Why 1440 prefers CPMs for its newsletter business over other pricing models

1440’s newsletter boasts a 65 percent open rate, per Huelskamp, and readers click on an average of 2.2 links per opened newsletter. In spite of these positive signals, 1440 is currently prioritizing the CPM model for its advertising inventory, which comes in two formats: a larger format that is immediately visible when readers open the newsletter, and a smaller format that becomes visible when readers scroll down.

For both of its ad formats, 1440 currently charges advertisers a combined CPM of roughly $50, with $40 accounting for the larger format and $10 for the smaller format and with each format appealing to a different pool of advertisers.

“When they’re in different sections, they drive higher results, and we’re constantly split testing that for our advertisers,” Huelskamp said during his Digiday Publishing Summit session. “We’re also constantly split testing what the ads look like, where the links are and how many links there are in the ad itself.”

Although Huelskamp said that 1440 used the CPA and CPC pricing models in past years, he said that the company is now focused on CPM pricing due to its larger scale and the direct relationships it has built with advertisers.

“We did almost purely CPA deals when we were smaller, but as we’ve gotten bigger, we have some operating leverage, and we don’t need to do them anymore,” Huelskamp said. “When you’re smaller — like a lot of the Beehiivs of the world — there’s some platforms that are CPC based, because if the advertiser can calculate their cost per click, they can get to what their CPA is going to be. So the CPC is, like, a really great driver of that, but luckily for us, we’ve kind of outgrown those.”

Huelskamp said that 1440 sells its ads to marketers on a monthly, quarterly and annual basis, with monthly deals accounting for roughly 50 percent of the company’s ad business.

“But the folks that are buying monthly, they’ve been buying monthly from us for five or six years; it’s just that they want to make sure that the returns are coming,” he said.

The rest of 1440’s advertising business is split between annual and quarterly purchases, with “a couple” of advertisers choosing the annual option, per Huelskamp.

“We’re just trying to optimize how to deliver the best revenue,” Huelskamp said. “Usually, when we do the big deals, we’ll give a discount, so it’s great for us to not have to worry as much. But if you can get higher revenues on a monthly basis, you’re just trying to balance that all the time.”