How Newsletters Grow With Ad Arbitrage

How MorningBrew, The Hustle, Industry Dive, Milk Road use this little know growth method.

Here's the secret that newsletter founders DON'T want you to know about building a massive newsletter business…

It’s all about ad arbitrage.

Here’s how it works:

The big newsletters you know and love (MorningBrew, The Hustle, Industry Dive, The Milk Road, and more) get 80% or more of subscribers from paid ads.

But when newsletter founders are interviewed on how they grew, they often talk about:

  • ”referral programs”

  • “building a brand”

  • “great content”

All are important.

But when you see behind the curtain you discover newsletters are getting 70-90%+ of subs from PAID acquisition.

But how do they get ROI from that ad spend?

Ad arbitrage. ♻️

A newsletter buys a subscriber for ~$2 (from paid ads)

And over the lifetime of that subscriber, they will get $10-$30 in revenue (from sponsorships)

That’s the ad arbitrage game. And it’s how big newsletters win.

What does it take to be great at this?

  1. Acquire subscribers at a low cost

  2. Write good content that gets subs to open daily

  3. Monetize by selling sponsorships to big brands at ridiculously high CPMs

Most newsletter founders are GREAT at #1 and #3 - and OK at #2.

IMO, the content most big newsletters publish is mediocre.

But these companies are some of the best in the world at paid acquisition and sponsorship sales!

Now let's dive into EXACTLY how the biggest newsletters do this.

Starting with paid acquisition.

Here's how they get high-quality subscribers at low cost:

These are the top paid growth sources:

  • FB ads

  • TikTok ads

  • Twitter ads

  • LinkedIn ads

  • Co-registration

  • Affiliate marketing

  • Programmatic email ads

90%+ of paid growth for newsletters comes from these. Often 90%+ of ALL their growth comes from these.

Facebook ads are still king.

I drove 150,000+ subs for The Milk Road from FB ads.

The Hustle got 800,000+ subs from FB ads.

And other newsletters I've talked with who have 500k-2M subs got 50%-85% of their subs from FB ads!

Cost per subscriber (CPA) on FB can be <$2.00

In the early days of The Milk Road and The Hustle, we acquired subs from FB for <$1.25

Not bad considering the LTV of a subscriber can be $10-20

LinkedIn is a great source for B2B newsletters

(By B2B I mean newsletters that focus content on a specific industry. Content for business leaders in that industry)

Like - Marketing, Banking, HR, Cyber Security, etc

Industry Dive = B2B

The Hustle = B2C

CPAs on LinkedIn are higher because ads are hyper-targeted by company, industry, and job title.

The CPAs I've seen on LinkedIn are $5-7

But the LTV of a B2B newsletter sub is also much higher!

According to the B2B newsletters I've talked with, subscriber LTV can be $30-$40

How do newsletters monetize subscribers and get massive returns on their marketing investments?

3 ways:

  1. Sponsorships

  2. Lead generation

  3. Marketing services

All are forms of paid marketing aka "ads" for other businesses.

Let's start with #1 Sponsorships:

Newsletters charge some of the highest ad rates in the advertising world.

A $50 CPM on opens for B2C newsletters is standard.

And CPMs are MUCH higher for B2B newsletters. I've seen B2B newsletters with 1,200 subs charge $1,500 per ad slot.

How can they charge so much?

Because advertisers want to get in front of specific, affluent audiences who have lots of buying power and are decision-makers in a business.

Here's a B2C example of this:

  • 40%+ of readers at The Hustle founded a business.

  • 30%+ have a Master’s or Doctorate degree

Where else can advertisers get in front of that many business owners and high earners?

Here's a B2B example:

  • MarketingBrew has 100k+ marketing professionals on their list.

  • Many of those readers have $100k+ (or even $1M+) in marketing budgets they command.

This is a goldmine for advertisers.

Especially if the advertiser has an enterprise product with a CLTV of over $100,000.

(Most B2B newsletters advertisers do).

So they only need a handful of sales to get a return on their newsletter ad spend.

Now on to #2 Lead Generation:

After you join some B2B newsletters you'll see a questionnaire to complete. They'll ask questions like:

  • Location

  • Job function

  • Job level/seniority

If you answer the questions in a specific way they'll sell your email as a "lead" to advertisers.

They're often able to sell each lead for $50-$150. Not bad considering they only spent $5-$10 to acquire that email!

Now the final way newsletters do ad arbitrage:

#3 Marketing Services

This is usually an upsell to advertisers who brought newsletter sponsorships and got good results.

Here's how it works:

The newsletter will help the brand reach more of its audience by retargeting them with ads.

The newsletter will run ads for the brand on FB (and other ad platforms).

The ads will retarget the newsletter subscribers, website traffic, and social followers.

It's a simple way for the advertiser to reach more of the newsletter's audience and a simple upsell and service for the newsletter


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