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MarketingSherpa Email Summit 2015 - SAVE $700 - VIP PRICING ENDS THURSDAY
Nov 02, 2001
Case Study

Behind-the-Scenes at a Profitable Email Newsletter Publisher (Trade Magazines, Watch Out!)

SUMMARY: Although Rich Ord, CEO iEntry, believes in Internet-style rapid growth, he also believes in quick profitability. When he founded the Company in January 1999 he had a rule: it had to be profitable from day one. Today his company publishes dozens of email newsletters which are sent to millions of subscribers.  And, yes, it's been profitable every single month (even during the downturn.) To hear the inside story of how to succeed in newsletter publishing, go to.
Until recently ad-based email newsletter publishers couldn't get any respect. Online advertising sales researchers didn't even bother to break them out as a category. But this fall newsletters are emerging as sales heroes for many media companies. Anecdotal evidence from a variety of media sales reps and publishers suggests that newsletter ads are getting hotter than banners, broadcast email lists, or even print space ads.

(The one major thing holding the industry back now is the fact that, although a few minor players have tried to, nobody has created a truly useful media buyer directory of ad-based newsletters.)

Rich Ord is a true newsletter pioneer. He created one of the very first HTML newsletters back in 1996 for his NewsLinx.com site, which was the Net's first news aggregation service. After selling it to Meckler's INT Media (then Internet.com), he became that company's Director of Email Operations and launched or acquired almost 150 ad-based newsletters for them in just 18 months, most of which are still generating revenues today.

So, when we wanted to profile a newsletter publisher who'd have some useful advice for the industry, we contacted Ord at his latest venture, iEntry…

CHALLENGE

Although Rich Ord, CEO iEntry, believes in Internet-style rapid growth, he also believes in quick profitability. When he founded the Company in January 1999 he had a rule: it had to be profitable from day one.

CAMPAIGN

That first year, Ord launched just a handful of newsletters starting with 'WebProNews', which is still his flagship publication. His strategy, "We picked niches with the
broadest appeal in business in the hottest zones likely to advertise in email. You want those areas in which advertisers already have a level of understanding. You don't have to explain it to them. Even a year ago when we were talking to big companies, we'd have to explain what an email newsletter is!"

In order to gain opt-in readers, Ord added a co-registration offer to the Jayde search engine which he also owns. About 15,000 webmasters registered their sites with Jayde every day, and one of the questions on the form was, "Would you like to sign up for WebProNews?" The letter which started with just 100 subscribers quickly grew to 500,000 subscribers.

As iEntry launched each new newsletter, the Company also launched a companion Web site branded with that newsletter's name to collect opt-ins from visitors. Ord's marketers drive targeted traffic to those sites by working on search engine optimization and positioning (which costs very little if you have an in-house expert) and by aggressively eliciting "thousands of links" from related Web sites. Ord says, "We ask for links in the newsletter itself. And we'll contact companies mentioned in articles and say, 'We're linking to you, would you mind placing a link to us on your site?'" This link marketing can be very powerful yet it costs nothing but time and effort.

Each HTML issue of every newsletter features a subscription form with tick-boxes for several related iEntry newsletters, so initial subscribers sign up for more titles and pass-along recipients also sign up.

Ord tested buying subscribers via co-registration programs through zMedia and a few other vendors, however after carefully tracking subscriber value based on open rates, unsubscribes and ad clicks, he found that these co-registration names were "only 1/3 as effective as typical subscribers who come to our site and subscribe." So, he's not using co-registrations anymore. (However, please note if you can get co-registrations cheaply enough, or you need help penetrating a certain marketplace, they may be worth it for you.)

For the first two years Ord kept content costs unusually low by soliciting free content from industry CEOs and consultants who were happy to write articles in exchange for the publicity. Last year he added another low-cost content stream -- articles written by his in-house non-editorial staff. For example his in-house Web development team are assigned articles about development and his sales reps write articles about selling for appropriate newsletters. Ord says, "They have knowledge, and we have people who will edit it so it sounds good. They like it. It's a change of pace."

In 2001, Ord finally began to pay for some high quality content. Now about 10% of articles are written by paid freelancers, and he expects to slowly grow that figure. Even so, the costs are still low because articles for his newsletters are so short and concise -- at most 250-300 words -- so they're very readable on a computer screen. (A 500-word article is usually published as a two-parter!)

All of iEntry's ad sales are handled by an in-house staff based in the Company's HQ in Lexington Kentucky (plus two sales reps work from home offices in Maine.) iEntry's site claims the Lexington is "within a day's drive of 75% of the population of the United States" -- which must mean a 24-hour driving day at about a zillion miles per hour.

The sales team entices advertisers by:
1. Offering a wide variety of ad formats, including the Cnet-style box (which iEntry has been offering since well before Cnet thought of it), advertorial content, and portions of ads integrated throughout an issue. They also offer streamed rich media ads that companies can repurpose their TV commercials to produce, however these have been less popular with advertisers despite the fact that they tend to get 30% higher click rates.

2. Always delivering a higher-than-promised circulation -- on average 20% more than what the advertiser paid for. This means advertisers are pleased with clicks and more likely to re-up their contacts.

3. Continually educating advertisers that the true value of newsletter advertising includes branding that builds up over time, and even direct marketing sales can come in over weeks or months. "People don't make a decision to purchase something on a five second read. Wait 2-3 weeks to measure your results."

Like most publishers in the ebusiness space, iEntry lost about half of its advertising clients during the dot-com crash. "Our rate of growth slowed. Maybe 50% of our advertisers weren't in business anymore." To combat this Ord hired more sales staff and pushed them to acquire stable, name-brand clients. "We're making concerted efforts to get the Adobes of the world."

To support this sales effort, he invested in building a sales database containing contact information for 20,000 clients and prospects. Ord says, "We don't send mass emails to it of course, but our people utilize the database to maintain relationships." All sales efforts are still conducted via phone and email … no costly travel for in-person meetings is required.

The Company's editorial and subscription marketing teams also support the sales efforts. Editorial focuses on creating newsletter subject lines that compel subscribers to open them. Ord explains, "We've done studies on this, tested different kinds. Obviously the word 'Free' works, but you can't use it with every issue. You also have to tie it in with something credible. 'Free download' doesn't work, but 'Free Macromedia seminar' will give you a 40% increase in open rate from the mundane headline the day before."

Ord's other advice on writing must-open subject lines includes never using an exclamation point (they look like spam); using "…" at the end to indicate that people have to open the email to read more; and using the term "how-to" so people feel they'll get some value from the letter. He says, "Don't expect the newsletter to sell itself by having the newsletter name and the date!"

Ord has discovered that subscription life cycle is the other critical factor for his company in increasing open rates. "If they subscribed within the past three months, they open at 85%-90%. If they're two years old, on average they could be down to a 15% open rate unless you really revamp content and find new reasons to make them open." Therefore circulation marketing plays a critical role in keeping advertisers happy by supplying fresh names that open well and click often.

Recognizing that collections problems now run rampant in the online ad industry, in March 2001 Ord's sales team revised standard contracts "to be stronger in terms of collectibility legal issues, and to make sure advertisers understood they were confirming a purchase." In addition now iEntry runs a credit check on every new client, and about 30% of new advertisers are asked to pay up front for their first insertion -- especially if they are a small company. Plus, nobody can order a campaign continuation until they've paid their outstanding bills.



RESULTS

According to Ord, "iEntry has always been profitable since it launched in January 1999. We've never experienced any unprofitable times."

Nearly 80% of revenues come from newsletter ad sales (100% of which are sold on a CPM basis only -- no CPAs or CPCs allowed) which Ord admits is, "not a good enough revenue mix for my taste." The Company will almost certainly get a revenue pop from its new partnership with Postmaster Direct which announced a fresh offering of more than 300,000 iEntry opt-in names on the rental market last week.

Currently iEntry runs 55 branded Web sites for its newsletters, and sends out -- brace yourself -- 50 million emails a month to opt-in subscribers. Which means the Company is a much bigger player in its chosen marketplaces than perhaps competing trade magazines realize.

Ord says, "We are competing with trade publications but the trade publishers don't know it yet. When you have several million subscribers, that's larger than almost every trade publisher in the world. In the coming year advertisers are going to realize the vehicle is irrelevant, it's who you're hitting."

In fact he personally feels email newsletters deliver ads more effectively than print in the corporate world because busy corporate workers don't want to be caught lounging back with a magazine … while if someone sees them peering at a computer screen it still looks like they're "working." He also feels his much shorter article length works better in today's corporate world because people get dozens or hundreds of emails, "You don't have time to dwell on things." (OK so how lame do we look now on page four of this Case Study?)

Ord has a grand vision for the year ahead: he plans to launch dozens, even hundreds of targeted niche, niche, niche newsletters that subscribers will want to open because the editorial appeals so precisely to their interests, and advertisers will yearn to sponsor because the audience is so perfect to meet their needs. For example, ultimately advertisers will be able to select just IT pros working for Fortune 1000 firms in certain zip codes… etc.

And thanks to dynamic newsletter-generation technology and an exceptional back-end database, iEntry may be able to provide that. Traditional trade publishers watch out! There's a whirlwind coming. And it's profitable to boot.

Tech note: iEntry uses Socketware's Accucast to send all those millions of emails.

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