How to Set Your Newsletter Sponsorship Rates (Without Selling Yourself Short)

If you’re ready to monetize your email list, newsletter advertising is one of the best ways to do it.

Not only do you get to finally turn your hard-earned subscribers into a real income strategy, but you can do it easily. Without selling products or setting up affiliate links.

Once you’ve decided to experiment with advertising, though, you’ll very quickly realize that you have to set newsletter advertising rates.

And, just like many conversations about money, advertising rates have a certain mystery about them.

How much should you charge for newsletter advertising? And how can you stay competitive and also be sure you’re not pricing yourself too low?

While we can’t alleviate all of your worries and tell you exactly what you should be charging, there are a few techniques to help you to decide how to price your newsletter advertising.

Types of newsletter advertisements

Advertising to your newsletter audience generally falls into two categories: dedicated email and sponsored email.

The difference is that a dedicated email is entirely dedicated to your sponsor’s message, while a sponsored email features a small ad next to your own original content.

In both cases, you receive the content from the advertiser and send it to your audience. The advertiser never gets information about your subscribers, like their email addresses, unless they opt into the offer after receiving your email.

When setting your prices, it’s important to decide which type of email advertisements you’re going to offer. Because of the size difference, a dedicated email advertisement costs more than a sponsored email.

If you’re using Paved to partner with advertisers, you can select either or both forms of advertisements to list on your profile. Join our network of publishers to learn more about monetizing your list with email advertising.

What does CPM mean in email marketing?

Once you’ve decided what type of sponsorship to offer, you’ll need to figure out your CPM. CPM refers to cost per thousand subscribers.

CPM is used as a way of comparing newsletter advertising rates, even when newsletters have a vastly different number of subscribers. You’ll determine your CPM based on the total number of subscribers you have.

Sometimes you’ll hear about “visible CPM,” which is the same idea, but it's calculated based on the number of subscribers who actually open your email. Advertisers use visible CPM to gain insight into how well their campaigns work. When you’re setting your rates, you only need to worry about CPM.

You can easily calculate your CPM yourself, or you can use our online CPM calculator. To calculate your CPM, just divide the amount you will charge for an email send by the number of subscribers you have, and then multiply by 1,000. Here's the formula for CPM:

(Cost of Email Send / Email Subscribers) x 1,000 = CPM

After you set your rate based on CPM, you're not done quite yet. You can stay competitive by knowing two other metrics:

• •CPC: cost per click (CPC)
• •CPA: Potential cost per acquisition (CPA)

Since these metrics matter to your advertising partners, you should keep track of them just like you do your CPM.

If you have a publisher account in Paved, you can look at the ROI calculator on your profile to see your CPC and estimate potential CPA for advertisers. Of course, the actual CPA will depend on the conversion rate of the advertiser’s landing page.

Know your numbers

Now that you know how to calculate your CPM, you can start to think about your newsletter advertising rates in the same way that advertisers do.

Bogdan Sandu, author of the Design Your Way newsletter, cautions against paying too much attention to list size. “That doesn't mean anything. You can have 100,000 subscribers, and less than 5 percent open rate, which doesn't mean much for an advertiser. They're interested in clicks and conversions. Deliver those above their expectations and then consider raising the price,” he said.

When you start to think about rates that you charge for newsletter advertising, you need to get up close and personal with your email list metrics. Start by looking at:

1. Number of Subscribers
2. Open Rate
3. Click Rate

Average the open rates and click rates for the past few emails you’ve sent to get a sense of what’s normal for your list.

Once you know your metrics, you can compare them to average to help you price your list. Don’t know what average looks like in your industry? CampaignMonitor tracked averages across a number of industries in this study.

If your open and click rates are above average, you can likely charge a little more for a newsletter ad. If they're below average, you’ll want to set your rates a little lower so you can stay competitive. If your open and click rates are much lower than you’d like them to be, it might be time to look at pruning your list.

Setting your newsletter advertising rates

Now that you know where you stand, you can set your newsletter advertising rates.

So what's the typical rate for an email advertisement? In working with our community of advertisers, we’ve found that they generally like to keep their dedicated campaigns under $30 CPM. If you’re aiming higher than that number, you should have a very niche audience or very high open and click rates.

While you're getting started, you may want to consider pricing your newsletter ads slightly lower than your ideal price point. The first few campaigns you participate in will help you establish a relationship with publishers and will help to show how effective your campaigns are.

Don’t worry, you can change your pricing later on. Once you have the metrics to support a higher rate, it'll be easy to make the case.

Finally, allow for negotiations. Just because you mention a certain price in an email discussion or on your Paved publisher profile doesn’t mean you’ll always find an advertiser that is comfortable with that number. Don’t be afraid to be a little flexible and allow for negotiations with your sponsorship partners.

Finding balance for your newsletter sponsorship rates

It's important to strike the right balance: you've got to be competitive, but you also don't want to undercharge. Armed with the knowledge of your email list metrics and a good pricing strategy, you can set sponsorship rates with confidence.

If you want to be paid faster than ever, consider joining the Paved community of publishers. Not only will you get paid the same day you send, but you can set your own rates and make it easy for advertisers to find you. Click here to join Paved today!