Substack Network Effect is a Form of Targeting

How to target on Auto-pilot? Just recommend your peers in your writing or podcast niche. ARPU on network effect.

Image: New Yorker Illustration by Ard Su

Hey Guys,

Writing Newsletters and articles over the years on LinkedIn, at the time of writing (1,416), the biggest pain point has always been targeting.

As a Creator having your audience have the same interests as you, is truly all you ever wanted.

Think about it, getting the right person to discover my work who’s actually the most interested in that exact topic! Niche traffic is gold.

• Better than an algorithm! This is because algorithms favor platforms, not Creators.

It’s not volume of subs that matters I’d argue, but that your E-mail list is high quality full of people who are actually passionate about your topic. If your conversion of free to paid subscribers isn’t optimal, targeting could be one of your issues.

Here we come to my hypothesis:

Substack Network is Actually ‘Targeting on Auto-Pilot’

Substack’s Newsletters Recommendation i.e. (“Substack Network”) feature, solves a few things:

1. Discovery: free subscribers

2. Targeted Discovery

3. This works when Creators recommend other Newsletters in the same exact niche!

So a Newsletter Creator on Substack just basically recommends their peers.

That’s literally all they have to do, transparently (because we can see it if they choose to make it public, on by default).

No machine learning, no attention gimmicks just to be featured more on the algo in the social graph. Just reading and writing simplified, and minimalistic recording and listening.

Let’s see via screen shots if this appears to be the case.

The Diff

@ByrneHobart of the Diff has around 32,000 free subscribers according to his Twitter. He generously recommends 24 others in his Niche.

Doomberg

The anonymous Green Chicken (said to be a team) of Doomberg is equally as generous. @DoombergT the audience must be massive.

• As the peer networks of “Substack Network” get bigger the targeting actually gets better for a trickle-down effect.

• This then becomes a social graph of how to recommend Newsletters that you think your audience will benefit the most from.

• The most popular publications on Substack who have been doing this for a while at a professional level are also those that that are most likely to target their traffic the best.

The Abbey of Misrule

Paul Kingsnorth is another fascinating example.

• The more Newsletters like theirs Creators recommend, the better the targeting of the “Substack Network” becomes overtime.

• With Paul you see even the genre of the topic shining through! Even things like tone, messaging, geographical region here seeps in.

Big Technology

@Kantrowitz is one of the most renowned Podcasters on Substack, he’s often interviewed by CNBC.

• Here we find network effect also is relevant to your relative free lists.

• For some of the most established Professional Creators monetization does not occur at the Newsletter level.

ByteByteGo Newsletter

Alex Xu is a professional technical writer, he does not need to make money off of his Substack. Monetizing another product on a website is not uncommon at this level, .e.g. professional job interviews.

So within “Substack Network”, Creators are also targeting niche by professional value. This is among the most lucrative sides of Substack monetization where there is a bundle of diversified revenue streams. The Substack Newsletter is simply just one of the tops of their funnel. You’ll notice these Solo-Entrepreneurs tend to do well on both Twitter and LinkedIn because they are more than just professional writers.

It goes even further, within “Substack Network” you have more informal “Network Partnerships” like we see with Alex and Gergely (The Pragmatic Engineer) that are the stuff of legend in terms of Substack History of 2022.

When you find a peer that resonates, it’s a win-win if you enter into deeper partnership. If an algo is a lose-win for a Creator, here we have cross-promotions that are way more organic and human-driven.

Sinocism

@niubi Bill Bishop demonstrates that Chinese Substack content is among the best case-studies for Substack Newsletter recommendations actually being a form of targeting.

With 26 recommendations, Bill does not disappoint.

• This elevates Chinese news read to a whole new level on Substack for its entire audience.

• The trickle down effect influences dozens of Creators and their audiences.

• An algo here would feel invasive, but due to the generosity of top Creators on Substack, here it feels more natural.

The Isolation Journals of Suleika Jaouad

@suleikajaouad also demonstrates how community building among poets, artists and fiction writers is strong on Substack and impacts and is reciprocated in the Substack Network effect.

• I will note that Culture writers significantly under-charge for their work (many of whom are women!)

• Substack’s Network effect is especially good on niche topics that Substack has taken great care to cultivate like food or sports.

• It is also strong among certain groups of female Creators. In our review we have not seen a very satisfactory gender split among male and female creators or much evidence of income equality.

Pomp

@APompliano is a great example of Crypto’s power on Substack, it even has is own category, a bit odd considering the categories that are absent currently in 2022.

So what is Substack Network look like on his newsletter of well over 210,000?

I did not find any recommendations on the Newsletter, perhaps has has made them private.

Perhaps Anthony “Pomp” Pompliano does not need to target or pass the Bitcoin down, given his relative Twitter reach. I cannot say for sure. So let’s try to find another good Crypto example.

The Held Report

Former Tech worker has popular Newsletter, hmm where I have heard this before? @danheld Dan Held at least recommends a few others. I’m curious as well about Substack’s bias to Twitter which appears significant in the Crypto Category.

I did not find great evidence of targeting in Substack Network effect on the crypto channels.

FinTech Blueprint

@LexSokolin is a great example of a hybrid disruption writer in business and technology. His work is basically at the intersection of business, finance, crypto and technology.

His coverage of FinTech, DeFi, Blockchain and Neobanks is a blend of innovation categories of disruptive technologies and his coverage is pretty legendary. FinTech appears fairly well targeted.

Conclusion

Over time Substack’s Newsletter Recommendation product feature that was seamlessly integrated into content discovery on April 12th, 2022 appears to over a longer period than just a few weeks gradually improve targeting and targeted traffic.

Hopefully Substack is working on providing us with news and updates on data regarding the ROI of recommendations.

From my own research I’d guess-estimate around 78% of recommendations are topic consistent or niche-relevant.

Substack’s social graph shows up to Creators in Newsletter analytics in the monthly Emails as “Substack Network”. What is your percentage?

Network Effect Increases Substack Product-Market Fit Substantially

In the big picture, for Substack’s viability as revenue generation, this is sort of a big deal.

It provides more value to Creators where Newsletters are all about a niche.

• Promotes discovery

• Promotes niche targeting and on-category traffic

• Improves incentives for human networking among Creators

• Creates a win-win environment of collaboration among Creators

• Compounds E-mail lists for new Substacks in the 2nd half of 2022.

• So generally speaking, the summer of 2022 is one of the best times to start a Substack with the opportunity of gaining new readers faster.

Newsletter recommendations basically uplift, empower and promote people to discover similar Newsletter and podcasts on auto-pilot without algorithmic intrusion or attention gimmicks.

While the experiment is just a couple of months in, there’s now enough data to see how this is working to increase and compound ROI over-time.

If Substack Network on average (guess-estimate) increases your free subscribers by 28% a month, what is the compound effect of that over time after say 12, 24 or 36 months?

You might be getting hundreds or even thousands of additional free subscribers that are interested in your Newsletter topic that you would ordinarily have gotten. This will improve Creator retention among new Newsletters.

Google any compound calculator online to better understand what I’m talking about. Substack & Stripe are taking a 13% (approx.) cut but over time it begins to matter less as the ROI compounds into paid subscriptions. This cross-promotional aspect increases the legitimacy of starting a Newsletter in the first place.

It lowers wait time to product-market fit and viability and can mean it becomes a more significant side gig and supplementary income for many writers, podcasters and even video specialists (now in Beta).

Targeted Traffic is the Golden Key for Newsletters

So how will this scale over time? Targeted traffic is the most important considering for higher conversion rates from free to paid traffic. Embedding social proof like visual cues in the form of info-graphics like Gergely has done is smart.

Gergely Orosz @GergelyOrosz

Something happened in the middle of April 2022 with my newsletter. It started to grow ~3x the pace as before (!!). Some articles were widely read at that time, and @SubstackInc launched recommendations right then (since: received ~21K, sent ~30K signups). Pretty incredible.

Any social graph or app in 2023 will have to adopt subscriptions including Snap, TikTok, Twitter, WhatsApp, Telegram, Coinbase, UberEats, Discord and so forth to become more viable businesses. They will join hands with Spotify, Twitch, OnlyFans, Patreon, Substack and all the rest.

The subscription economy is scaling very well and it will make Substack gradually more and more popular and mainstream. The way this scales then in a subscription-normative internet is of course very good.

Starting a Substack then, is a bit like being an early employee at a Startup, if you decide to join when the team is relatively small, you can benefit from the growth wave of its curve appropriately (minus the equity that the actual employees get of course).

What Substack Network does is also make the community of Creators more dynamic. When solitary writers team up, it’s usually a good thing with positive outcomes and creative side-projects.

Have you created a Network partnership BFF with another Creator on Substack like Gergely and Alex have?

Have you found your Substack Network (search your Monthly Substack updates on your ESP) traffic has surprised you in any way? I would be interested to hear from others in the comment section.

Anyways guys this is my take on on the new feature and it builds organic discovery right on the value proposition of why starting a Newsletter on Substack is beginning to make a lot more sense in 2022.

Thanks for reading!