I’m extremely excited about this one.

📚 The process of writing this has helped me crystalise a Monthly Revenue Potential calculation for newsletter sponsorships.

Personal eureka moment, let’s dive in! 🚀

1. Look further than subscriber numbers

2. A recommended agency

3. How to write better hooks & more

4. Great sales meme

^{When’s the right time to start monetising?}

Firstly, we need to differentiate between a few scenarios and

(1) If your newsletter is a side hustle or fun project, it isn’t your primary income, nor is that the plan. Obviously, your monetisation timeline is much less important and not really what I’m referring to.

(2) Long-term business. Your newsletter is or will be in the future, your primary income or a large part of your revenue. This is the scenario that we’re focusing on.

As always, we’re mainly talking about sponsorships & ad sales.

🤔 “How many subscribers should I have before I start selling ads?”

This is the most common way people frame this question. 

The logic here is that before X many subscribers, ad sales won’t be worth your time, or the media buyer’s time for that matter.

The logic is sound, subscribers is an important metric, but it doesn’t paint the full picture. Thinking about monetisation targets and timelines solely in terms of subscriber numbers is problematic.

Here are the other aspects to consider.

📊 Engagement Rates

This must be taken into account when calculating how much you could potentially charge. A newsletter with 100k subscribers and a 60% open rate, will quite obviously have double the unique impressions than one with 100k and a 30% OR. The fact that Apple Mail has smudged open rates aside, open rate is how marketers will analyse a media buy (expected impressions).

Similarly, performance-focused media buyers will look at expected CTR to determine whether they want to advertise with you, and/or how much they’re willing to pay.

Hint: most media buyers are at least somewhat performance-focused.

👯‍♂️ Audience

Another thing to take into account how much revenue you can generate is who your readers are. Sounds obvious, but how does this look in the ad sales market..?

My experience has told me that we can generalise newsletter audiences into different categories to give us useful pricing guidance.

Morning Brew-ish audiences. Think: general professionals, across various industries, pretty affluent and often retail investors. Topics are typically news in tech, finance, economics or self-development. Generally, a great readership to have, however, due to the lack of specificity, they usually can’t command the highest CPMs. In my opinion, this is because:

• There are a lot of these types of audiences around now.

• The ad sales market generally is tough right now. But 2024 onwards is looking brighter, read why here.

Specific niches: examples include crypto (Milk Road), AI (The Deep View), alternative investing (Alts), specific locations and so on.

This naturally puts you in a stronger pricing position versus a broad ‘news’ newsletter. The potential value of your audience hugely depends on what niche you’re in. Think about:

• Advertiser economics -  How much money do your potential advertisers have? How much is each customer worth to them? What is the average CAC?  Hint: the higher the better, for you.

• Scarcity - How many other publishers have a similar content type and audience? For example, AI companies are flush with cash, but there are a lot of AI newsletters now. 

B2B audiences, great examples include Growth Daily, TLDR and SaaS CFO, and StartUptoScaleUp. B2B advertisers are very much used to paying higher CPMs and higher CACs. This makes B2B audiences the highest potential value per subscriber. 

This does vary, for example, Payload commands CPMs that make me smile at night, due to their audience/target advertisers. In comparison an audience of mainly SDRs probably won’t be half as valuable.

🫣 Monthly Revenue Potential

So now you know what factors to take into account when calculating revenue potential. Here’s the calculation that’s evolved in my head over the last year:

Subscribers x Open Rate x Monthly Sends = Monthly Impressions.

(Monthly Impressions/1000) x CPM = Monthly Revenue Potential

If you have a daily Morning Brew-ish newsletter with 100k subs and a 40% OR. Your CPMs will likely be $10-$30, let’s say $20. A reasonable price is $800 per sponsorship, assuming you start with 1 primary placement per send, that’s $16,800 in Monthly Revenue Potential. For example:

100k x 0.4 × 21 = 840k | 840 x 20 = $16,800 Monthly Revenue Potential

Another example: You send thrice a week to 20k subscribers, with a 60% open rate, to mainly founders. A reasonable CPM I’ve seen for founder audiences is $100. So…

20k x 0.6 × 13 = 156k | 156 × 100 = $15,600 Monthly Revenue Potential

As you can see, a newsletter with 80% LESS subscribers and 40% LESS sends, can have a similar, or even higher, MRP. Damn Daniel.

Calculating CPMs can be a finger-in-the-air exercise. If you’re struggling, just start in the middle of your best-guess range, then adjust depending on sales conversations and campaign results.

😐 Caveats

Of course, all models are limited. If you start offering more than 1 sponsorship option, this changes things. Although I’d always try and stick to just 1 format in the beginning.

Also, you need to take into account that ad sales is hard. It will likely take you many months before you have some form of consistent pipeline. Growth may happen during that period, but IMO you should always model off the status quo.

Also, this is all assuming that you can always close deals at your estimated CPM, but that won’t always be the case.

🙋‍♂️ Another example - Revenews

This newsletter, has 550 subscribers, a 65% open rate and weekly sends. Most readers are newsletter operators. I believe can get a $200 CPM with the right partners.

So 550 × 0.65 × 4 = 1430 | 1.43 × 200 = $286 MRP.

At a $286 MRP, it’s clearly not worth my time doing cold ad sales outreach. This is why I’m monetising with other methods for now (big plans soon 👀).

I’ve sold one sponsorship, but that’s only because they reached out to me, and I know and trust the people and business.

That business, and the sponsor of this newsletter, is Alota…

Getting your first few hundred or thousand subscribers is a grind (hi to those subscribers here that I Twitter DM’ed!).

Organic growth is great and all, but it will only get you so far, 

The inconvenient truth is that every newsletter 20k subs heavily relies on paid growth.

If you take your newsletter seriously, it’s essential. But, it’s also f*cking hard, especially if, like me, you’re not a marketer. 

To master paid acquisition, you need:

• Cutting-edge strategies for Meta, TikTok, and X.

• Eye-catching ads – static and video – that magnetize subscribers.

• Scalable techniques that maintain low CAC with high engagement.

Instead of spending heaps of time learning or doing all these things yourself, you should just pay Alota to do it for you.

Alota are veterans in running profitable ads for 8-figure e-commerce brands. Now, they’re bringing their expertise to the newsletter space.

I personally know the CEO Leevi, they know their stuff. Alota are offering an awesome deal:

• Handle all ad creative costs, including professional UGC videos.

• Deploys battle-tested media buying strategies on Meta, TikTok, and more.

• A bold promise: 100% money-back guarantee if you're unsatisfied (excluding Ad Spend).

• No strings attached – no contracts, leave anytime.

Let's Talk Paid Acquisition for Newsletters.

Worst case scenario? You walk away with invaluable media buying insights, absolutely free.

📰 Newsletter News

👏 28 hooks of top-performing threads from large X creators. I just downloaded this, and will 100% be using it.

📈 How this newsletter grew to 370k subs in 6 months

🤖 How to maintain deliverability in 2024.

🔒 Freelance journalists need a pay rise, read about it here.

📊 Why publishers & advertisers can’t ignore podcasts anymore.

Read: The state of newsletters in 2024

🤣 Inbox Sales Banter