Home Email This Investment Firm Is Acquiring A Newsletter Ad Platform To Build Email’s Answer To Taboola And Outbrain

This Investment Firm Is Acquiring A Newsletter Ad Platform To Build Email’s Answer To Taboola And Outbrain

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Comic: What's Your Email?

Newsletters are having more than a moment, and advertisers are getting interested.

Inspired by the recent success that publishers like Morning Brew and The Hustle have had launching newsletter businesses, a Canada-based tech investment firm called Redbrick is looking to capitalize on the growing opportunity.

On Tuesday, Redbrick announced that it has acquired Paved, a programmatic newsletter platform for publishers. The deal price was not disclosed.

Paved, which specializes in native text-based ads and display, services more than 2,000 publishers, many with niche, topic-focused newsletters. But it also works with some heavy hitters, including Bloomberg, NBC, Fortune, TechCrunch and Flipboard.

Redbrick is “really bullish” on the email newsletter market, CMO Marco Pimentel told AdExchanger, because it’s poised for a breakthrough thanks to product innovation and advertiser demand.

He likened the current state of the newsletter market to where native content platforms like Taboola and Outbrain were roughly a decade ago. Like those companies, newsletters offer publishers a flywheel for paid audience growth, he said, while also innovating new ad formats for brand advertisers.

“There’s going to be a bunch of new inventory that can be accessed in a whole different way,” Pimentel said, “and the value of being able to own that audience yourself, as a publisher, is pretty unique.”

Audience and revenue growth

Pimentel has firsthand experience with newsletter monetization.

He was previously co-owner of a small fly-fishing site that drew 30% to 40% of its traffic from its email newsletter – which also drove nearly 100% of the company’s ecommerce sales. This newsletter was also monetized with ads.

With publishers increasingly starved for traffic and ad revenue, Pimentel said Redbrick jumped at the chance to acquire Paved, which he described as “a fairly small team in a space that we think is going to continue to grow quite a bit.”

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Redbrick is retaining all 12 of Paved’s employees, including contractors, as well as its CEO and Founder John McLaughlin. Paved will continue under McLaughlin’s leadership with strategic oversight from Redbrick.

Paved is Redbrick’s first purely ad tech acquisition.

Redbrick acquired email service and SMS provider Delivra in 2022, which is the same year it sold Assembly Media – a digital media startup it launched in 2015 – to Canadian media giant St. Joseph’s Communications. Redbrick also developed its own content discovery platform named Duplex, which is still under its umbrella.

Advertisers can buy inventory through Paved in two ways, either by purchasing a sponsorship that reaches all of a newsletter’s subscribers or by programmatically targeting readers across multiple newsletters based on their job title, location and interests.

Paved also sells ads for publishers who use subscription-based newsletter platforms like Substack, which doesn’t offer its own ad platform.

In addition, publishers can promote their own content by placing native ads in other publishers’ newsletters – again, echoing the model popularized by native ad platforms Taboola and Outbrain.

Finding new ways to grow their audiences will only become more valuable as publishers continue to see referral traffic dry up from search and social media, Pimentel said.

Sales and development

Going forward, Redbrick will expand Paved’s sales teams and hire more software developers for product R&D. For now, though, Paved will continue its focus on native text-based and display formats, rather than chasing newer formats like video that feel less native to email, McLaughlin said.

Redbrick’s status as a certified B Corp company could also help Paved access new demand. Companies receive B Corp Certification in recognition of their commitments to environmental sustainability and diversity, equity and inclusion, which could enable Paved to be included in green energy PMPs and tap into budgets earmarked for publishers with diverse workforces.

Paved’s biggest opportunity, however, lies in reaching audiences that have become disillusioned with the increasingly cluttered and algorithm-driven experience on social media, McLaughlin said.

For one thing, newsletters tend to only feature content that the audience is interested in, which users appreciate, he said.

And while platforms like Facebook, X and TikTok are moving away from giving users control over curating their experience, recent developments in the email space are making the user experience more personalized and accessible, McLaughlin said.

He pointed to Apple designing a more customizable inbox on iPhone and Mac, Google slowly building on AMP for email, increased newsletter support by cloud data companies like Salesforce and growing newsletter adoption by big publishing brands as indicative of how email has evolved in recent years.

“There’s innovation on all sides,” he said.

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