For many businesses, emailing is the primary customer acquisition channel – this is because it’s easy to nurture your audience and build personal relationships with them, unlike social media that’s designed for mass marketing. Also, you don’t get censored or canceled for spreading any piece of information that doesn’t sit well with a platform. And it’s cheap and yields the highest ROI ($40 per $1 spent!).
This makes email newsletters a very valuable asset to many businesses. So if you don’t have a newsletter, you’re missing out on converting a fraction of the 3.8 billion email users.
Now if you’ve decided to buy a newsletter, finding out its valuation isn’t as easy as that of a micro-SaaS business. In this guide, I’ll show you how to evaluate a newsletter and the factors to consider when buying one. Let’s begin with the latter.
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While you may be tempted to buy a newsletter due to the size of the email list, there are a couple of factors you should consider before investing in a newsletter. Carrying out due diligence will help you get in-depth information about the business and know if it’s worth the seller’s asking price.
Building trust with an audience doesn’t happen in a day. There has to be consistent communication, and the readers have to see value in the emails being sent – this takes time, which makes age an important factor to consider when buying a newsletter.
This makes older newsletters more valuable than newer ones. Newer newsletters haven’t stood the test of time and you can’t guarantee that the open and click-through rates will be good a few years down the line. So be sure to ask the seller when they sent out the first newsletter issue.
There are different strategies for getting subscribers, making the strategy the seller used to generate readers to sign up for the newsletter very important.
Does the seller have a blog where they create content regularly? Is he actively creating valuable content on social media to cause readers to want to consume more content? Does he have a referral program where subscribers can easily invite their peers? These are good strategies for acquiring newsletter subscribers.
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However, when a newsletter gets its subscribers by hosting giveaways, the email list tends to be low quality. This is because most of those subscribers joined the newsletter for the wrong reasons – to get the giveaway, not to engage with its content.
So it’s important to ask how the seller acquired their subscribers before buying the newsletter.
This is one of the most important factors to consider when buying a newsletter. A large subscriber-base indicates the seller has built trust with their audience. It also signifies a potential for increasing revenue. However, a large subscriber-base is not always indicative of this – if the seller got the subscribers through giveaways and contests, it’s not a high-quality newsletter and will not yield much when monetized.
This is why you have to consider another top factor – open rates.
Open and click-through rates are probably the most important factors to consider. It wouldn’t make much sense to buy a newsletter with a poor open rate. It could mean the seller hasn’t built enough trust or delivered enough value for their audience.
The open rate is a better indication of a newsletter’s value than the number of subscribers. A newsletter with 3000 subscribers and a 30% open rate may be better than one with 5000 subscribers and a 10% open rate. Although this isn’t always the case – it’s possible the seller isn’t giving enough value or doesn’t know how to nurture an email list. But if you start creating more valuable content, you may get better engagement.
Another factor that can impact the open and click-through rate is the acquisition strategy. If the seller gets his subscribers using organic traffic, his emails will tend to have higher open and click-through rates.
You also want to check how often the seller sends emails to his list. Typically, sending emails at least once per week is a good practice for keeping an email list alive. Also, a monthly newsletter is good. But anything short of this, the newsletter may not be valuable as the subscribers may not have built any form of connection with the seller. So before buying a newsletter, you want to consider the seller’s consistency in sending emails.
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There are different ways newsletters make money. There are paid sponsorships where people could pay for you to advertise their products or services to your audience. There are also affiliate promotions where you link to blogs with affiliate content. You could also sell your products or services or use a mix of these strategies.
Whichever it is, consider if the newsletter has more monetization potential and the impact the exchange deal (between you and the seller) will have on the audience.
All niches aren’t built the same – some are more sought-after and therefore more valuable. Some of the top niches are those in self-development and business-related niches. So it’s better to be interested in newsletters in any of these niches.
That said, all niches are monetizable – it all depends on how engaged the subscribers are and the quality of content you can offer your readers.
Now newsletters don’t come without operational costs. You have to consider the email service provider (ESP) cost, promotion cost such as social media advertising, the cost of creating lead magnets like ebooks, etc. And there’s also content cost – the seller’s time is valuable and it takes a lot of creativity to craft emails that audiences find engaging. It’s also possible the creator has a few writers on their team. These add up to the value of the newsletter.
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The formula for evaluating a newsletter’s worth is its last 6 months’ profit multiplied by the industry’s standard multiple;
Valuation = (Profit from last 6 months + Operational costs) x Multiplier
At Microns, we typically use multiples ranging from 4x to 6x when finding the value of a micro-SaaS: although it could go as high as 15x. However, we use a higher multiplier for newsletters as they’re longer-term assets. Depending on the age of the newsletter and the other factors listed, the multiplier can range from 10x to 20x.
So if a newsletter made $500 in the last 6 months (with the operational cost factored in), it can be sold for around $5000 on Microns.
Buying a newsletter is easy. Monetizing it? Not so much. Here are several ways to monetize your shiny, new newsletter;
This is especially good for niche newsletters. If you offer digital marketing services such as email marketing, content creation, etc., and you buy a newsletter in the business or digital marketing space, you can sell digital products such as ebooks, courses, spreadsheets, frameworks, and checklists – the list is endless. This doesn’t stop you from selling physical products like your merch, books, or magazines.
Also, if you sell high-ticket coaching or consultation services, a newsletter can be your funnel to sell your service.
Selling to niche newsletter subscribers means you already have a teeming pool of warm leads.
Getting sponsorship deals is another great way of monetizing your newsletter. It entails displaying your sponsor’s banner or ad at the beginning of your email.
Typically, you can get between $30 and $50 per 1000 subscribers. So the larger your audience, the more you can make. Also, you could feature up to 2 sponsors per issue or increase the frequency of sending out emails to grow your revenue.
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This is different from sponsorships in that, rather than acknowledging someone else’s product or service as your sponsor, you reserve a section at the end of your email where to place ads as shoutouts.
If you’re having difficulty attracting other businesses to sponsor or book ad space in your newsletter, you could ask for donations through Patreon. If your followers find value in what you do and appreciate it, they’ll consider donating.
Here at Microns, we sell subscriptions to our newsletter subscribers. If you’ve got premium content to offer, you can sell it as a member-only subscription to your readers.
This approach is good because you’ll have a predictable recurring monthly income (MRR).
If you promote affiliate products on your blog, you can send traffic from your newsletter to the blog. However, promoting affiliate products in your newsletter goes against Amazon’s terms of service, so you want to be careful when doing that.
So there you have it – the simple formula for evaluating a newsletter and increasing its earning potential with different revenue streams. On the Microns, we’ve got tons of newsletters across a range of topics. So signup to begin exploring the marketplace today to find one that aligns with your business goals.
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