Substack implements native advertising following $1.1bn valuation
Substack, the historically anti-advertising newsletter platform, has announced it will pilot an advertising programme following its latest funding round.
This year, the platform reached 5m paid subscriptions and achieved 39 per cent year on year audience growth.
It has also seen a surge of interest among high-profile figures in the UK, its second-biggest market. Keir Starmer joined Substack last week and Piers Morgan launched a newsletter on the site earlier this year. In 2019, the platform’s co-founder, Hamish McKenzie, said: “Ad models break everyone’s brains.”
However, on Tuesday, the company launched a pilot scheme to connect newsletters with sponsoring brands, following its latest funding round, in which it agreed to trial ads.
Investors demand diversification
In July, Substack raised $100m (£75m) from investors as part of a Series C funding round. The fundraising gave the company a $1.1bn valuation, a 70 per cent increase on the valuation achieved in March 2021, following its last full series B round.
This most recent round of fundraising was led by investors such as BOND, a global technology investment firm; The Chernin Group, co-founded by Peter Chernin, former president of News Corp; and Andreessen Horowitz, the $46bn Silicon Valley-based venture capital giant, which backed Substack in 2019.
Substack has raised a total of $200m from investors in the past eight years. Last year, they raised $10m from investors in a ‘friends and family’ round.
Substack takes a 10 per cent cut of subscription revenue, but doesn’t currently make any money through advertising. Its new scheme will help brands partner with creators, but will not have editorial oversight of these partnerships.
Although Substack will not initially take a cut of the money writers can earn through the sponsorships, this will likely change if the scheme is successful.
Announcing the launch, McKenzie posted to Notes, Substack’s social feed, saying: “Substack makes money only when creators make money.
“We think this effort can also make life easier for those who want to do sponsorships (which is not everyone), so they can spend less time on admin and more time on their core editorial work.”
A Substack spokesperson told City PM the pilot scheme “is shaped by what creators have been asking for: more ways to earn revenue that aligns naturally alongside subscriptions.”
The shift from an explicitly anti-advertisement approach to take advantage of ad revenue reflects a broader trend in media, says Abi Watson, head of publishing at Enders Analysis. “Netflix once defined itself by its refusal to take ads, and now advertising is one of its core strategic pillars.”
Other newsletter platforms are poaching key Substack players
Other newsletter platforms have found success by pivoting to advertisement-based models.
Beehiiv, a direct competitor of Substack, introduced advertisements in 2022. Now, it receives up to 20 per cent of writers’ advertising revenue and charges creators a flat fee.
From April 2024 to 2025, 3,000 Substack writers migrated to Beehiiv. Many of them have reported increased revenue since making the switch.
Watson believes there is a defensive element to Substack’s new scheme. “Expanding the commercial toolkit helps Substack retain its biggest creators.
“Subscriptions let you monetise only the most committed part of the funnel. Advertising opens up the rest – the large cohort of registered users with low propensity to pay, plus the passing traffic that still has value in aggregate.”
Many writers on Substack already use advertisements to bolster their earnings. In January, the Wall Street Journal reported that creators were managing their own deals with brands through Google Docs or hastily-made spreadsheets. For a newsletter with more than 75,000 subscribers, an advertisement could fetch $20,000.
In its initial stage, Substack is seeking feedback from a small number of newsletters and brands before a broader rollout in 2026.