How To Price an Ad In Your Newsletter
One of the thorniest questions a newsletter publisher or creator inevitably comes up against is: How should I price an ad in my newsletter?
The answer to the question is part art and part science.
In order to get the science part right, you first need to be familiar with a few terms and models related to how newsletter ads are commonly priced.
(We’ll get to the art after that!)
Common Newsletter Ad Pricing Models
So, here are the common newsletter ad pricing models…
CPM (cost per mille): CPM is the cost per 1,000 impressions that your newsletter generates. Say your list size is 100,000. And say your CPM is $20 (that is, you charge $20 for every 1,000 subscribers you reach). One hundred thousand divided by 1,000 is 100. So, you’re charging $20 X 100. That’s $2,000 per sponsorship.
CPC (cost per click): CPC is the cost per click that your newsletter generates for the sponsor. Say an advertiser is willing to pay $3 for every person you get to click through to their website. And say you drive 300 clicks. You’d get paid $3 X 300 clicks. So, $900 in this example.
CPA (cost per acquisition): CPA is the cost per acquisition. Say a sponsor offers to pay your $5 for every person you drive to sign up for their app, and say you drive 500 sign-ups, you’d get paid $5 X 500 sign-ups. So, $2,500 in this example.
Flat Fee: A flat fee is more or less what it sounds like. A sponsor agrees to pay $3,000 for an ad in your newsletter, and that’s what you get paid regardless of how many people click on the ad or buy the product.
So, How Should You Price Your Newsletter Ads?
All of the models listed above have their place. But from years spent selling newsletter ads in a variety of newsletters, there are some guidelines and best practices we think will serve you well, especially if you’re early in your sponsorship program.
Flat Fee Is the Best Fee
We’re huge fans of simplicity. Nothing beats having a solid sticker price, or rate card, and using that as the starting point for any negotiation.
That said, you’re not going to want to pick your rate card pricing out of thin air. Your rate card should be derived from some combination of the pricing models outlined above.
The main factors that are going to determine how valuable your newsletter audience is to a sponsor look something like this:
- Who are they? (the general public? travel enthusiasts? day traders? Directors of Marketing?)
- How many of them are there? (list size)
- How many open the newsletter? (open rate)
- How many generally click on an ad (ad click-to-open ratio, or adCTOR)
At the end of the day, the sponsors you are selling to are always going to be working out how your flat fee comes out in terms of CPM and/or CPC.
That is: If we buy this ad, what are we going to be paying, roughly, per thousand people reached or per click?
A very rough way to think about how to price yourself is based on how much a sponsor will want to pay per person who clicks on their ad.
For consumer goods targeting general interest audiences, we’ve found over the years that brands will want to target around a $1 CPC.
For more targeted audiences, say pet owners (or something similarly interest-based), they may be looking to spend around $2 per click.
For professional or wealthy audiences, such as financial products, $3-4 is a reasonable CPC.
And for B2B audiences, $6-8 CPC and up is a good range to have in mind.
Using these very rough guidelines, you can play with your pricing in our Newsletter Ad Calculator.
You’ll of course want to make your rate card flat fee a round number—and use it as the start, not the end, of a negotiation on price.
Rate Card, Packaging, and (Ultimate) Pricing
Now, as mentioned above, your rate card isn’t always the actual price you’re going to get for your ad space.
If your fill is strong, and demand for your ads is high, you may well get your rate-card price regularly… which is a great time to raise your rate card!
Generally speaking, you don’t want to sell every ad as a one-off—it creates extra work for you, and it doesn’t help you build long-term relationships with sponsors.
What you want to do, as much as possible, is sell ads in packages, where you can offer a discount for bulk buy. Say you’re pricing your newsletter at $3K a day, you could sell a package of 5 runs. But instead of pricing that at $15K (rate card, full price), you’d price it at $12K (a 20% discount, or call it “1 run free”).
In this way, your rate card pricing will ultimately be set about 20-25% above what you will ultimately accept in terms of payment for the space.
You're getting more slots filled more easily. Your advertiser is saving a bit on a bulk buy. Win-win.
Another benefit here is that being able to offer a discount helps you close the sale faster. And shortening the sales cycle will let you get more sponsors in to test. The goal is to test lots of sponsors and see which are the best fits with your audience.
When To Go With CPC or CPA Pricing
The problem with CPC and CPA pricing, from the publisher’s perspective, is that it shifts all the risk onto you. Does the sponsor’s landing page fail to convert? Does their ad copy fail to drive clicks? Suddenly you’re making less money.
And this, of course, is why a lot of sponsors will try to push CPC, CPA, and other affiliate arrangements on you.
When should you go along with it?
One time is when you're just starting out. If performance-based payment is the only type of ad you can sell because of a very small or untested audience, then it may be worthwhile, just to start getting a baseline on how your audience responds to advertising and to establish an average adCTOR.
The other time is when you know a lot about your audience. If you know your audience will respond to a particular sponsor and their offer—either from past, similar offers or by other means—then you can make out better on a CPC or CPA basis than on a flat fee.
CPC and CPA arrangements may also be good for filling secondary or link-roundup ad spots. If they perform, great. If not, you haven’t pegged the financial success of that day’s newsletter on them.
Build for the Long Term
The goal of your sponsorship program should be to provide value to readers by matching them with products or services that they may enjoy or benefit from; and to match sponsors with an audience receptive to their products.
To do that, you want to price your ad space correctly, test lots of different sponsors, and build long-term partnerships with the ones that work.
With time, revenue will help you grow—and more growth will bring more revenue.
--
For more coverage of the email newsletter market, see Email Intelligence.
Join Out Mailing List - It's Free
Find companies that are sponsoring newsletters right now!
Contact Us
You have been added to our mailing list successfully.
Please try again later.