Does Increasing The Number of Your eNewsletter Subscribers Make Economic Sense?

strategies for profitable email newsletters

 
It's a reasonable and responsible question. Will you make more money by substantially increasing your enewsletter subscriber base?
 
Substantially increasing your enewsletter subscriber base will come with some cost so you need to be able to justify that cost by showing the return on investment you will receive from the increase.
 
So let's look at the costs associated with the increase.
 
Let's say you have an dining enewsletter that currently has 20,000 subscribers. Advertising is doing well selling ads in the newsletter and your open rates are good as are your click through rates.
 
You hear a knock on your door. It's your Ad Director. It's budget time and he wants to budget for an increase in advertising revenue from your newsletters. He's able to get a $20 CPM on the newsletters and since the dining newsletter is doing so well, he wants to budget for an increase on it. He asks if you can get the dining newsletter up to 40,000 subscribers.
 
Expense
So you need an increase of 20,000 subscribers. The cost of serving those 20,000 additional subs once a week for the year at $3.50/m will be $3,640. The cost of generating those subs via a longtail ppc campaign will be $20,000. 
 
So your total costs for year one of the increased subs will be $23,640.  That's a lot of money.  But fear not, here's how that becomes a drop in the bucket.
 
Revenue
Let's start with the most obvious revenue, the ad revenue.  You're adding an additional 20,000 subscribers.  At a $20 CPM with 4 ad slots at 75% sold that's an addiitional $1,200 a week or $62,400 for the year.  If the CPM on your newsletter is higher that number will be higher.  So you've already covered your costs with just the additional advertising revenue and you're showing a nice profit.
 
But don't forget about the other revenue that your enewsletter generates.  Here are some revenue sources that will come from your increased subscriber volume.
 
You can generate print or digital subs from your newsletter.  The increased 20,000 subscribers will likely generate at least 600 new print subs a year at $12 each, and you should be able to generate 400 gift subs at $15 each.  That gives you $13,200 in subscription revenue for the year.
 
You should also be promoting your other enewsletters to your 20,000 new dining newsletter subscribers.  That should give you at least 3,500 new subscribers to your other newsletters for the year.  Since the enewsletters are free for subscribers we won't assign a dollar figure to these.  Although you do save the cost of having to generate those newsletter subs.
 
If your company holds events or sell products, you can also sell those items to your new names.  So we'll add another $5,000 for year one.
 
Finally there's the traffic to your website.  Your additional newsletter subscribers will generate 124,800 page views on your website.  With 2 ads on each page of the website that's an additional 249,600 ad impressions on the site.  With a $10 CPM on website ads that's an additional $2,496 from additional ad views on your site.
 
So the net result is $23,640 in expenses and $78,096 in revenue for a net revenue of $54,456 in year one for your additional newsletter subscribers. In year two and year three you only have the cost of deployment so you'll generate $78,096 each year.  That's a total of $203,368!
 
Not bad if you ask me.
 
Contact me, Don Seckler (dseckler@listservices.com) and we can help you get started building your e-newsletter base today.