What is the Purpose of a Newsletter?

What is the Purpose of a Newsletter?


Starting a newsletter seems like starting a band in the ’80s: 

Everybody did it, nobody stuck with it, and in 20 years, it will be a distant memory with only embarrassing photographs (or articles) to show for it. 


So, what exactly is a newsletter?

Basically, a newsletter is just an email you send out regularly. It used to be, that mainly organizations or companies send out newsletters, however it becomes more and more popular for individuals to send out newsletters. For example, James Clear sends out his “3-2-1 Thursday” newsletter every thursday. Tim Ferriss sends out “5-bullet friday” every (you guessed it) friday.

So, should you bother and start a Newsletter?

Let me ask you:

  • Do you own a business?
  • Are you looking for a side hustle?
  • Are you responsible for sales at a company?
  • Do you see advantages in creating a personal brand?
  • Do you want to be known as an expert in a particular field? 
  • Do you enjoy writing, or do you want to improve your writing?
  • Is there a possibility you will apply for a job sometime in the future?

If you answered one of these questions with “Yes,” please continue reading. 

If not, close this tab; no, seriously close it. 


You see, Newsletters can serve different purposes, depending on your situation. 

  1. Newsletter FOR a business.
  1. Newsletter AS a business
  1. Newsletter for writers
  1. Newsletter for personal brands. 

Newsletter FOR a business

Why do companies have newsletters?

There are endless reasons:

  • To stay “on top of mind.”
  • To engage with your employees.
  • To ask your customers questions.
  • Sending out holiday sales like Black Friday. 
  • To inform your customers about new products
  • Sending out promotions for items you need to get rid of.
  • Branding for your clothing store (e.g. Huckberry does a great job)
  • Consultants use newsletters to keep their clients updated on their industry.

So, why are newsletters better than social media? 

There are two main reasons: 

1. A significant higher conversion rate

2. You can talk to your customers directly

Conversion rate

Emails are WAAAYYY better in generating sales than any other platform, but don’t take my word for it:

Talk to your customers DIRECTLY.

While setting up a social media account and start talking seems convenient, there is one BIG disadvantage: You DON’T OWN the platform, the customers, the leads, etc. 

So, if Mark or Jack decide to change the algorithm, you are….fucked. 


See, Facebook, Twitter, and Co. want to earn money. So, it usually goes like this:

Organic Reach

New Plattform -> High Organic Reach -> Lots of new Accounts -> Organic Reach declines -> Platform becomes uninteresting -> New Platform

Paid Reach

New Platform -> Platform wants to earn money -> High effectiveness on Paid Advertising -> Platform wants to increase Ad Revenue -> Ads become more expensive -> Platform becomes uninteresting -> New Platform

In 2014, Facebook Organic Reach declined on Brand Facebook Pages dramatically as Facebook decided to put more focus on groups  (When was the last time you looked at a Facebook Brand page?). Brands with a high following on pages got screwed.

Development of reach of Facebook Brand Pages in 2014


As you see, if you build your business on the back of a platform that you don’t own, you build your business on SAND. 

It CAN work if you can convert all leads to YOUR platform (Amazon did it with Google). 

But, if you don’t have a platform, Email is your platform. And you should convert to it fast.  

Newsletters AS a business

In contrast to a newsletters for a way to generate sales, newsletters have become a service in itself that can be sold. For example, Trends uses a newsletter to send out their monthly business reports on different industries. AppSumo uses a newsletter to send out deals they get on software. This is their actual business.


So, while people laugh at the idea of a “cute” little newsletter, these guys are printing money:

  • The Dispatch hit $1MM ARR in less than a year launched
  • Agora Financial acquires newsletters and reportedly makes $500MM ARR
  • Stratechery supposedly makes around $3MM with a pretax margin of ~90% (it’s a one-man show)
  • Axios is at $25MM ARR 
  • MorningBrew was acquired by Insider in October for a reported $75 million
  • TheHustle (the parent company of Trends) just sold to HubSpot for approx. $27 million

So, how are newsletter businesses earning money?

There are two ways: Revenue from Advertising or Subscription Fees.

Advertising

Through websites like Swapstack, you can find brands that want to advertise through a newsletter e.g.; TIMES Magazine pays $50 for 1,000 recipients. 

So, if you do the math (using the TIMES Magazine example): 

Pretty good, right? We are talking about a business with little to no employees (except you) and a laptop as infrastructure. 

Subscription

Here, it gets a little more complicated, but stay with me:
Platforms like Substack offer creators the possibility to charge fees for their publication. Their revenue calculator shows the profitability on a subscriber basis at varying price points. The calculation to keep in mind is that you usually get 2% sign-ups of your entire newsletter list.

That means, theoretically if you converted 2% of a 30,000 person email list, you would have 600 subscribers at say $10 a month, which would be $6k a month or $72,000 a year. For work, YOU DO ON THE SIDE with no employees.

Then, imagine you grow the subscriber base to 2,000 people, so the business is making $240k a year. (again, no employees)

If you take out processing fees of

  • 10% for Substack
  • 2.9% for Stripe
  • 3% cushion for admin expenses etc

You would make approx—200k on this newsletter with a margin of 84.1%.

And if you don’t fancy it anymore, you go to Flippa and sell it for a multiple of your annual profit. Small businesses at this level usually sell for 2-3x profits.

-> That means a $600k profit for a sweet little micro-personal brand business that “only” has 3k subscribers. 

Newsletters for Writers

If you are a writer for a publication, you probably don’t have the best sleep currently. Newsletters are dying as advertising money is going somewhere else.



So, what to do?

You do have a unique talent: WRITING.  

And people still want to read the news. According to Reuters Institute, 21% of Americans access the news via email weekly.


There are plenty of opportunities out there, from local news, to niche news, to specific trade newsletters. 


As Petition — the Substack bankruptcy newsletter — shows, there is enough appetite
to give traditionally dry, industry-specific trade publications a more approachable voice. 

A Google search of popular trade publications shows dozens of opportunities, including:

  • AdWeek (advertising)
  • Building (building & construction)
  • Building Design+Construction (building & construction)
  • Crane Today (crane industry)
  • Global Custodian (security industry)
  • Game Industry Report Magazine (gambling)
  • Australian Dairy Foods (dairy)
  • Design News (designers)
  • Coach & Bus Week (bus industry)
  • Engineering News-Record (construction)
  • Architectural Digest (architecture)
  • Hairdressers Journal International (hairdressers)
  • Global Custodian (custody and asset management)
  • Coach & Bus Weekly (transportation)
  • Gavin Report (radio industry)
  • Heritage 365 (museums)
  • Hotels (hospitality)
  • Packaging Digest / Packaging World (packaging industry)

Newsletters for your personal brand

Even if you are not looking to make some $$ directly, it makes sense to publish a newsletter IF you are an expert in something (anything really). 

There are newsletters with 1,000s of subscribers talking about China, Cats, Christianity & Climate Change. So, if you know something about a subject and are interested in it, why not write about it twice a month? 

The worst thing that can happen is you meet people with the same interests as yours. However, the best thing is you build up a reputation and start working in that field (or if you already are, you increase your value as an expert).

 

Don’t let the noise fool you; there is still plenty of space for your project, brand or business. 

You don’t have to be picked; you can pick yourself.

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