Substack explores advertising strategy with $100 million funding boost

Substack announced July 17, 2025, that it has raised $100 million in Series C funding while simultaneously indicating a strategic pivot toward advertising integration. The investment round, led by BOND and The Chernin Group with participation from Andreessen Horowitz, Rich Paul of Klutch Sports Group, and Jens Grede of SKIMS, values the platform at $1.1 billion.

According to the company's announcement, BOND's Mood Rowghani will join Substack's board as part of the agreement. The nearly 70 percent valuation increase from its 2021 figure of $650 million reflects investor confidence in the platform's advertising potential.

Summary

Who: Substack, led by co-founders Chris Best and Hamish McKenzie, along with investors BOND, The Chernin Group, Andreessen Horowitz, Rich Paul, and Jens Grede.

What: $100 million Series C funding round valuing the newsletter platform at $1.1 billion, accompanied by strategic pivot toward advertising integration after previously maintaining subscription-only model.

When: Announced July 17, 2025, with BOND's Mood Rowghani joining the board of directors as platform explores advertising opportunities.

Where: The funding supports global expansion efforts while advertising strategy focuses on leveraging existing creator relationships and platform infrastructure for ad integration.

Why: Creator demand for advertising support drives strategic shift, while competitive pressure from WordPress and other platforms requires revenue diversification beyond subscription model limitations.

The funding coincides with a marked shift in Substack's stance on advertising. Co-founder Hamish McKenzie, who previously criticized the advertising model as "busted" and condemned social media "bedlam," now describes the company's embrace of advertising as "a recognition of new possibilities" enabled by network growth, according to The New York Times.

Mike Kerns, co-founder of The Chernin Group, explained the advertising rationale to The New York Times: "Their creators have told them that they want Substack to support advertising. We think it is a massive opportunity to launch a native form of advertising within the Substack ecosystem at some point."

The platform currently operates on a subscription-based model where creators charge for newsletters or podcasts, with Substack taking a 10 percent cut. This approach has generated hundreds of millions of dollars flowing from audiences to creators annually, according to company data. However, the advertising pivot suggests recognition of revenue limitations in the subscription-only model.

Substack's advertising exploration occurs as newsletter monetization strategies diversify across the industry. According to Substack's platform documentation, "you're welcome to host sponsored content and we don't have any policies in place that prohibit publishers from doing so," despite officially maintaining an "ad-free" designation.

High-profile creators already monetize through sponsorships manually. Mario Gabriele's The Generalist and Packy McCormick's Not Boring have transformed sponsorships from experiments into substantial revenue streams. These creators utilize platforms like Paved to connect with advertisers or reach out directly to potential sponsors.

The advertising infrastructure for newsletters has expanded significantly. Google Ad Manager now supports newsletter advertising through beta features allowing publishers to serve reservation and programmatic guaranteed ads within email content. The feature supports image creatives and includes targeting options, though Apple's Mail Privacy Protection affects location and device targeting accuracy.

Newsletter monetization research reveals sophisticated revenue strategies beyond subscriptions. Recent analysis shows newsletter operators achieving $10,000 monthly recurring revenue with approximately 1,000 subscribers through service-based approaches. Advertising performance metrics from the Beehiiv Ad Network demonstrate newsletters generating $1-$5 per click, with average campaigns achieving $2.50 per click.

Substack's creator statistics demonstrate significant earning potential. According to The Verge, Substack CEO Chris Best confirmed at The Information's "Future of Influence" event in June 2025 that "more than 50 people" earn over $1 million annually on the platform. The company reports over 17,000 writers receive payment through Substack, with the top 10 authors collectively earning $25 million per year.

Platform growth metrics support advertising viability. Substack achieved 37 percent website traffic growth while mobile application users increased by 139 percent, according to Similarweb analysis. The app, introduced in 2022, now has millions of weekly active users engaging with social features including Notes, chat functionality, and live video conversations.

Video monetization capabilities launched February 20, 2025, enable creators to upload and monetize content directly from mobile devices. The feature supports files up to 20 gigabytes and allows creators to configure paywall settings for video content. Company data indicates creators using video and audio grow revenue 2.5 times faster than text-only publishers.

Technical developments support advertising integration potential. The platform's mobile infrastructure enables creators to reach subscribers through email notifications and app alerts simultaneously. Video creators can track post views, new subscribers, and estimated revenue growth from paid subscriptions driven by their content.

The competitive landscape influences Substack's advertising strategy. WordPress enhanced its newsletter capabilities with pricing structures that challenge Substack's 10 percent fee. WordPress's Commerce plan could eliminate thousands of dollars in annual fees for high-revenue creators, while providing native advertising integration through third-party services.

Programmatic advertising trends favor newsletter inventory. Industry research reveals 72 percent of marketers plan to increase programmatic investment in 2025. Connected TV budgets double from 14 percent in 2023 to 28 percent in 2025, indicating advertiser appetite for premium content environments that newsletters provide.

Privacy considerations affect newsletter advertising implementation. Google's Ad Manager documentation emphasizes avoiding personally identifiable information within newsletter tags, while email client caching impacts targeting accuracy. These technical limitations require specialized approaches for newsletter advertising compared to web-based inventory.

Creator retention strategies become critical as advertising integration proceeds. According to The New York Times, some high-profile creators departed Substack citing concerns about social features overwhelming email product development. Ryan Broderick of Garbage Day wrote in his departure announcement: "Substack has insisted on adding more social features over the last three years, instead of making their email product better, which is still missing tons of pretty basic features."

The advertising model transition faces platform-specific challenges. Substack's current analytics provide limited audience insights compared to dedicated advertising platforms, making it difficult for creators to provide detailed demographic data to potential advertisers. Creators often supplement with external survey tools to gather audience information for sponsor presentations.

Revenue diversification strategies appear increasingly necessary for newsletter sustainability. According to creator monetization analysis, no single revenue stream proves reliable long-term. Successful newsletter operators combine subscriptions, sponsorships, affiliate marketing, and service offerings to build resilient income streams.

Substack's official stance maintains subscription primacy while acknowledging creator advertising demands. According to Substack's company announcement, the platform states: "direct relationships between readers and writers make for a healthier information ecosystem. That's why our business model relies solely on subscriptions instead of revenue from advertisers."

International expansion plans accompany the funding announcement. Substack aims to bring its platform to new global markets, potentially increasing addressable audience for both subscription and advertising models. This geographical diversification could provide additional revenue opportunities as advertising integration develops.

The $100 million investment enables accelerated development of creator tools and audience growth features. Previous fundraising attempts in 2023 were abandoned at approximately $1 billion valuation, with subsequent layoffs of 14 percent of staff. According to The New York Times, BOND's Mood Rowghani noted that market conditions needed to mature for Substack's independent journalism and creator economy bets to succeed.

Industry observers note tensions between creator independence and advertising integration. The platform's original appeal centered on freedom from algorithmic manipulation and advertiser influence. Balancing creator autonomy with advertising revenue requirements presents ongoing strategic challenges.

Creator economy platforms face similar monetization pressures. Meta introduced unified Content Monetization combining multiple revenue streams, while Threads began advertising tests targeting 300 million monthly active users. These developments indicate industry-wide movement toward diversified monetization models.

The funding round positions Substack to compete more effectively with technology giants developing newsletter products. However, the company must navigate creator concerns about maintaining platform independence while building sustainable advertising infrastructure.

Technical infrastructure improvements will focus on advertising capabilities alongside creator tools. The mobile application development continues with enhanced video features, community chat functionality, and live streaming capabilities designed to increase user engagement and advertising inventory value.

Newsletter advertising market growth supports Substack's strategic direction. Email marketing spend continues increasing as marketers seek alternatives to cookie-dependent digital advertising. Newsletter environments provide brand-safe, engaged audiences that command premium advertising rates compared to social media inventory.

Key Terms Explained

Newsletter Tag Implementation: Technical code snippets embedded directly into email newsletters to serve advertisements dynamically. Unlike web-based advertising, newsletter tags must account for email client limitations, caching behaviors, and privacy protections like Apple's Mail Privacy Protection. Publishers generate unique tags through platforms like Google Ad Manager, then integrate them with their email service provider to display targeted advertisements alongside editorial content.

Email Service Provider (ESP): Platforms that manage the technical infrastructure for sending bulk emails, including deliverability optimization, subscriber management, and analytics tracking. For newsletter monetization, ESP choice affects advertising integration capabilities, merge tag functionality for personalization, and compliance with anti-spam regulations. Popular ESPs include Mailchimp, ConvertKit, and specialized newsletter platforms like Substack and Beehiiv.

Merge Tags: Dynamic variables within email templates that automatically populate with subscriber-specific information such as names, locations, or custom data fields. In newsletter advertising, merge tags enable personalized ad experiences and ensure proper tracking by creating unique identifiers for each email recipient. This functionality becomes essential for attribution measurement and preventing duplicate ad impressions across email campaigns.

Email Client Caching: The practice where email applications like Gmail, Outlook, or Apple Mail temporarily store newsletter content on their servers before displaying it to users. This caching behavior affects advertising measurement accuracy because it can trigger ad impressions before users actually view the content. Newsletter advertisers must account for inflated metrics and implement viewability standards specific to email environments.

Newsletter Ad Network: Specialized platforms that connect newsletter publishers with advertisers specifically for email-based advertising inventory. Networks like Paved, beehiiv Ad Network, and Morning Brew's advertising platform aggregate newsletter audiences and provide standardized pricing, creative specifications, and performance reporting. These networks simplify the advertising process for both publishers and brands while ensuring email-specific optimization.

Sponsored Content Integration: The strategic placement of promotional material within newsletter editorial flows to maintain reader engagement while generating advertising revenue. Unlike banner advertisements, sponsored content matches the newsletter's writing style and provides genuine value to subscribers. Successful integration requires clear disclosure, audience relevance, and content quality that upholds the publisher's editorial standards and subscriber trust.

Email Deliverability Rate: The percentage of sent newsletters that successfully reach subscriber inboxes rather than being filtered into spam folders or blocked entirely. Advertising content can negatively impact deliverability if it triggers spam filters through excessive promotional language or suspicious links. Newsletter publishers must balance monetization efforts with maintaining strong sender reputation and inbox placement rates.

List Segmentation for Advertising: The practice of dividing newsletter subscribers into targeted groups based on engagement behavior, demographics, or content preferences to deliver relevant advertising messages. Advanced segmentation allows publishers to offer advertisers premium targeting options, such as reaching only highly engaged subscribers or specific geographic markets. This capability commands higher advertising rates compared to broad, unsegmented newsletter distribution.

Newsletter Attribution Tracking: Measurement systems designed to track how newsletter advertisements drive website visits, conversions, and sales despite email client privacy limitations. Attribution in newsletters requires specialized tracking methods including unique promotional codes, dedicated landing pages, and post-click survey data. The complexity increases with Apple's Mail Privacy Protection and similar privacy features that block traditional tracking pixels.

Subscription Paywall Strategy: The editorial and technical approach to restricting premium newsletter content behind paid subscriptions while maintaining free content that supports advertising revenue. Publishers must balance valuable free content that attracts sponsors with exclusive paid content that drives subscription conversions. This strategy affects advertising inventory availability and audience demographics, influencing overall monetization optimization for newsletter businesses.

Timeline

• January 28, 2023: Substack introduces private newsletters with invite-only functionality
• June 10, 2024: Google Ad Manager adds newsletter advertising support in beta
• February 20, 2025: Substack launches mobile video publishing with monetization features
• February 23, 2025: Newsletter monetization research reveals shift toward service-based revenue models
• May 25, 2025: WordPress unveils enhanced newsletter features to rival Substack
• June 3, 2025: Substack CEO Chris Best announces over 50 creators earning $1 million annually
• July 17, 2025: Substack announces $100 million Series C funding round and advertising strategy shift