I’ve worked in digital marketing, and more specifically SEO, since 2013. As any young professional does, I’ve often contemplated where I want to see my career go, and what business ventures will promote a successful and happy life. My old client contacts, ex-coworkers, and family members consistently ask me if I would ever start my own marketing agency. For the first few years, I always said, “Yeah, someday.” But the more non-SEO practice responsibilities I take on at my current agency, the less I like the idea of running my own agency. I do believe in the agency model, but at this point in the digital marketing world, a number of headwinds are keeping me from making that move.
Competition is Insane
Let’s be honest, the world does not need another digital marketing or SEO agency. If you Google “digital marketing agency” it returns 8.2 million results and has an estimated cost per click of $ 12.33. With a few hundred freelancers on Upwork, and over 181 local results for a digital marketing agency in New York City, there are enough companies offering digital marketing services like PPC, SEO, CRO, and web design. While there are definitely some people out there doing low quality work, there is plenty of people doing it the right way. So how would I set my agency apart?
Unless you have a bunch of new clients just waiting for you to open your doors, you are going to have to sell. I have been in on hundreds of sales calls and sales meetings as technical support, and I’ve witnessed tens of thousands of dollars invested into sales pitches that we didn’t win… and it’s grueling. It takes a special personality to just get in those meeting in the first place, and those personality traits aren’t my strong suit. Typically account executives have the skills to flourish in that role, but you need someone strong at executing digital strategies to ensure your pitch is successful. So right away, you’re probably looking at needing a partner or hiring a “salesy” type person. I recently read a post about the paid search agency Klient Boost grew to 1million dollars in revenue, it’s definitely possible but it requires a lot of work and a fair amount of luck.
Starting with Low Paying, High Maintenance Clients
You gotta start somewhere right? And “somewhere” usually looks like local small to medium business that have monthly budgets around $ 1000 for marketing. Those sized companies typically don’t have a marketing team. They might have a marketing person, but you’re likely going to be dealing with the CEO/owner on a regular basis. From my experience, when I worked with small businesses at my first agency, it never goes well. Trying to explain how sessions differ from pageviews to someone who is still using Windows XP is tough. Uneducated clients typically require more handholding, and expect results faster, regardless of outside forces like algorithm changes or website limitations or lack of a quality brand and product. Even at my current agency where we only work with enterprise clients, we find the businesses closest our minimum monthly retainer are the least profitable, most difficult and leave much faster than larger clients.
At the End of the Day, Agencies are a Service
This is the major kicker for me. So let’s say you do get the agency off the ground. You have a handful of well-paying clients, office space, and some employees. So what’s your ceiling? The major struggle with the agency model is that you are a service. Revenue increases are directly tied to payroll increases. With most agencies billing by the hour, you have to get creative to scale outside of that direct ratio of 1 new client equals .5 new bodies. Many larger agencies are increasing profitability by introducing software as a service such as reselling software or platforms, hosting fees, etc., or investing in automation to reduce the effort for recurring tasks. SEO vet John Doherty shares why he’s investing in building a software company instead of an agency focusing on scalability.
So What Should a Budding Entrepreneur with Agency Experience Do?
Build a product. Build something you own. Build something that makes money. You are your great ideas, not a number of hours you spend creating them. If you can find something that you are passionate about, even better. I recently started an outdoor review site as a way to spend more time snowboarding and use my SEO skills to build traffic. While this likely isn’t going to replace my day job, it is a fun way to apply my experience. Start thinking about ways you can solve people’s everyday needs with a product, then go.Digital & Social Articles on Business 2 Community