Welcome to a fresh edition of Growth Croissant!

I’m Reid, your host on this journey. I’ve been lucky to be part of incredible teams that launched and grew some of the most well-known consumer subscription products: Hulu, Crunchyroll, HBO Max, and Substack.

Growth Croissant will be an evolving home for our learnings, painful lessons, and frameworks for making hard decisions. My goal is to deliver you a comprehensive and actionable guidebook on how to grow your business.

Hello friends,

In our last post, we covered how directly-sold, tailored sponsorship products can be much more lucrative than platform-sold programmatic ads. But there’s a catch: these types of sponsorships require a lot more effort, including pre-deal negotiations, sponsorship fulfillment, reporting, and getting paid.

To an increasing degree, directly-sold sponsorship products are becoming a meaningful revenue stream for lean, niche media businesses. At Caddie, we’ve been exploring ways to help scale directly-sold sponsorships, some of which is peppered in the post below.

Let’s dive into how to turn directly-sold sponsorship products into a meaningful revenue stream for your business.

An obvious starting point is how to find new sponsors and create a steady inflow of sponsorship demand. , founder of The Rebooting, informed us of how his approach to finding sponsors has evolved over time — a sequence we’ve noticed for other publications:

1. Personal relationships

2. Audience members

3. Outbound sales

If you’re focused on an industry you’ve been operating in for a while, you probably know some folks who might like to work with you. Personal relationships can be a great starting point for helping determine how you work with sponsors, how you showcase sponsors to your audience, and pricing.

After you’ve exhausted personal relationships, your audience can be a great source of prospective sponsors. We’ve heard many cases where readers will notice a sponsorship in a post and then reach out asking how they can become a sponsor.

At some point, the well runs dry — to continue generating the same level of sponsorship revenue, you’ll likely have to turn to some form of outbound sales. A lot of folks avoid outbound sales given the substantial lift in effort (and for some, discomfort) associated with reaching out to potential sponsors.

We’ll come back to outbound sales — let’s dive into the basics of directly-sold sponsorships.

Once you start running sponsorships, you may have folks from within your audience reach out asking how to become a sponsor. You can encourage this type of inbound demand by occasionally including prompts to sponsor your work on your site, in newsletters, or mentions in podcasts or videos.

Any “Sponsor Us” button could link to your media kit, which emphasizes why you would be a compelling partner for certain sponsors. Media kits are an important part of generating sponsorship revenue, providing details on:

1. Your audience

2. Your distribution

3. Who you’ve worked with in the past

4. Your sponsorship products and how you work with sponsors

Below is an example of what a media kit could look like on your site (a PDF / slide version is also useful). The first few segments highlight why Caddie (hypothetical publication) is a compelling partner for a certain type of sponsor, with the last section showing Caddie’s sponsorship products. (For larger media businesses, check out Vox and BuzzFeed for more dialed-up versions of media kits.)

For higher-priced, more-involved sponsorship products, the sponsor will usually want to talk to you. In those cases, the “Sponsor Request Form” button from your media kit could direct to a short survey, allowing sponsors to provide more info on their business and goals. You can also ensure they’re aware of how much your sponsor products cost (and that you don’t work on a cost-per-click basis).

After potential sponsors submit a request, based on their response, you could provide the option to schedule a call with you to discuss the details of working together. If you want to maximize conversations to start, you could skip the survey step and link directly to a calendar booking app (e.g., Cal, Calendly). 

You may work toward a champagne problem of having several clients to manage. It might help to come up with some kind of system to manage your sponsorship pipeline. Google Sheets, Airtable, and other off-the-shelf products can get you very far, but you could also consider a sponsorship product like Passionfroot.

Once you’ve agreed to work together, the work shifts to making sure the sponsorship is fulfilled. Fulfillment may be as simple as making sure the sponsor provides the appropriate ad copy and that you’re comfortable with it. Fulfillment may be more complex if it’s a longer-term relationship or if there are multiple deliverables (e.g., research reports, events, mentions across different platforms, etc.).

One of the dynamics holding back more money from flowing into these types of sponsorships is that they’re harder to measure than programmatic, cost-per-performance ads. One way to chip away at this problem, and encourage an ongoing relationship with clients, is to provide reporting on how the sponsorship performed, including engagement metrics (views, likes, clicks), but also anecdotes and comments. The latter can provide ideas for how to frame the next sponsorship.

The last part is making sure you get paid. The key here is to make it as easy as possible for the sponsor to pay you, providing options for credit card, ACH, and wire transfer. It’s also better if this can be done on a web page via Stripe or a similar payment platform (vs. attaching wire instructions or some type of convoluted process). 

The hardest part of turning sponsorships into a meaningful revenue stream is that it usually requires some form of ongoing outbound sales effort.

Reaching out to potential sponsors and negotiating deals can be time-consuming, distracting, and uncomfortable. Understandably so, many publications hire someone or work with an agency to lead outbound sales and other aspects of the sponsorship process.

For outreach, a good starting point is to target businesses that are already sponsoring similar publications, or at least open to working with niche media businesses. It’s hard enough to find the right sponsor for your publication; it’s doubly hard if you have to also educate them on the value of partnering with a newsletter, podcast, etc.

Still, finding the right business to partner with and finding the right person to talk to at those companies is time-consuming.

We’ve been exploring whether there’s an opportunity to build a product that can make high-quality recommendations for prospective sponsors, tailored to each publication. The recommendations could be sent via email (say, once per week or when a new match is found), and could be displayed in a self-serve dashboard.

The “Send email” button would direct to a pre-filled draft email to that particular sponsor. To draw attention, the message could be customized for each sponsor, including an idea for how to showcase their product to the publication’s audience.

It’s not obvious whether a software solution is better than the current combo of tools and people. Any software solution would need to achieve some mix of the following for publications and sponsors:

• Improved focus: allow the publication to shift focus to creative efforts and allow sponsors to better balance efforts across their broader marketing portfolio.

• More cost-effective: shift more of the sponsor’s money to creative talent and actual marketing activities (vs. platforms, headcount, etc.), allowing creators and publications to make more money.

• Encourage scale: enable sponsors to work with a significantly larger group of publications, and vice versa for publications.

We’re looking for a few more publications to join a pilot for the feature above — let us know if you’re interested!

With paid subscriptions, you have to think deeply about who your ideal subscriber is, and what problem you’re solving for them. Sponsorships are different — you have to think about what business would want to reach your audience, and how you can help that business make more money.

Shifting your mindset from selling paid subscriptions to sponsorships can be difficult. If you’re just getting started, it may be valuable to develop an understanding of what sponsors typically look for in a partnership and their goals.

As a starting point, check out this great interview panel with Danielle Ito, who manages Notion’s budget for partnering with writers, podcasters, YouTube channels, and creators. Here are some of the takeaways from how Notion views sponsorships, some of which are broadly applicable:

• Like to start with a test before developing a longer-term relationship (e.g., 6+ month deal) — manage your expectations with your initial proposals.

• Care more about brand alignment and engagement rates than audience size.

• Prefer the creator lead the “story” and creative aspects of the sponsorship. Notion will also share notable product updates with partners in case they want to incorporate them into their sponsorships.

• Use a portfolio of metrics to evaluate performance:

  • Bottom-funnel / conversions: traffic, link clicks, signups.

  • Top-funnel / reach: mentions and engagement on social, brand awareness.

  • Sentiment: How are people reacting to the sponsorship? What are they saying in the comments?

  • Want to drive a “FOMO effect” — it doesn’t always have to be an immediate action, but we want to support a future stream of new user growth.

• If Notion wants to work with someone and the proposed pricing is reasonable, they’ll negotiate on price and find a way to work together.

• More than happy to work with business managers, agents, etc., but usually like to also have a personal relationship with who they’re working with.

• Will always read cold outreach — here are ways to get attention:

  • Be up-front about all your info (handles, links, followers, engagement)

  • Share a compelling idea for ad creative (e.g., spotlight a new feature)

  • Keep the pitch concise

Directly-sold, tailored sponsorships are much more lucrative than relying on ad platforms or sponsors looking for cheap cost-per-click ads. BUT, there’s a catch: they require a lot more effort and can be challenging to scale.

As publications push to make this a meaningful revenue stream, deals usually become more complex (e.g., longer agreements, multiple deliverables). As deals become more complex, the sponsor usually needs more attention and has more creative requests, making it harder to stay true to delivering value to your audience.

The tension between delivering value to your sponsors or audience can be especially tangible if your audience is paying you (e.g., paid subscriptions, courses). Even if it’s not an issue of creative alignment, you may find yourself spread thin trying to manage these different revenue streams.

Newcomer, Payload, The Ankler, and many other publications are showing that it’s possible to nail this balancing act and drive substantial revenue from sponsorships alongside other revenue streams. Directly-sold sponsorships will be a key ingredient for many publications as they look to achieve long-term sustainability.

We’d love to hear from you! What do you think of sponsorships? What’s your experience been like selling sponsorships? How have you thought about pricing and creating sponsor products? How have you found sponsors to work with?

As always, thanks for reading,
Reid