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Should newsletter creators embrace programmatic advertising?

Back in January, I published a piece titled “Newsletter writers need to focus more on revenue diversification.” In it, I argued that newsletter creators are too wedded to paid subscriptions and that they need to expand into other business models. 

Though I namechecked several business models in the piece, I specifically pointed to advertising as an underleveraged revenue generator. In a follow-up article titled “Why host-read ads will never go away,” I argued that brands are allocating bigger and bigger budgets toward creator advertising and that newsletter writers stand to benefit from this shift in spending.

The two pieces were generally well received, but they did get a little bit of pushback from some figures in the writing community. For instance, here’s what sports journalist Matt Brown tweeted in response:

Totally agree, and whoever figures out how to actually help journalists/writers do this is gonna get rich AND make a better internet

IMO, really building out these other revenue streams requires skillsets that are foreign to many writer newsletter types

I'm a writer! If I write stuff and put some of it behind a paywall, people will pay for it. That business makes sense!

Selling ads? Courses? Merchandise? Consulting? shoot, even classifieds? Those take DIFFERENT skills! That [takes] time to develop, time I could spend writing!

this is not a critique of Simon (his article made sense IMO), but I feel like I see this sort of advice a lot from B2B or marketing people who never write anything longer than 2 paragraphs.

like yeah, I could build other stuff if I never took time to report anything

But I want to hear about a newsletter that actually does reporting/deep writing that isn't just culture war grift crap and also has time to sell ads in a positive way, or build a working course business, or any of this stuff that we're supposed to be doing. writing a lot takes TIME

His point is well taken. As someone who’s currently struggling to meet his writing deadlines while simultaneously teaching a 10-week entrepreneurial journalism course, I sympathize with any creator who’s stretched too thin to experiment with something new. 

But I also think a big part of the problem has to do with the inefficient newsletter advertising market. Currently, most newsletter advertising is still negotiated and executed through person-to-person interactions. The newsletter writer has to both find clients AND execute on campaigns – campaigns that often involve writing the sponsorship copy themselves. As Matt pointed out, many content creators have neither the interest nor the time to become salespeople.

A few startups have emerged to help ease this burden. For instance, a company called Swapstack launched a marketplace platform that connects newsletter writers with sponsors. A newsletter creator can create a profile that includes basic audience and price details, and then advertisers utilize the Swapstack database to connect with those creators. Brands can also upload creative briefs and allow newsletter writers to submit bids on campaigns.

This removes some of the friction from the process, but still requires a lot of labor for newsletter owners to negotiate and execute on brand deals. It’s also still difficult for larger brands to include newsletter advertising in their multi-million dollar marketing campaigns. Madison Avenue advertising firms simply have no interest in negotiating with writers on a one-to-one basis.

That’s where programmatic advertising potentially comes in. This week I came across this Product Hunt listing for a company called Paved. The tagline for Paved is “Put your newsletter advertising on autopilot,” and it’s basically a platform that allows for participating newsletters to have ads dynamically inserted into their emails. 

Here’s Paved’s list of services:

Simple install + dynamic insertion: Place the ad unit in your newsletter template and sponsorships will auto-fill with every send.

Responsive, native design: Customize your ad unit with the Native Ad Editor to match the format, sizing, colors, and font of your newsletter.

World-class advertisers: Paved works with advertisers that run quality sponsorships—Uber, eBay, and Square to name a few.

Targeted and relevant ads: Sponsorships are aligned with your newsletter’s subject matter and your audience’s interests.

Auto bidding: Advertisers compete for your ad space. That means more revenue, more relevant ads, and more ad spaces filled.

Automated payouts: Make money with every send. Paved handles all invoicing, IOs, contracts, and payments.

It remains to be seen whether Paved can actually execute on all these features, but it appears to address Matt Burns’s wishlist, in that it allows newsletter creators to sell advertising without all the associated labor. 

But should newsletter writers be all that eager to embrace programmatic advertising? Let’s take a look at the pros and cons: 

Pros: The YouTube effect

In the history of the Creator Economy, no event has had a larger impact than YouTube’s launch of its partnership program. YouTubers with as few as 10,000 channel views suddenly gained access to Google’s vast programmatic ad machine, and as that machine grew into the billions of dollars, video creators then had a solid foundation on which to build real businesses. Today, creators receive a collective $10 billion just from YouTube itself. 

The introduction of programmatic could have a similar impact on the newsletter economy. For the past few years, most writers have had to rely entirely on paid subscriptions to sustain their operations. While that’s been lucrative for the few who managed to build large audiences, it’s simply not feasible as a standalone business model for the vast majority of creators. Programmatic advertising could create a crucial pipeline that will make newsletter careers more sustainable for mid-tier writers.

Cons: A worse user experience

There’s an industry that’s currently being introduced to programmatic advertising: podcasts.

For the first 15 years of podcasting’s existence, ads were primarily host-read and catered to direct response marketing campaigns. Episodes were typically limited to just one or two sponsors, and the podcast host was given the opportunity to insert their own personality into the ad read. Because of this, podcast sponsors reported higher-than-average ROI on their marketing spend, and listeners weren’t too annoyed by the ads.

But over the last two years or so, podcast networks and platforms have invested heavily in ad tech, and now most of the popular podcasts operate with dynamically inserted ads. Not only are these ads no longer host-read, but there are more of them per episode. 

Podcast listeners have noticed. “The percentage who think podcasting has too many ads has more than doubled, from 10% in 2019, to 22% this year,” wrote Edison Research’s Tom Webster.” As the user experience gets worse, podcast listeners will simply start tuning out ads or skipping them entirely.

The same would likely happen with the introduction of programmatic newsletter ads. Here’s how Louis Nicholls, co-founder of the newsletter referral platform Sparkloop, put it in my Facebook group:

Similar to podcasts, the advantage of newsletter sponsorships is that they're (perceived as) a recommendation by the creator.

That's why podcast sponsors LOVE host-read adverts. And it's why every smart newsletter creator (and sponsor) I know insists on the creator writing the ad creative themselves in their own voice.

A programmatic ad network doesn't allow for that. It tries to compete on impressions (where newsletters are weak vs online search & display ads) at the expense of destroying the one thing that makes newsletter ads actually effective.

And of course, as these ads become less effective, that will drive down CPM rates, which will then result in the newsletter cramming in even more ads. It’s a race to the bottom. 

***

So how do I view programmatic advertising as it pertains to my own newsletter? After all, I opened up to sponsorships at the beginning of March, and this very edition contains a native ad. Would I opt into a robust programmatic ecosystem if it became available?

I think I’d hold off for as long as humanly possible. It’s not that I don’t recognize the benefits programmatic could have for the newsletter economy, but I really value my relationship with my readers, and I wouldn’t want to introduce a business model that cheapens that relationship unless I absolutely knew that the revenue it generated could somehow make my content better. 

The worst thing about most publisher websites is the advertising, and personally, I’m not looking forward to the day when all the newsletters I subscribe to start looking a lot more spammy.

CEX is giving away 5 complimentary tickets to attend the Creator Economy Expo

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The Creator Economy Expo (CEX) takes place May 2-4, 2022 at the Arizona Grand Resort in Phoenix and is limited to 500 creators. The speakers include Dan Pink, TikTok/Twitch star Leesh Capeesh, Ann Handley, Joe Pulizzi, Roberto Blake, and 30 other world-class content/media entrepreneurs (plus, attendees get ALL the recordings as well).

CEX is giving away 5 complimentary tickets to attend the Creator Economy Expo. Enter to win here.

Quick hits

A good profile of NYT's incoming editor. [NY Mag]

"Musicians are speaking up about the pressure they’re facing from their labels to post more TikToks." [Dirt]

I somehow missed this when it was published in 2019, but if you love the HBO show Succession, then you're definitely going to enjoy this 20,000 word biography of the Murdoch media empire. [NYT]

I had no idea that Publishers Weekly was 150 years old. [Publishers Weekly]

A deep look at how iHeart's NFT-based podcast might play out. Personally, I'm extremely skeptical that there's a mass market for this type of IP. [Tom Webster]

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