Demand for popular new medium is already outstripping supply

High-tech companies looking to integrate the Internet into their direct marketing strategy now have a new weapon in their marketing arsenal: online newsletters. Several high-tech publishers, including IDG, CMP and Ziff Davis, already offer such publications, typically comprised of industry-related news, excerpts from print publications, and other Web-sourced material. Delivery to subscribers is via e-mail.

Many of the subscriber lists are available to rent for broadcast e-mail campaigns, but, in addition, advertisers can now also purchase what amounts to "ad space" in the form of short (usually 60-75 words), text-based ads that appear early in the body of the newsletter, prior to the editorial content. The ads are usually preceded by headlines such as, "This Week's Newsletter Sponsored by Company X" and include a hotlink to the advertiser's Web site.

Demand for sponsorships is running high. At least one of the leading general computer publications is sold out through the end of 1999. Many others are booked two to three months in advance. The popularity of this new medium seems to reflect an enthusiasm for e-mail as a marketing tool, but one that's tempered by companies' wariness at being associated with the "spam" phenomenon.

Newsletters give the high-tech marketer a way to deliver his or her advertising message to a prospect's inbox in a way that's seen as less intrusive compared to standard commercial e-mail. After all, the newsletter is something the reader has asked to receive, and (presumably) something that gets opened consistently. Even the most successful Internet marketers are quick to admit that the vast majority of commercial e-mail, even those campaigns broadcast to so-called "opt-in" lists, rarely gets read.

Most newsletters are offering sponsorship ads at rates around $50-60/M, far less than the $200-250/M charged for the more reputable high-tech e-mail lists. Also, with newsletters, delivery is included in the base rate, while most e-mail list owners charge an additional $150/M for broadcast by a service bureau of their choosing.

One reason that list owners can afford to charge a higher rate for e-mail addresses is selectability. Most e-mail lists enable the advertiser to select only those names with job functions, purchase authority, or other criteria that provide the best match to their target audience profile. As with direct mail, the editorial content of the source publication is less important than the list owner's ability to provide the appropriate select criteria. Newsletters are more akin to general advertising in this regard. Since you broadcast your message to the entire subscriber base, choosing the right newsletter for your product or service rests much more on editorial content and general readership profile.

Many companies are looking at newsletters as a cost-effective alternative to banner ads. David Faul, an Internet marketing consultant with Online Response Solutions, concurs. "We're seeing click-through rates about double what our clients are achieving through banner ads," he says. "The conversion rate is also much higher. Overall, this is the most effective approach to online direct marketing that we've seen."

Sponsorship ads are being used successfully for white paper offers, Web seminars, free downloads, and more. As with e-mail, the secret to successful newsletter ads is concise, compelling copy that sells the offer and motivates the reader to take action. Ads that simply sing the praises of a product or service, followed by "Visit our Web site now!" are typically doomed to failure.

The future for online newsletters as an advertising medium seems bright. Until broadcast e-mail becomes more generally accepted and sheds its spam reputation, newsletters offer a cleaner, more Net-acceptable alternative for reaching prospects via their inbox. The number of such publications will rise, as publishers discover another source of advertising revenue, and smaller firms recognize a publishing opportunity with none of the production and layout costs associated with print and, to a lesser extent, the Web. The number of ads in newsletters could also rise, as publishers seek to maximize revenue and test their subscribers' tolerance for advertising in publications that until now have been virtually 100 percent content.

Ad rates will be interesting to watch. Both demand (as more marketers discover the new medium) and supply (as more established high-tech publishers start their own newsletters) will increase in the short-term, so economics would dictate that prices will remain stable. But as we've all learned over the past few years, if it's the Internet, the old rules just don't apply. Stay tuned.