How does your marketing agency make its money? In our digital age, it seems like more and more agencies are focusing on specialized niches to solve specific problems, rather than trying to serve as a one-stop-shop for their clients’ marketing needs.
There’s nothing wrong with focusing on the tasks you do best. After all, graphic design and lead generation are both marketing, but they require very different skills. Unfortunately, this can create situations where an agency becomes too dependent on a single source of revenue.
Why revenue diversification is essential for agencies.
While you may stand out in your niche and experience initial success, new competitors or changing market conditions could quickly sink an agency with a single primary revenue stream.
As Facebook’s disappointing last quarter and subsequent crash in stock value revealed, even the most “established” marketing channels can be vulnerable. While Facebook seems unlikely to go away anytime soon, consider the platforms that haven’t been so lucky.
Vine and Google Plus are just two social media platforms that once had millions of users but are now gone. MySpace technically still exists but as a shell of itself. If you had a marketing agency that focused exclusively on one of these platforms, their decline and collapse would also mean the death of your agency.
Of course, diversification isn’t just about mitigating your financial risk. Adding new products or services to your agency’s offerings will 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 your brand authority – they’ll likely generate new leads.
All of this combines to make your agency much more sustainable and better equipped to deal with the ever-changing nature of the marketing industry.
Diversify agency revenue through strategic partnerships.
Fortunately, there are many potential ways for a marketing agency to diversify its revenue. This became particularly evident during a recent meeting with Itzik Levy, founder and CEO of vcita, a small business management platform. His company recently partnered with FCR Media in Belgium to help them launch Sitee, a co-branded version of the vcita platform designed to enable FCR to expand its marketing services.
By partnering with a software company, the agency was able to diversify its revenue streams by providing a self-service channel for its clients, subsequently expanding its target market by serving new audiences that would otherwise have been excluded from the RCF. This partnership has also enabled the agency to better position its services on a more targeted basis, thanks to better visibility of its clients’ needs.
Marketing agencies should always be on the lookout for mutually beneficial partnerships that can increase their operational efficiency. By collaborating with software vendors and others who can open up new avenues to reach their target market, agencies can become much more profitable.
Diversify your income with new offers.
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 might actually incorporate affiliate links into articles on topics listing favorite software tools or bloggers to follow.
Many agencies are also expanding their content marketing efforts and building industry authority by providing paid educational content to their audience. Webinars, e-books, guides, and other similar content can serve as a powerful lead magnet that expands your customer base. After establishing a reputation for producing quality content, you can upgrade to a paid model that turns these materials into a source of passive income.
Of course, marketing agencies shouldn’t be afraid to expand into new areas related to their core competencies. If your agency is focused on social media marketing, expanding to add online reputation management could prove very appealing to many clients. Since social media is often used for reputation management, this would be an area where you could have more confidence in your ability to deliver quality results.
As you assess your organization’s strengths and weaknesses, you should be able to identify additional revenue streams that could be a natural extension of your current offerings. By creating new sources of active and passive income for your agency, you will ensure a more stable and profitable future, whatever changes the market may bring.