How does your marketing agency make its money? At our digital age, it seems that more and more agencies are focusing on specialized niches to address specific pain points, rather than trying to serve as a one-stop-shop for their client’s marketing needs.
There’s nothing wrong with focusing on the tasks you do best. After all, graphic design and lead generation both fall under the marketing umbrella, but they require very different skill sets. Unfortunately, this can create situations where an agency becomes overly reliant on a single source of income.
Why revenue diversification is essential for agencies.
While you might be able to stand out in your niche and find initial success, new competitors or changing market conditions could quickly sink an agency with only one main revenue stream.
As Facebook’s disappointing recent quarter and resulting crash in stock value reveal, even the most “established” marketing channels can be vulnerable. While Facebook seems unlikely to disappear anytime soon, consider the platforms that haven’t been so lucky.
Vine and Google Plus are just two social media platforms that once boasted millions of users, but are now extinct. MySpace technically still exists but as a shell of its former self. If you had a marketing agency that exclusively focused on any of these platforms, their decline and decline would also mean the death of your agency.
Of course, diversifying isn’t just about mitigating your financial risk. Adding new products or services to your agency’s offerings will ultimately make your business more profitable by giving clients a new way to engage with you. When executed well, these new revenue streams will also help you build additional brand authority — they will likely generate new leads.
All of this combines to make your agency far more sustainable and better equipped to weather the ever-changing nature of the marketing industry.
Diversify agency revenue with strategic partnerships.
Fortunately, there are many potential ways a marketing agency can diversify its revenue. This became especially apparent during a recent meeting with Itzik Levy, founder and CEO of vcita, a small business management platform. His company recently partnered with FCR Media out of Belgium to help them release Sitee, a co-branded version of the vcita platform designed to enable FCR to broaden its marketing services.
By partnering with a software company, the agency was able to diversify its revenue stream by offering a self-service track for its customers- widening its target market by serving new audiences who may have been otherwise priced out of working with FCR. This partnership also better positioned the agency to upsell its services on a more tightly targeted basis, thanks to better visibility into their clients’ needs.
Marketing agencies should always be on the lookout for mutually beneficial partnerships that can increase their operational efficiency. By collaborating with software providers and others that can enable new avenues for reaching their target market, agencies can become far more profitable.
Diversify revenue with new offerings.
In addition to expanding your reach to serve new audiences, marketing agencies should look to expand the types of services and products they offer. For example, an agency with an active blog could actually incorporate affiliate links into posts on topics listing preferred software tools or bloggers to follow.
Many agencies also expand their content marketing efforts and build industry authority by providing paid educational content to their audience. Webinars, eBooks, guides and other similar content can serve as a powerful lead magnet that grows your client base. After establishing a reputation for producing quality content, you could shift to a paid model that turns these materials into a source of passive income.
Of course, marketing agencies shouldn’t be afraid to expand to new areas that are related to their core competencies. If your agency focuses on social media marketing, expanding to add online reputation management could prove highly appealing to many clients. Since social media is often used for reputation management, this would be an area where you could have greater confidence in your ability to deliver quality results.
As you assess your organizational strengths and weaknesses, you should be able to identify additional revenue streams that could serve as a natural expansion to your current offerings. By creating new sources of active and passive income for your agency, you will ensure a more stable and profitable future — no matter what changes the market might hold.