Media Briefing: How newsletters publishers are dealing with a destabilized ad landscape

Pressure on newsletter publishers

The key hits:

• Newsletter publishers like Morning Brew, The Gist and 1440, are starting to see a shift in some of their advertisers’ marketing strategies, with categories like crypto pumping the brakes on media buys. 
• Media buyers want more proof that their investments in newsletters are worth the budget allocation. 
• Apple’s Mail Privacy Protection setting has made open rates unreliable but some publishers are using audience surveys to convince advertisers that their campaigns are worth the investment.

The economic slowdown is threatening advertising budgets not two years after the pandemic-induced recession hit the brakes on almost all marketing spend. But that isn’t the only threat at the moment to newsletter publishers’ advertising businesses.

Apple’s Mail Privacy Protection feature introduced in September has caused open rates to be viewed as unreliable at a time when advertisers are seeking stronger evidence of a return on their ad dollars. Meanwhile, the proliferation of newsletters over the past couple of years has reached a point of oversaturation in the market, according to some media buyers.  

For newsletter-first publishers like Morning Brew, The Gist and 1440, the strategy now is to adapt. For example, some advertiser categories are beginning to drop off, such as brand advertisers. So the publishers are turning to brand lift studies to prove out campaign success, which is also part of their playbook for dealing with Apple’s change destabilizing traditional email metrics.

“What we’ve seen in the market over the last few months is there is definitely a change happening. There are some partners of ours that are looking to scale back a little bit. While some categories may be looking to scale back, however, we have plenty of others, where it’s business as usual, if not even increasing spend,” said Jason Schulweis, evp of brand partnerships and creative studio at Morning Brew. 

One of the advertiser categories pumping the brakes is – to no surprise – crypto. “Some big partners of ours are taking hits not only from the larger economy, but also what’s happening in crypto,” he added. Cryptocurrencies Bitcoin and Ethereum are both steadily dropping in value, hitting one and two year lows, respectively, this week. One crypto exchange platform Coinbase announced it will lay off 18% of its employees as a result of the crashing market. 

Advertisers focused on brand awareness campaigns are starting to shift their timelines a bit too. 

“We haven’t experienced too many partners canceling things outright, or having really drastic changes in plans. That might change as we get further into the summer months, but so far, there’s been a lot of uncertainty and a lot of pausing or shifting plans out more,” for advertisers in the upper- to mid-funnel category, said Jacie deHoop, co-founder and head of brand partnerships at The Gist.

As a sports newsletter aimed at female audiences, The Gist’s advertising schedule is tied to the professional sports calendar, deHoop said. But unlike last summer where sponsorship deals were signed months in advance to be timed with the Olympics, she said she expects this summer to be slightly slower in comparison. 

“We haven’t yet seen a slowdown,” said Pierre Lipton, COO and co-founder of 1440. However, “performance marketing is growing in importance. [Publishers] are sharing their CPAs [cost-per-action rates] and ROIs [return-on-investment] a little more. But [transparency] is clearly becoming more and more important to [marketers] because their budgets are becoming increasingly limited.” 

The iOS 15 problem 

Since last September, email open rates have become less reliable for newsletter publishers thanks to Apple’s iOS 15 update, which gave its mobile mail app users the opportunity to turn on the Mail Privacy Protection option that blocks companies from being able to track whether someone opened an email and collect information like IP addresses that can be used to track an email recipient online. 

“This was intended to be a way for Apple to strike back against spammy email senders, but unfortunately as part of that, legitimate news organizations have been grappling with some of the changes that have happened,” said Dan Oshinsky, a consultant at his company Inbox Collective, which works with media companies and brands on email strategy. 

Specifically, Apple’s iOS 15 update has given users the option to have Apple essentially read the email on their behalf, preventing their personal data from being shared with the sender. Inadvertently, this has led to some instances where Apple “reads” an email that the user never actually opened, inflating open rates for the sender. 

As a result, Oshinsky said his clients have seen on average a 15-20% increase in their open rate. For example: this would mean a publisher with an average open rate of 30% would now see 35 – 37%. 

For The Gist, deHoop said her team accounts for about a 5% inflation in the newsletter’s open rate, which brings the average open rate to 40% on their main daily newsletter. 

1440’s Lipton has noticed a decrease in clicks on ads in emails that can be attributed to a specific user. Unattributable clicks used to represent about 5% of the newsletter’s total click-throughs, but its share has increased to around 9%. While it’s not a pressing concern, he said it is something that his team is watching.

Fortunately for newsletter publishers, the situation is somewhat stabilizing. According to mobile analytics firm Mixpanel, 87% of iPhones are running iOS 15, “so there’s not a lot of people left to turn it on,” Oshinsky said. What that means is publishers have a better chance of accurately estimating the amount of inflation to their open rates now. 

The proof is in the survey 

As open rates and impressions have lost their edge when it comes to proving campaign success or convincing marketers to spend their budgets on newsletters, brand lift studies could be key for newsletter publishers to satisfy any brand advertisers looking for more evidence of their budgets leading to direct impacts on their businesses.

For Morning Brew, advertisers focusing on brand awareness want more data on their campaign performance. Whereas direct-response campaigns have things like conversion metrics or transaction data that advertisers can track, “even with brand awareness [campaigns] it goes back to being able to measure that to prove that out,” said Schulweis.

To do that, the company began conducting brand lift studies in early 2019, pre-, post- and mid-way through ad campaigns for its advertisers to measure not just the awareness of the brand among its audience but also how well the ads were able to create affinity with those subscribers. 

The Gist has been leaning into brand lift studies for the past few months as a way to find alternative metrics like brand memorability and propensity to buy, deHoop said. 

A recession is likely to impact consumer behaviors and their propensity to spend. Because of that, “advertisers [might] also begin to act sheepishly in these times as well, making them more hesitant to invest in media that might not show a direct impact on sales, due to its difficulty to track,” said David Mirsky, group director of media at MMI Agency. “Newsletters [also] tend to be more expensive per impression than almost any other digital media, making it a less favorable choice from an optics perspective.”

Stability but oversaturation

Oshinsky said his clients haven’t reported a drop off or significant changes in their newsletter advertising businesses yet, but is hopeful that the impending recession will behave similarly to the one in summer 2020 in regards to how little impact it had on email CPMs. 

“Newsletter advertising stayed pretty steady throughout that period,” Oshinsky said, pointing to email CPMs that remained in an average ballpark of $20 to $50 per every 1,000 people who opened the email. From 2020 to now, he’s even seen a slight increase in CPMs for his clients of approximately $5 each. 

And yet, the bull market for newsletters the past few years could have created an embarrassment of riches. 

“There is an oversaturation of newsletters. Frequency is a big problem and a lot of advertisers will absolutely inundate their audiences because they see it as a lower cost resource for them to be able to communicate on a one-to-one basis,” said Seth Hargrave, CEO of media buying agency Media Two Interactive. 

When buying newsletter inventory – which Hargrave said is now primarily considered an additive element to larger media campaigns he works on for his clients – he said he looks first at the rate of send, then open rates, but most importantly, it comes down to click-through-rates and what the cost-per-click (CPC) rate is in order to judge the engagement rate of the newsletter’s audience. 

“Even then the click-through-rates are going to be reliant on the open rate data that we’re provided from the publisher so absolutely, there’s a concern on [the reliability of] the open rate data, which is why that KPI unfortunately comes back to a CPC, which is really that highest funnel metric that we can look at accurately,” said Hargrave.

“And that unreliability is one of the reasons that newsletters are one of the very first things that us as buyers are going to raise our hands and say, ‘Can we get that as an added value?” — Kayleigh Barber

What we’ve heard

“We felt like if we landed in that studio space, while we do all have those offerings, it might just sort of limit us in where we were going to reach some prospective clients, especially when we wanted to get into those longer-term remits with certain opportunities.”

— Magnet lead Danielle Johnsen Karr on why Team Whistle’s social content agency doesn’t label itself a branded content studio

Journalists dissatisfied with their organizations’ racial and ethnic diversity

Despite media companies’ pledges and subsequent efforts to improve the diversity of their staff since an industry reckoning in 2020, journalists remain largely dissatisfied with those efforts.

Fewer than half (42%) of the nearly 12,000 journalists surveyed between mid-February and mid-March this year by Pew Research Center said their organization makes issues of diversity and inclusion a major priority. 

Tim Martell, executive director of Dow Jones’ union IAPE, said Pew Research Center’s findings are “not surprising to me, or I suspect to anybody who does what I do at any of our peer unions across The NewsGuild.” 

Here are a few other key findings from Pew’s latest report, in regards to journalists’ views on their organizations’ DE&I efforts:

• 52% of journalists said their organization does not have enough racial and ethnic diversity.
• About two-thirds of journalists say their organization generally treats everyone fairly regardless of age, gender, or race and ethnicity. But Black, Hispanic and Asian journalists are less likely than their white peers to say their organization treats everyone fairly based on race and ethnicity. 53% of Black journalists, 55% of Asian journalists and 62% of Hispanic journalists said employees at their organizations are treated fairly – lower than the 69% of white journalists who said this.
• White journalists and men were more likely to think that their organization treated everyone fairly regardless of gender, age or race.
• Younger journalists (18 to 29 year olds) and women were more likely to think there is not enough diversity in their organizations. 
• About half of the journalists surveyed had participated in a formal training session about diversity in their workplace in the past year. 
• On the bright side, most of those surveyed said there is enough diversity in their newsrooms when it comes to gender and age.

Looking at publishers’ self-reported diversity statistics published this year, it’s clear that there have been some improvements in diversifying the staff at media companies – though the changes have been incremental at best. 

There are other signs that employees are concerned about the future of their companies’ DE&I efforts. WarnerMedia employees are reportedly worried changes associated with the Discovery merger could be a set-back to the structure established by their 50-plus person DE&I team. In April, The Washington Post’s union issued a report from its Black Caucus highlighting systemic inequities at the company, with testimonials from over 30 current and former employees.

“The thing about DEI initiatives is that it’s slow work… This is just slow, intentional work,” said Ali Jackson-Jolley, Forbes’ assistant managing editor overseeing DEI initiatives, in an interview last week. She added, “I truly believe as long as we’re patient and committed… we’re going to see the change and we’ll all be better for it.” — Sara Guaglione

Numbers to know

50%: Percentage share of journalist respondents whose salary has remained the same in the past year.

$19.5 billion: How much money Magna expects to be spent on short-form video advertising in 2022.

30%: Percentage share of Warner Bros. Discovery’s global ad sales employees that the company may end up cutting through a round of buyouts being offered starting this week.

50: Number of video series that Tastemade will produce as part of a deal with Pinterest.

42%: Percentage share of U.S. survey respondents who said they “sometimes or often actively avoid the news.”

What we’ve covered

Magnet’s Danielle Johnsen Karr explains why Team Whistle’s social content agency is not a branded content studio:

• Team Whistle felt the studio label could constrain the roughly 35-person agency’s prospective client base.
• Johnsen Karr detailed Magnet’s working relationship with the rest of Team Whistle on the Digiday Podcast.

Listen to the latest Digiday Podcast episode here.

How ComplexLand gave advertisers a space to play in the metaverse:

• Complex Networks had eight sponsors for the third edition of its metaverse event.
• While ostensibly a shopping-centric event, the sponsors weren’t all that focused on getting people to purchase their products.

Read more about ComplexLand here.

A guide to the top 10 ID alternatives for publishers:

• Digiday’s research team has produced a guide on the third-party cookie’s would-be replacements.
• The guide includes breakdowns of the types of data the different IDs use as well as the privacy mechanisms they employ.

Read more about alternative IDs here.

Time expects events business to cross $10 million revenue mark for first time in 2022:

• The publisher will host 10 in-person events this year and is expanding where its events are held.
• In 2023, Time projects its events revenue will increase by 20% to 30% over 2022.

Read more about Time here.

What we’re reading

Facebook may pivot away from paying publishers:
Facebook’s initial wave of three-year deals to pay publishers to carry their content is about to expire, and the platform has not committed to reup the publisher payment program, according to The Wall Street Journal.

Warner Bros. Discovery employees wary of company’s DE&I commitment:
WarnerMedia employees are worrying that the company’s recent merger with Discovery will scuttle the former company’s efforts to improve its levels of diversity, equity and inclusion, as the combined company’s DE&I corporate structure changes, according to Insider.

The Washington Post isn’t selling its tech business:
The Post’s software-as-a-service business Arc XP is worth at least $100 million and may become the newspaper publisher’s biggest and most profitable revenue stream in a few years, according to Axios.

Trans journalists take The Guardian to task:
After The Guardian’s website ran an opinion piece that has been called out online for being anti-trans, trans journalists Freddy McConnell and Vic Parsons have called out the U.K. publisher for “its trans-hostile and exclusionary stance,” according to Vice.