicks if you are pretty sure that subscribers will actually click on the sponsor ad.
Pricing your newsletter sponsorships can be tough. And every potential sponsor can’t afford your price. So you may have to lower your price in these scenarios and it’s ok if it happens few times a year.
You may fail to find sponsorships. In this scenario, offer an affordable classified ads section. It will bring in some revenue - enough for keeping the lights on for the newsletter. Also, start adding affiliate links in your newsletter to make extra money.
More Sponsorship Resources
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