Wk31 (41k subs): The Future of Online Marketing Agencies

The Comeback - Week 31 (41,000 Subs):

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This week I was having a deep conversation with one of the agencies I’ve been mentoring.

After scrolling through some posts on LinkedIn about the death of online marketing agencies he was extremely concerned.

Tobi Chapman is his name (absolute legend btw!).

He runs an email marketing agency in the Ecom space.

He’s just starting out so he’s now wondering if this is the completely wrong business model.

I can relate.

When I joined my last Agency Alpha Inbound in 2021 people also told me agencies were dead.

But this was when I developed critical thinking.

Ignoring the noise, the narratives people are spinning and focusing on finding the truth.

I then went on to scale that agency to $140,000 a month in 2 years and I’ve been mentoring other agency owners since.

Today I return the favour.

For anyone running, thinking of starting or working with an online marketing agency, this one is for you.

Today on David to Goliath:

1. Is the online marketing agency market oversaturated?

2. Are Online Agencies The Best Business Model?

3. How Will AI Impact Online Marketing Agencies?

4. Work One-One With a 7-Figure Agency CEO

1- Are Online Marketing Agencies Oversaturated?

Supply has increased and not gonna lie, yes, there are way more marketing agencies online today than ever before. 

BUT it’s the wrong question to ask.

Right question: In the next 5 years, will there be existing and new online businesses that will need help solving problems and won’t have the time/experience to do it themselves?

Yes.

Therefore there is demand. 

Remember only half the world is online at the time of writing this. Large parts of continents such as Africa and Asia don’t even have access to the internet yet.

Do you think they will have in the next decade?

It’s inevitable.

Since Tobi operates in the Ecommerce space let’s look there (the numbers, not the noise).

Ecommerce is not even 20% of all sales - 80%+ still happen offline.

Right now it’s a $4 trillion dollar market cap and it’s on pace to hit $7 trillion by 2030.

It’s a growing, not shrinking market.

That’s critical thinking.

Even outside of Ecommerce more and more businesses will come online in the next decade.

It’s just more fragmented now and that’s natural in all maturing markets.

This is where specialists will win.

20 years ago there weren’t enough businesses overall for agencies to be super niche-specific and have a large client base but now that isn’t the case.

For example, 20 years ago there weren’t many pet brands that sold supplement products just for cats - but now there are thousands - so if you only helped those companies solve a specific problem such as optimizing their landing pages, you would have hundreds of clients to choose from.

Add to that algorithms are now much smarter so if you put out specific content to a super niche section of the market, the social media platforms will be able to find your ideal clients (and there will be more of them).

When the market size dramatically increases and becomes more fragmented, positioning becomes more important than ever.

Businesses will go to the agencies that solve their specific problem and have proof that they’ve solved that problem for businesses just like theirs.

Also, if you only serve a very specific problem for a very specific company you will be able to get their desired result faster so not only will you have more case studies, you will also be more efficient (profitable).

So in short, yes, it is more saturated (mature) but I’d argue overall there are even more opportunities if you can differentiate yourself.

2- Are Online Agencies The Best Business Model?

Answer: Depends where you’re at in your journey

I don’t believe long-term agencies are the best business model if you want to build generational wealth.

Agencies don’t sell for much money because investors are essentially just buying a group of people - which is risky.

Agencies that sell for a lot of money have moats - usually in the data or technology field.

Having said that, they are still the best business model to start with if you don’t have a big network, you don’t have a lot of money or you don’t have specialized knowledge.

Why? 

4 reasons:

1- Low Barrier to Entry

All you need to start an agency is a laptop, connection to the internet and knowledge to solve a specific problem (which you can learn on Youtube for free).

2- Learning High Valued Skills

The key to scaling an agency is first learning how to sell your time for a good profit, and then organizing your time to be able deliver on those promises.

After you’ve maxed out your time it’s then about recruitment, financials and leadership.

You need these skills to run any business and the fact that with an agency you’re forced into learning them because of the pressure of not getting paid or losing clients, it fast tracks your growth learning curve.

Constraint drives innovation and these skillsets can then be used when building bigger businesses further down the line.

3- Knowledge and Networking

If you work on one business to start with you only ever get those experiences and lessons.

But with an agency, you get access to the inside of several businesses simultaneously - often the owner of these businesses will have a lot more experience than you.

So not only are you learning the lessons from scaling your agency, you’re also learning the lessons from all the businesses you’re helping and all the previous lessons from the past experiences of the owners of those businesses.

These relationships can serve as the foundation of your network which will become incredibly valuable further down the line.

You’re essentially getting paid to build your network - just make sure you deliver incredible results so the business owners actually respect you!

4- Cashflow

Agencies might not sell for much money although they can generate a lot of cash fast. There aren’t many other business models that require next to no up front investments but you can start generating nearly $10,000 a month within 6 months (it may take longer).

Once you’ve built your reputation, network and a solid amount of cash you can either sell the agency, or hire someone else to maintain it whilst you use the cash to fund your next business which can be sold for a lot of money.

Just be careful when considering selling because most agency acquisitions require long buyout periods where you and your team have to stay on for a few years.

3- How Will AI Impact Online Marketing Agencies?

Artificial intelligence will increase the supply of agencies even more because technology will keep replacing the work that humans used to do.

Here’s how to become ‘AI Proof’:

1- Super Niche

Focus on a specific niche so you can figure out the best technology that solves problems for your specific type of client. Also, hire forward-thinking people that relentlessly test new technologies and help you become more efficient.

2- Offline Relationships

The best way to stand out in a world which is turning more robotic by the day is to be more human.

For example: If cold emails have become so easy due to technology that business owners receive 100X more pitches in their inbox, having a face-face conversation with them will give you a huge competitive advantage.

You will be remembered.

Offline communities will become more important and if you can build your own offline community for the specific business owners you serve, you will never be short of potential clients.

To Recap:

1- Is the Online Agency Space Oversaturated?

No, it’s just more fragmented

Solution: Focus on solving problems for a super-specific niche and build up your reputation in the marketplace.

2- Are Online Agencies The Best Business Model?

Answer: It depends on where you’re at on your journey.

It’s still the best business model to start with if you don’t have a network, specialized knowledge or a lot of money.

Solution: Build up a network through the business owners you help and learn valuable skillsets including sales, resource management, financials, recruitment and leadership for your future career.

3- Will AI Replace Online Marketing Agencies?

No, it will just expose those who don’t specialize or don’t have offline relationships.

Solution: Figure out the best tech to adopt for your specific niche and build an offline community for the specific business owners you serve.

Work One-One With a 7-Figure Agency CEO

Since I left my position as CEO of Alpha Inbound other agencies started reaching out, asking for my help.

And I’ll be honest, I’ve been pleasantly surprised by the results.

Out of the 16 agencies I’ve mentored at least 5 of them have tripled in size.

So this September I’m opening up a handful of new mentoring spots.

If you’re an agency doing between $5k/mo - $50k/mo OR:

1. You can’t book consistent qualified sales calls

2. You’re constantly working but not growing

3. You don’t know WHAT to work on to grow

4. You don’t know how to build a team

5. You don’t have a network

And you want to scale your agency in half the time by working 1-1 with a 7 figure Agency CEO, this might be for you.

You’d also be joining a tight-knit community of fast-growing agency owners to build partnerships with, get access to my network of high-level agency growth operators, and have weekly catch-up calls directly with me.

Because it’s 1:1 work I can only do this for a maximum of 10 agencies (and I’ve already had a lot of interest).

If you’re tired of trying to figure out everything yourself, here’s a link so you can learn more about what to expect and the results other agencies have got.

Apart from that, I do hope you learned something today.

Remember: Entrepreneurs see opportunities where others see problems.

The more problems there are, the more impact we can make!

Yours truly,

-Nigel Thomas