Introduction To Marketing Technology Course

How Daily Yahoo Newsletter Makes Money

The journey of a thousand miles begins with a single step – Lao Tzu.

Let me start this post with something totally unrelated – the making of atomic bomb. As you all know, it needs Uranium. Uranium comes in two flavors – the abundant 238 flavor and the rare 235 flavor.

If you start with a ton of Uranium mix, it may have just a pound of the rare 235 flavor. Your job is to clean it up. That was the task at hand in 1942. There were two approaches suggested to General McArthur. Approach 1: Use the current cleaning method that removed 0.1% of the impurity. Approach 2: Work on inventing new methods that will clean up faster.

The general sanctioned doing work on both the methods. Which one do you think yielded the Uranium faster to make the bomb?

Approach 2 came close to winning, but it was actually approach 1 that succeeded in producing the needed payload.

In Approach 1, they did the same inefficient process 10000 times to make the sample rich in the rare Uranium flavor.

What relevance does all of this have to do with Marketing? And daily yahoo newsletter in general? 

Let us do the math. Roughly, assume that we have been sending Daily Yahoo newsletter emails every day to 50 million people for 4 years. Assume that 10% of those emails are opened. And that 10% of the emails that are opened, are actually clicked. When they click, the user lands up on Yahoo news article half the time. The other half they are on a Yahoo Search Result Page.

Let us focus only on the money made through Yahoo Search. And calculate how many search sessions did we drive.

50,000,000 X 365 X 4 X 10% X 10% X 50% = 365 Million.

That is right – 365 Million Session starts of Yahoo Search. On these search result pages are some Ads. And who knows that else the user may begin searching for, seeing that search bar in front of them. All the search activity that occurs starting from that Search Page is attributed to the email marketing campaign.

If we assume that each session produces 10 pages on average, and the ads have a conversion rate of 0.1%, and Yahoo makes $1 on each search ad, here is how much money the daily yahoo newsletter generated –

365 Million X 10 X 0.1% X $1 = $3.65 Million.

In reality, the revenue numbers are not far from what we have calculated. The campaign managers have optimized the pipeline so much that by sending fewer emails, they are able to generate a twice the revenue that we calculated!

Indeed, doing seemingly tiny actions again and again over insanely long periods of time does yield to a big impact.

I know of no other company that has a campaign like Daily Yahoo newsletter that makes more than a million dollars a year.

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