BtoB

Newsletter ad networks sprout

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First there were direct e-mail ads.

Then there were ads in opt-in e-mail newsletters.

Now there are opt-in e-mail newsletter advertising networks: one-stop shops for advertisers seeking to reach targeted, amenable audiences across a range of newsletters with one media buy.

All this evolved over the past two years.

Targeting many with one buy

The network approach works well for photography portal Zing.com, San Francisco.

"I recognized right away that banners weren't getting the people to the Web site," said Bill Flitter, Zing.com online advertising manager. "I dabbled in buying newsletter sponsorships when it really wasn't that popular, and I noticed a good response."

Mr. Flitter soon found PennMedia.com, Tinley Park, Ill., which began an e-mail newsletter ad network in November 1998. It now claims a network of nearly 300 e-mail newsletters and 11.8 million subscribers. Advertisers include iPrint.com and Borders.com.

Tens of thousands of e-mail newsletters are on the Web, said PennMedia.com CEO Jaffer Ali, but in 1998, not many ventures had banded those newsletters together to sell space to advertisers.

"We came across e-mail newsletters as a marketer [of prerecorded videos] first, and they worked so well," Mr. Ali said. "We had tried streamed video, rich media, banners, everything. E-mail newsletters worked, and then we knew they would work for other advertisers."

PennMedia.com owns 50 of the newsletters in its network and pays to advertise in the other 250.

Although PennMedia.com represents some technology newsletters, most are personal interest. Later this year the company will initiate a b-to-b e-mail newsletter network, which will include marketing and investment categories, Mr. Ali said. PennMedia.com plans to create at least a few of those newsletters.

The company charges $18 per 1,000 e-mails and requires a minimum order of 500,000. Advertisers can buy the run of the network and categories.

Mr. Ali estimated that ads for the b-to-b newsletters will cost about 35% more than the current rate. "We can get a much higher cost per thousand because it's much more targeted," he said.

New player

A younger but quickly growing competitor is Flycast eDispatch Newsletter Network, introduced in mid-January by Flycast Communications Corp., San Francisco.

Flycast's newsletter network began with 100 affiliates. eDispatch VP Bill Jacobson said more than 25 newsletters are being added each week. Eventually the network will have 25 content categories.

"Our network is more b-to-c focused. As we grow, I anticipate a larger b-to-b component," Mr. Jacobson said.

eDispatch's rates are $8 per thousand e-mails for the run of the network, $16 per thousand for category buys.

And many ad network functions can be performed online. For example, Flycast touts what it dubs an "open network," which allows newsletter publishers and their technology partners to connect to Flycast's ad server and place the ads that were bought for their newsletters. "It really opens us up to a broad range of publishers," Mr. Jacobson said.

E-mail newsletter ad networks are also outsourcing work.

For example, eDispatch offers advertising and publishing clients full Web access to reports on the success of their ads or newsletters, such as click-through rates and ad sales. But within some networks, such as PennMedia.com's, advertisers must track their own success.

That's where companies such as Toronto-based FloNetwork (formerly Media Synergy) come in.

FloNetwork supplies reports about ad and content click-through for clients such as San Francisco-based CNET's network of e-mail newsletters. FloNetwork also helps networks such as CNET's gather subscribers for their e-mail newsletters by hosting a one-stop sign-up page for them.

PennMedia.com outsources a similar service for its own newsletters, but its, and Flycast's, affiliate newsletters are responsible for acquiring their own subscriber databases. Many do so through their Web sites.

Regina Brady, VP-strategy and partnerships for FloNetwork, views these as areas for expansion.

"We have plans, particularly in the publishing vertical, to create a whole new series of capabilities that are really geared toward their specific needs," she said. Those services will be introduced later this year.

"We're going to see a lot of players coming into this field within the next year," Ms. Brady said.

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