Michael WeinsteinIt turns out that the best use of newsletters in performance marketing is in niches where the purchase cycle is quite long.
In immediate purchase consideration markets (like health insurance, debt relief, auto insurance, etc) the marketer can run direct-response advertisements and get results immediately. After the user purchases, they have essentially zero value to the marketer.
And also consider markets where everything happens online – there’s a direct link between the marketing efforts and the actual purchase.
These are the markets that are best served with an affiliate marketing model. Advertising is outsourced to third-party contractors that are paid purely on performance. Great deal for both, as long as the affiliates don’t run shady ads.
In other markets, such as custom homebuilding and luxury travel, there’s a long consideration period. It’s also much harder to prove the direct link between marketing efforts and purchases. These markets will likely never work for affiliate marketing, because the time between ad dollars being spent and the purchase taking place is way too long, and the correlation is hard to prove. You don’t have a click ID to trace back when someone hires a homebuilder after weighing options for 6-12 months.
In these markets, newsletters are the best medium for reaching, retaining, and proving incrementality. Since you’re essentially building a CRM of prospective customers, it improves the link between marketing efforts and proving results.
Also search arbitrage is great for identifying these markets. Search arb works because there’s a pool of consumers on one side, and a pool of brands/advertisers on the other, and there isn’t a great way of linking the two. For example, there isn’t a search arb opportunity in gambling because you can track a click ID directly to a sale.
Search arb can be used to identify consumer demand, advertising rates on the buy-side, and advertising rates on the sell-side. And if there’s a search arb opportunity, it means you can probably also run ads directly to content that’s subsidized or even profitable by display ads, and build a large email list for free.