For those who don’t know, I’ve been updating a newsletter for the past 3 years and for a long time the sponsorship revenue generated from this newsletter represented a large part of my income.
I’ve learned a lot about dealing with sponsors and in particular building a lifestyle business that relies on advertising revenue. What follows is a few lessons I’ve learned that can hopefully help others who are considering doing the same.
1. Sponsors won’t come to you
When I first started to accept sponsors I had envisioned that when I published the sponsorship page on my site, companies would come rushing to me with their ad spend. Boy was I wrong; from working with over 100 sponsors over a three year time frame, only 4 companies approached me.
Tim Ferris hosts one of the biggest podcasts in the world. If you listen carefully, you’ll often hear him say “I reached out to…” when introducing his sponsors. Yep, even the guy with the biggest podcast on the planet reaches out to potential sponsors directly.
I guess the takeaway here is that if you plan on relying on advertising revenue, you’ll need to have a strategy in place where you are really proactive in finding good sponsorship partners and more importantly, get really good in closing the deals.
2. You need scale
I’ve come to learn it’s easy to get companies to pay $100 for a sponsorship and it’s also easy to get a company to pay $50,000 for a sponsorship (if you have the numbers).
The logic here is pretty simple: most companies are happy to try an experiment for $100 and most companies who spend big bucks on sponsorships understand how advertising works (and in most cases on this level are more interested in brand awareness over direct trackable ROI).
The trouble with working with the first group is that they’ll quickly come outside of their comfort zone at a sponsorship costing more than $500. And the trouble working with the later group is you’ll need huge numbers for them to consider working with you.
This leaves you with the Fortune 50 million. And while it’s cool there’s a lot of companies you can approuch within this range, you’ll quickly start to learn how many have no experience with sponsorships, and in particular monitoring and measuring ROI.
The takeaway here is that you’ll want to jump from the low sponsorship ranges to the high as quickly as you can, which most of the time is directly contingent on audience size.
3. Working with sponsors is really time consuming
Reaching out to sponsors. Chasing up payments. Broken promises. Editing assets. The whole model of dealing with sponsors is far more time-consuming than one would imagine, and for someone who wants to focus their time on making their product better for their users, it’s ultimately soul destroying.
4. People don’t value reach like they do physical/digital products
Founders/friends often ask me to feature their products on my newsletter while I have other startups paying me to do this. If I ask a friend for payment, I end up feeling terrible. If I give the shout out, I’ll feel terrible to those who are paying me. 3 years in, I still don’t know how to deal with this and it’s always made me feel really uncomfortable.
It’s funny, I’ve never had anyone ask for a free copy of GrowthList (my paid-for product), yet many have asked, some were even shocked to know, I charge for newsletter sponsorships to cover my time in pushing the product forward.
I think this says a lot – many assume working on a media property is easy, while they view a paid-for product as something entirely different.
If there’s one thing I’ve learned, it’s that I’ll never set out to start a business that relies on advertising revenue alone again. Instead, I recommend focusing your time on building a great product that you charge for and use the media property you want to start as your marketing channel (or have some serious chops where you charge users to access your media product/content like Ben Thompson does).
From today, I’m going to withdraw being proactive with chasing sponsors and instead offer a really affordable way for friends or big companies to sponsor the newsletter. It’s now just $149 to sponsor one edition, with 5 editions per week. It’s not going to make me rich and I’ll be taking a huge pay cut from our current sponsorship programs, but for me, not having to deal with the above BS so I can put more time into making the newsletter better for my avid readers is a huge blessing I’m really excited about.
If you’ve been a newsletter reader for a while and find value in the content I curate, consider buying me lunch in return for that shout out.