Digital Marketing Redux   //   June 18, 2024

‘We’re all just fumbling around’: Advertising on Substack remains a Wild West for brands

Since 2022, writer Emily Sundberg has churned out edition after edition of her popular daily Substack business newsletter “Feed Me.” Sundberg writes about products she comes across organically, and she typically hears from brands she mentions in issues. “Often, founders will email me and say, ‘A ton of people came into the store asking for this, and they mentioned ‘Feed Me,'” she told Modern Retail.

It wasn’t until March 2024, however, that Sundberg ran her first sponsored Substack post. That post was sponsored by the apparel brand Free People, which Sundberg used to work for in high school. The two collaborated on a travel newsletter. Since then, Sundberg has worked with three other brands: skincare brand Medik8, supplements brand Moon Juice and nicotine replacement brand Jones.

Substack was founded in 2017 as an email publishing platform billed as one part Tinyletter and one part Tumblr. Substack newsletters are niche by nature; one may talk about beauty, another about food, another about hiking. The platform runs on a subscription model, meaning that users can pay authors a monthly fee to access their posts. Readers have paid writers more than $300 million through Substack subscriptions, according to Substack. Substack raised a $65 million Series B in 2021. In 2023, more than 17,000 writers earned money on the platform, per Axios.

As more writers flock to Substack, the channel is becoming ripe for advertising. More brands are seeking out newsletters with strong follower counts or a unique point of view for possible sponsorships. Many are targeting newsletters that are linked to influencers, mention their products or allow them to reach certain demographics, such as makeup lovers in their 20s and 30s.

Brands are also turning to Substack as a direct messaging tool. Users open Substack newsletters via email, meaning that they interact with content more actively than they might on Instagram. For brands, that can mean a strong return on their investment. For instance, Medik8 told Modern Retail that it saw a 204% ROAS with its Substack partnership with “Feed Me.”

Still, brands and Substack authors alike described the platform as a sort of Wild West, saying they forged their own partnerships independently without guidance from Substack. Some writers charge brands a flat fee, while others accept store credit. Some have had brands approach them about sponsored posts; others have approached brands. It’s an environment where “nobody really knows what they’re doing right now” in terms of sponsorships, said Lia Haberman, who writes the Substack marketing newsletter “ICYMI,” which has 22,000 subscribers.

“We’re all just fumbling around getting set up with sponsors,” she told Modern Retail. But, she added, “I like that Substack’s not involved just yet, because the writer gets 100% of the partnership revenue… The minute Substack gets officially involved, writers will have to pay a portion of their sponsorship to the platform.”

Substack positions itself as a creative outlet, not a marketing one. In fact, its terms of service say the site does not “permit publications whose primary purpose is to advertise external products or services, drive traffic to third party sites, distribute offers and promotions, enhance search engine optimization or similar activities.”

Earlier this year, Christina Loff, Substack‚Äôs head of lifestyle partnerships, told Glossy that Substack writers are “finding freedom” from Substack’s subscription model. “[They are] finding that readers will pay them directly to get their honest takes, free of ads,” she said.

According to Axios, however, Substack is developing some sort of service to help creators sell ads. “We’re always working with writers, running experiments and listening to feedback,” a Substack spokesperson told Axios. Substack did not respond to a request for comment for this piece.

Substack has not publicly said when it plans to launch this new ad service. In the meantime, Substack authors are seeing requests from brands pile up. For instance, Erika Veurink, who writes the Substack secondhand fashion newsletter “Long Live,” said she started hearing more from possible ad partners a couple of months ago. “It feels like all my friends who have Substacks are in talks with brands,” she said.

But Substack authors told Modern Retail that simply hearing from a brand doesn’t guarantee a deal. For one, there’s the matter of price, said Veurink, who’s run sponsored posts with the finance platform Fruitful and the swimwear brand OOKIOH. “What I’ve heard conversationally is essentially $1 for every subscriber,” Veurink said. “A lot of people are in theory open to it, but when you put an actual number in front of them… a lot of smaller brands sort of freak out.”

What’s more, not all brands understand how to use Substack or even newsletters in general, Haberman said. Haberman shared she’s had success running sponsored newsletters with the software company Sprout Social and the social media management platform Dash Hudson.

Advertising on Substack can be a bit of a long game. Yet some sponsors Haberman has been interested in working with expect their ads to lead to instant conversion.

“It’s awkward because I literally have to tell them they need to lead people down the funnel,” she said. “People are throwing money at newsletters and expecting miraculous results outside the realm of everything we know about marketing.”

There’s also the issue of brand-author alignment on Substack. Sundberg, whose newsletter has tens of thousands of subscribers, is careful to only work with brands she’s already mentioned or actually uses. “I’ve said no to most of them,” she said.

Likewise, Melanie Masarin, who started a Substack fashion newsletter called “Night Shade” last fall, says she’s discerning about which brands she wants to work with. “I’m obviously interested in getting more work, but only to the extent that it allows me to have a tougher filter on who I work with,” Masarin, the founder of aperitif brand Ghia, explained.

Masarin ran her first sponsored post with the luxury resale platform Vestiaire Collective in April. She had long plugged Vestiaire in her newsletter and got to know the company’s executives better when attending an event. The company told her it was interested in doing more to break into the U.S. market, she said, and the two decided to work on a Substack post together. “It kind of came to me very organically, which is how I like to do Substack,” Masarin said. Masarin gave readers a code for 10% off at Vestiaire Collective.

Medik8, which ran its partnership with “Feed Me” earlier this year, is eager to work with Sundberg again, as well as try out other Substack partnerships. It’s also open to using whatever ad tools Substack develops, Amanda Beckwith, director of public relations at Medik8, told Modern Retail. “I think [a Substack ad program] would be easy to scale,” she said. “We’re seeing a lot of success with Substack, but as a brand, it’s like, ‘How do we accelerate on this?'”

What Beckwith likes most about Substack is that it gives brands a chance to work with built-in audiences. “It’s tough to build your own brand community,” she said. “So I think leveraging an existing community that aligns and has parallels to your existing brand community is really important.”

“Medik8, having a lower brand awareness, we do take risks,” Beckwith said. “I think just seeing that ROAS percentage [on Substack] is really healthy for a brand of our size. I definitely am looking to accelerate within the space.”