Welcome to a Revenews edition that was stoked by witnessing some online convos in the newsletter community.

🥳 Talking of community, I will be going to the Newsletter Conference in May!

Fun plans aside, let’s dive in! 🚀

1. Newsletter News

2. What type of acquisition is better

3. Saving time on ad ops

4. Inbox anter

📰 Newsletter News

👂 Listen: How WorkWeek grew to $1M+ per month

📈 Watch: Newsletter sponsorships in 2024.

🤖 The quickest way to $10k months

📊 How a local newsletter does 6 figures in revenue

🏷️ Buzzfeed sold off a big chunk of business

Two types of newsletter acquisitions

I’ve seen a few internet conversations talking about newsletter exits and pricing models. Some gave me the impression that writing about my view on two different types of newsletter buyers would be helpful. 

I’m not referring to two different business models or industries, of newsletter buyers. I’m talking about the two different WHYs that drive people to want to buy a newsletter. Which is much more influential.

1. List acquisitions - they want to buy your subscribers.

2. Brand acquisitions - they want to buy the whole brand.

Hint: You want to be number 2.

Let’s examine them and how they differ.

📧 1 - List Acquisition

Why they buy…

Ultimately this is when a newsletter acquires another similar newsletter, intent on merging the new subscribers into their main publication, growing total list size.  

The value is logical from the buyer's perspective:

I own newsletter A, you own newsletter B. We have similar audiences, the fact that they read your content seemingly proves that they’re within my target demo. So I wanna buy! 

A great public example of this was documented by Matt McGarry here (cheers Matt). 

🔎 Characteristics of List Acquisitions:

• These typically happen with smaller, sub-100k-subs newsletters, but not always. 

• Significant revenue is not typically important, or even necessary.

• The buyer is almost always a newsletter, which is larger than the seller.

• Most of the time the transaction is initiated by the seller. They’re seeking a buyer and/or have dropped consistency with sending.

• Limited due diligence, usually ESP access and subscriber analysis.

🤑 Valuing List Acquisitions

Due to the above points the value per subscriber can be wildly below people's expectations. Any seller-initiated transaction is clearly not ideal for optimising value.

I’ve seen two distinct conversations this week where newsletter owners posted that they wanted to sell. This was then followed up soon after with posts about how insultingly low the offers were. Frustration is understandable, growing and maintaining a newsletter takes time (and stress). 

But thinking about it from the buyer's perspective, a competent digital marketer can now get subscribers for under $2 CPA, whilst offsetting some of that with Sparkloop/beehiiv. Yes, your subscribers are more likely to be interested in their content, but there is no guarantee that engaged subscribers will happily transition to a new publication, even if it's almost identical in content. 

This is exactly what Matt tracked, thanks again!

Personally, I’ve seen more than one list acquisition behind closed doors, and once all the dust had settled, the new subscribers usually have much lower engagement than both the buyer's original list, and the seller's list before selling.

As a small newsletter owner myself, acquiring another newsletter-newsletter is interesting. But, for the above reasons, I personally wouldn’t want to pay more than $2 per subscriber.

Also, if you’re small and/or young, you most likely just don’t have the brand signal to start demanding super-high valuations.

For all the blood sweat and tears invested into growing a newsletter, this type of valuation is not usually the dream sale that anyone has in mind. That said, it can definitely lead to a great injection of capital for some quality newsletters or well-negotiated deals.

To achieve valuations similar to high-profile acquisitions like Morning Brew, you’ll need to make sure that you’re in the second category…

🏆 2 - Brand Acquisition

Why they buy…

Buyers are acting on a desire to own the entire company, not just their subscribers. They want to own the brand, the revenue and the content. Yes, they want to own the subscribers, but almost always they want to retain the newsletter’s brand, not just plug readers into a bigger list.

I was tempted to call this type a ‘Proper Acquisition’, but that felt mean to list acquisitions. But the point here is that this type is a much more comprehensive transaction, with rigorous due diligence, higher valuations, and bigger deal sizes.

Almost all the high-profile acquisitions are this type:

🐐 Morning Brew - acquired by Business Insider for $75m. As cited online, here’s the WHY behind the buy:

• $20m in revenue and $6m in profit. 

• Growing audience of 2 million professional millennials.

• The content and the people.

💸 Finimize - acquired by abrdn for £85m. As cited online, here’s the WHY behind the buy:

• Love of the Finimize brand and content.

• Growing and diversified revenue.

• Financial education for millennials complemented abrdn’s other products and vision for the future of the firm.

I could go on.

🔎 Characteristics of Brand Acquisitions:

• Usually larger newsletters.

• More developed companies with a strong brand driving significant revenue.

• The buyer can be from any industry, the key factor is that the newsletter audience will complement their existing products.

• Comprehensive due diligence, carried out by an investment bank.

• Most of the time the transaction is initiated by the buyer or stems semi-organically from a previous partnership conversation, with Milk Road being a notable exception.

🤑 Valuing Brand Acquisitions

As this is not just a subscriber acquisition exercise, valuations are much higher.

The value is typically based on a traditional method such as an EBITDA multiple range and then considering the more subjective factors such as brand, content, growth, company documentation, etc.

Here’s an interesting article on valuing media companies.

This is how those 7-8 figure exits start to become realistic.