Publishers

How to Balance Growth vs Profit When You’re a Small Newsletter

This post was written and submitted by Louis Lazaris, the publisher of Web Tools Weekly and Tech Productivity.

One of the biggest challenges I’ve had with my primary newsletter is how to grow while maintaining a proportional profit.

I’m currently using MailChimp as my email service provider, and I’m on a legacy plan (which is good), paying about $125 USD per month. Web Tools Weekly currently has about 11,700 subscribers, almost all of which has been pure organic growth over the course of about 7 years (including a couple of times when I purged the list of inactive subscribers to keep costs down).

Web Tools Weekly newsletter image

For those who don’t know me, I’ve been blogging and writing about various web development subjects pretty regularly now for more than ten years. In 2013 (I can’t believe it’s been that long!) I launched my primary newsletter Web Tools Weekly. Last year I launched my second newsletter, Tech Productivity. So I’ve been knee-deep in the newsletter niche for quite some time now.

Here’s the question: How do you supplement the natural growth without having to resort to a paid subscription model? And even further, how do you turn a newsletter side project into something bigger? 

In this post, I’m going to look at three possibilities that have been presented to me over the years, and why I’ve mostly chosen to stick with organic growth through blogging.

But first, let’s get into the financial details.

Focus on turning a profit that’s worth your time

To make a worthwhile profit with Web Tools Weekly, I need to sell at least two premium ad spots each month. And that  hasn’t been difficult for me. 

Most months out of the year I’m able to easily clear my costs and then some. On top of that, I sell e-books through the newsletter, I periodically include affiliate ads, and I use Paved’s PPC Ad Network in issues that don’t sell all regular ad spots. My association with the newsletter has also led to various paid writing projects.

Here’s the dilemma: While 11,700 subscribers is decent, it’s not an elite subscriber number. When I factor in the 35% open rate, adding possibly another 10% for web views (each newsletter issue has a web version that people sometimes get to via RSS or clicking the “view on web” in the email itself), I might get about 5,000 legitimate visitors per issue. 

Some of the Open Rates for Web Tools Weekly
Some of the open rates and click rates for recent issues of Web Tools Weekly

This is where it gets exciting.

If I’m able to turn a moderate profit based on those modest subscriber numbers, how much more profitable could this be if I was able to grow the newsletter to over 20,000 subscribers? 

Or even 30,000? 

The MailChimp costs would go up to about $180 – $200 USD. But the ad spots could be priced at a much higher rate (2x or 3x to be precise). So it would be well worth the extra overhead. To be completely transparent, Web Tools Weekly currently pulls in about $700 per month in revenue, so that should give you an idea how valuable some exponential growth can be.

The best kind of growth is still organic growth — here’s why

My 11,000+ subscribers are as organic as they get. Up until very recently, I haven’t done any direct promotion of the newsletter other than mentioning it in blog posts and including it as a link in my bio when I write articles for popular sites like CSS-Tricks and Smashing Magazine.

There are a number of different apps and services that claim to help you grow your audience. If I can get to 20,000 in a few months after spending 7 years getting to the first 11,000, that’s certainly a tempting idea!

But my newsletter is in a specific niche. I need each one of my subscribers to check all the following boxes for me to consider them a quality subscriber:

  • Web developer, preferably front-end or full-stack
  • Knows at least a little JavaScript
  • Is willing to open 30%-40% of the weekly emails
  • Is willing to click something in a newsletter at least once every 3 issues
  • Doesn’t mind a little bit of advertising geared towards developers and startups in the tech niche

And that’s just not your average internet user. 

So let’s explore some popular options and why they do or don’t work. 

Rejected: Giveaway + Referrals

Running some kind of giveaway or referral program has been suggested to me a few times. But I know it’s not a good option for my newsletter. 

Here’s an example structure of a newsletter giveaway: 

What a giveaway pop up could look like
What a giveaway pop up could look like
  • Prize: $100 Amazon Gift Card
  • Each person can enter once
  • Each person gets a bonus entry for every person they refer, thus increasing their odds of winning the prize

The idea here is that the bigger the prize, the more likely people are to refer others, leading to more entrants, and more subscribers.

If 500 people entered the giveaway and each of those referred an average of 2 people, your newsletter could grow  anywhere between 1,000 to 1,500 subscribers (depending on how many of those who enter the contest are already subscribers to begin with).

But there’s a  glaring problem with giveaways…

  • Are any of the What are the odds that any of the entrants not already subscribed are web developers?
  • Are the referrals other web developers (not random people only interested in the prize)?

Web developers know other web developers. But people in this niche don’t like to ‘spam’ their cool programmer friends with marketing stuff. 

And no matter how this is dressed up, it’s just going to look like a marketing gimmick to most people who probably get paid to build this sort of thing themselves. If the entrants refer ‘family and friends’, it’s even less likely that the referrals will meet any of my criteria for a quality subscriber.

So I’ve never really been interested in this sort of thing for growing my newsletter.

Rejected: Obtrusive Promotions (aka Popups)

In addition to my newsletters, I also run a moderately-trafficked web development blog. I sometimes mention the newsletters in articles, and I have links in the sidebar and footer — but nothing too intrusive.

Many blogs, apps, and websites use one of the following to ask visitors to subscribe to their newsletter:

  • A modal window overlay
  • A push notification message
  • A top-bar (or bottom-bar?) message/overlay

There are other variations of these, but most of them come in one of the above formats, usually one of the first two. To me, these are definitely better options than doing the contest/giveaway. But they’re still a major problem.

An example of an invasive popup
An example of an invasive popup

I’ve heard reports that modal windows really work, and that they do in fact increase subscription numbers. 

But at what cost?

The web development industry has been quite vocal over the years about how much we are against intrusive marketing methods. A number of humorous projects have been created, including this one, that makes light of all the different messages and overlays we find on websites nowadays. Or this one that shows how fed up users are with obtrusive and unintuitive interface components found on many websites. Other projects have offered suggestions on how to do things less obtrusively.

To be clear, I’m not against advertising or promotions; I use ads on my websites and I depend on ads for some of my regular income. But I always try to opt for advertising that’s relevant to my audience or doesn’t intrude on the content they’re looking for.

So I have to consider: Do I want to gain 2 or 3 subscribers who may or may not stay subscribed for more than one or two issues, at the expense of 2 or 3 already existing regular subscribers or website readers? 

Even if this does lead to an immediate gain in subscriber numbers, those numbers could prove to be superficial in the long term when I start to examine CTR, newsletter open rates, etc. So while this is a better option than a contest or giveaway, it’s still not something I’ll do.

This means, no popups or overlays and no gimmicky contests.

Accepted: Paid Advertising

I believe the best opportunity for sustained, long-term growth (besides organic growth) is customary advertising through something like Google Ads, Facebook Ads, or another network like Paved.

I have only recently started to do paid promotions for my newsletters, and it’s just an experiment for now. But it seems to be working. 

Web Tools Weekly Facebook Ads performance
Web Tools Weekly Facebook Ads performance

People often condemn advertising (and rightfully so if the ads are intrusive or contain malware or tracking). 

But if you think about it, the advertising model is simple:

  1. Display your product
  2. User sees your product
  3. User clicks or ignores your product

That’s as straightforward as it gets! 

In most cases, the reason they’re clicking the ad is because it’s something they’re interested in reading more about. So every visit via an ad click is a valid lead (assuming it’s not an accidental click and assuming your ad isn’t misleading).

I like that premise. 

As long as the value of each click is worthwhile (i.e. it leads to a minimum percentage of conversions), I’m willing to go this route over either of the previous possibilities.

Real Evidence That Quality Beats Quantity

It’s important that my readers are quality subscribers who meet my criteria. 

One of the reasons for this is directly related to the performance and success of the advertising spots I offer in my newsletter.

In addition to my normal ad spots, I offer paid product reviews in Web Tools Weekly. Almost all the product reviews I’ve done have been very successful in encouraging users to click through to view the product and in many cases to sign up for a trial or make a purchase.

Here’s a chart breaking down the email-only click-through rates for the three types of ad spots I offer (keeping in mind this goes out to about 11,000-12,000 subscribers):

Ad SpotAverage Total ClicksAverage Unique Clicks
Paid Product Review179.6154.2
Top Ad Combo108.191.0
Secondary Ad Combo75.368.1

(Note that these are just the email click-through numbers; this doesn’t include web clicks, which I don’t track. So the numbers are certainly higher overall.)

You can see from those stats how important it is to obtain quality subscribers. In fact, a few product reviews have resulted in well over 200 clicks, with one product up to 280 unique clicks.

The Golden Rule of Newsletter Advertising

An ad spot should never encourage someone to unsubscribe or leave them with a bad taste in their mouth. 

Of course, there are some people who will never be on board with paid product placements, even if they’re clearly marked. And I’m sure it happens at times even in my newsletter. But I’m willing to take the trade-off so that my business model is sustainable.

A huge promotion could get hundreds more views on some of these product reviews. But the quality of views might make the difference in number of clicks (and subsequent conversions) negligible by comparison.

And trust me, the people who are advertising on your newsletter can quickly tell a quality and engaged audience from a mediocre one. It comes through in their actual conversion rates (how many people buy the product).

It might be boring, but engagement really is key

Growing your newsletter to the point of financial success is important. But making sure your subscribers are engaged and interested in your content is vital. Especially for a smaller subscriber list. 

I’m sure others in different industries have had significant levels of success with promotional growth tactics like the ones I’ve both rejected and used. 

I’d love to hear if you’ve had better success with some of the strategies I’ve discussed. Leave me a message in the comments.

I believe it’s important to know your audience and adapt to it accordingly. I hope to continue writing both Web Tools Weekly and Tech Productivity. And I’m willing to do whatever I can to keep my subscribers happy while maintaining a business model that makes both projects worthwhile and promotes long-term growth – even if it’s a slower climb than I would like.