Every month, the SMMA (Social Media Marketing Agency) world mints a new six-figure agency owner.
Mostly, I dwell in the SMMA niche of Facebook Ads and let me tell you: it’s starting to get crowded.
So is it too late to start making money in this low-barrier-to-entry niche?
As of June, 2018 it is not and not even close.
What’s Happening In Social Media For Locals
This is hard to believe given how many solo or small-time agencies are out there.
You might have noticed that some of the fastest growing companies in the Fortune 500 are digital marketing agencies. This is everything from social media management to websites to video creation.
In the last five years, social media has really blown up and everybody wants in on the action.
The problem is that large businesses and traditional businesses of every size are slow to adopt new media.
Ten years ago, a local dentist practice might laugh you out of their office if you presented a digital media solution to them. Five years ago, many of the early adopters would have totally taken you in—but that’s it.
Today, most businesses finally get it. They know that the old-fashioned way to get customers is too expensive. It’s also hard to track their advertising dollars and the ROI is weak compared to digital media. The list of reasons to use digital media go on.
Businesses Still Need You
So has the agency population reached a tipping point?
Not really because in my experience so many businesses are still clueless about how to integrate digital marketing with their brand. That is, they get the value of digital marketing but they’re struggling with making it work. Some think they just write a few blogs to shoutcast it on Twitter and massive traffic will come their way. Maybe they’ve even dabbled with Facebook and boost their posts there.
A decent agency will tell them that that’s exactly not how to do things. And agencies who are watching do tell them that stuff.
What I’ve noticed is that there are still many businesses that have not been hit up by the army of digital agencies out there. But where do you start?
The Need To Niche Deep
There is a sweet spot of companies who have a $15,000 – $2,000 a month marketing budget who are desperate for a digital media expert to come in and save them. That’s just what I see in the U.S. and that budget range could differ depending on your country.
Since these companies are getting emails and calls about this more often now, what really works is niching deep. What I mean is focusing on a narrow and profitable niche that has barely been tapped. I call these sub-niches, or niches within a niche.
For a moment, put yourself in their shoes.
Let’s say you’re an endodontist (root canal specialist). If five agencies were bothering you with their digital media services, but only one understood your industry, who would you choose?
And let’s say that this understanding came from serving over ten other endodontists in various regions. Maybe on their website Drs provide glowing recommendations for this company.
In their talks with the prospective client, this company even qualifies themselves out of jobs. They might say something like, “We’re not for everyone. Unlike many agencies, we don’t take just any client in. We have a track record of achieving superior digital marketing results for endodontists only. Day in, day out, that’s all we do and we understand your ideal patient.”
That’s where all businesses in all industries go after the first level of saturation: niching then sub-niching.
You name the billion-dollar industry, and I’ll show you how it niched down deep to keep specialized service industries in business.
We can talk cars, shoes, TV, music, etc.
Look how big Nike and big Adidas slept while tiny companies like Lululemon and Lucy stole billions of dollars away from them selling a very specific, niched item: yoga pants.
These two sports apparel giants should have created and owned that category, however, they didn’t niche deep enough. They weren’t listening and learning.
The point is, if you can be a “category killer”, you can grow your business in a sub-niche and later take on broader niche clients.
So don’t start with a generic niche.
Every digital agency out there is trolling for any clients with a pulse and a checkbook. They’ve hit up real estate agents, they’ve hit up dentists, they’ve hit up stockbrokers—there are tons of people to go after and it’s a free-for-all for the digital media agency generalist. Now, that aspect of the fieldis saturated.
However, deep niche industries are not . . . yet.
If I Had To Start Over Today
So that’s what I’d focus on if I started an agency today. If I didn’t know the industry well, I would get to know them. I’d take several weeks or months to interview at least ten specialists in the niche you want to work in.
I wouldn’t sell them anything. I wouldn’t even bring up digital media so to not fill their heads up with a pre-packaged answer.
As I like to tell my business students and clients. . .
Pick their brain and find the pain.
Once you find their marketing pains, you can begin forming a few packages and services that will be part of your “elegant solution”. Test it a few times, get results, and then go after big clients. Get proof, hire well, and then you earn your right to the bigger bucks.
So many people skip this step. They want to start calling on the biggest clients to get $10,000 a month clients.
Well, you do have a reputation to uphold! So how do you build a good reputation in SMMA?
Getting Past Imposture Syndrome
To practically guarantee results to your future clients, you have to actually get superior results for yourself and former clients. You need all your well-oiled systems in place.
That takes lots of experience and practice. There are no hacks here.
For example, if you’re positioning yourself as a Facebook Ads manager expert, it would be more credible if you mastered that medium yourself and secured tons of clients from your own Facebook Ads. Hello!
Don’t just take a course and think you know it all because you “learned” the blueprint that 100,000 other people bought. If you don’t have any clients, this is the best place to start.
Because of this learning curve, an agency might take four to ten months to really start seeing good money. However, that’s really nothing time-wise. In the meantime, hire/outsource the best social media people to do the work while you start mastering the craft yourself. You’ll take a pay cut in the beginning, but that’s the price of admission to build your SMMA.
My best advice for new agency owners is to do it ethically and do it right.
Start at square one and seek to understand your sub-niche’s pains.
That takes me to the second part of your success as a new agency.
Don’t Start With Your Why, Start With Theirs
Even though technology has made a lot of things really easy, businesses still only want to spend their hard-earned money with people they Know, Like, and Trust.
Some agencies can close a deal in one 15m call. Good for them. However, pre-dating this call there is often some information they have provided for free. That could be videos, tutorials, case studies, blogs, etc. Maybe they saw one of their ads or maybe they stumbled upon a helpful blog post that addressed a specific need.
Seth Godin said it best when he wrote about how important the “customer curriculum” is. This is a strategy where you get exposed to your customer over time. Each phase is more sophisticated and lucrative.
Take care of customer needs first, then go after the sale.
This is the whole reasoning behind the “online freebie” movement. Sure, the law of reciprocity is in effect. But also, you’re getting people’s attention and building a relationship with them. You’re getting to know them to build trust so eventually they’ll like you—to do business with you!
People are crazy about their lead magnets and email funnels these days as they should be. It’s part of the curriculum. If people already know you, that’s a different story. You get to skip a few steps to the top.
Leverage Your Unfair Advantage
You might see a lot of celebrities making insane amounts of money lately. George Clooney recently sold his tequila company for a billion dollars. Gwyneth Paltrow, Reese Witherspoon, Jessica Alba are raking in millions too. Even Sarah Michelle Gellar (Buffy The Vampire Slayer) is making a comeback with entrepreneurship. I saw her in Entrepreneurship Magazine hocking brownies!
Their unfair advantage is that any celebrity already has the Know-Like-Trust factor down. Millions of people know who they are and will buy anything with their name on it. The rest of us, we have to try harder. However, it’s likely you have something to offer in terms of an unfair advantage. Maybe you’re great at copywriting or web design. Some people have a business consulting background or a digital marketing credential. Use what you have and showcase it.
But going back to niches, that is your unfair advantage, even to the billion-dollar celebrity brands or apparel brands. You can focus on one very specific sub-niche.
There Is No SMMA Without Sales
A huge part of your success as a social media marketing agency is being able to sell. You can have the best training and the best deep niche, but none of that matters if you can’t close a deal. None of it.
This is one of the biggest mistakes I see. Don’t get me wrong, I’m not the best salesman either. In fact, most the time I hate sales. However, it’s a necessary thing to build a business. You can be bad at a lot of things, but sales can’t be one of them.
As an ad agency, I want you to have problems of scaling a big because you have too many customers! Sam Altman of Y-Combinator says, “in startups money solves everything”.
You can always hire brilliant people to do all the technical digital media projects and tasks. However, the founder needs to be able to sell. You can’t outsource this because no one knows your brand better than you.
Plus, you’ll always be selling something so you better be good at it. You will have to sell digital media packages, partnerships, venture capital, etc.
So think long and hard on who you want to serve. Do massive research and circle back to the lucrative sub-niches that have been barely touched.
I would look at industries where the average customer spends a minimum $500-$1000 per sale. It would be easy to justify a $3,000 digital media package if it reaps at least 6 clients in a few weeks. You would have paid for yourself and made the client an extra $3,000 from your work. A long-term contract would be simple to close at that point.
In my opinion, you have about 2 years to really jump on the SMMA opportunity. After that, only the best of the best will be around because every niche and sub-niche will be saturated. I’m already seeing SMMAs that only serve yoga centers. Plus, I suspect the LegalZoom of SMMA will come along and offer rock-bottom prices for some generic service. It’s the way of the world and expect it to happen in this space too.
Good luck to you and Godspeed!
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