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I Sold My Marketing Agency, Here's What I Learned
I just finalized the sale of my SEO and content marketing agency.
It’s a strange feeling.
I’m grateful for the experience building Assisted Reach with such hardworking and talented people. We developed cutting-edge tooling that advanced the SEO industry, created content that improved the web, grew our client’s organic search presence, and had a damn good time doing it.
I’m also relieved.
I’m relieved because running an agency is hard by itself. And I was doing it along with several other projects and obligations. When you have more than one focus, you fall victim to context switching, which lowers the maximum potential of everything you’re working on.
I was feeling the context switching and it was exhausting…
When I started Assisted Reach, I didn’t really understand the agency business model or what I was truly getting myself into. I just knew I could do some really cool things with my growth marketing and analytics engineering skill set.
I’ve learned a lot through the experience of building and selling Assisted Reach and had a ton of help along the way. Thanks to some incredible mentors, books, blogs, and podcasts, I built a thriving business.
This post is about sharing the lessons I learned building and selling my agency. But rather than writing about why you should start an agency, I’m going to give you the reasons you shouldn’t.
Why you shouldn’t start an agency
Thanks to internet agency gurus, everyone and their mother own digital agencies.
The space is saturated, which means two things:
You have to be great at the services you’re selling AND
You have to be great at marketing / selling yourself
Most agency owners are great at one, but not both.
When I started Assisted Reach, I was great at the service I was selling (business intelligence-focused SEO and content marketing), but I had never sold before.
I view sales as an essential business skill, so I enjoyed learning it.
I figured out that my services sold themselves and so I began guest posting and writing long-form content about them. Inbound interest started increasing, so I got a lot of practice articulating the value of my services to prospects.
If you’re not willing to put the time and effort into marketing and sales, the agency game may not be for you.
"You need to be different, really different. Know exactly who you’re going to target and make sure you have results to show. Sales are all that matter in the beginning. Then you will quickly need to pivot into systematic process design. Be prepared to break everything into chunks of minutia and save every dime you possibly can for the first 6-9 months. The early days are an absolute slog."
It’s true plenty of large agencies were started by sales professionals who weren’t great at the service they were selling. But I don’t recommend it.
To build something sustainable, your company must be providing an exceptional service. And it’s difficult to provide an exceptional service unless the owner (or one of them) is a master at their craft.
2. Scale requires specialization
The cardinal sin most new agencies commit is trying to do all the work that comes through their front door.
I sure fell victim to this in the early days.
When you’re trying to build up your MRR, any work looks like good work.
Any work is NOT good work.
An agency obtains efficiencies through productizing services.
For example, modern-day SEO requires significant data transformation and analysis. I developed tooling that automated the vast majority of SEO-related data work. Automation allowed for better, more accurate and actionable deliverables, while increasing margins significantly.
So why was I accepting web development projects?
Don’t make this same mistake.
Focus on what you’re good at and say no to the rest.
"When I first started Contrast, we were a generic digital marketing agency with nothing unique to set us apart from the competition. Over time, we realized our mistake and pivoted the agency to focus on eCommerce businesses. Since making the switch, we’re beginning to be viewed more and more often as the expert in our vertical."
3. Productizing creates negative incentivizes
Paul Graham wrote an essay in 2013 titled, “Do Things That Don’t Scale.” I encourage anyone who’s starting a business to read it. The core idea is that startups should do things that don’t scale early on to provide a delightful experience and learn from early users.
As an agency, productizing your service is one of the key objectives early on. Doing things that don’t scale seems completely counter to this objective.
In the early days of Assisted Reach, if we couldn’t complete something within the desired margin, we wouldn’t do it.
This was a mistake.
We ended up missing out on the value we could have provided to our clients.
A good example of this was our TOAM (Total Online Addressable Market) analysis. Our TOAM analysis helps businesses understand the organic search opportunity of entering into a new vertical BEFORE they make any investment. The problem is that completing a TOAM requires quite a bit of manual work in determining which keyword clusters are relevant to the business model and which aren’t.
There’s no way to automate this piece because every business is different.
For a long time, we just didn’t offer the TOAM as a service for that very reason, even though we were getting asked questions related to it all the time.
Finally, after getting asked the same questions over and over again, I decided we’d start offering them to our clients. After doing a few at a negative margin, we found a way to make the economics work for us, but only because we did it in a way that didn’t scale early on.
"Don’t think about how things will scale in the beginning. First, make your product or service work. Next, test it in the market. Get a foothold, and refine your positioning /messaging as you sell. Then worry about automation and scaling later."
4. Solving the same problem
I need novelty in my work to stay interested. I can’t stand doing something more than once.
Getting your agency off the ground IS novel. But after you dial in your process and start delivering, the work becomes repetitive.
Like I mentioned before, a productized service is the best way to get an agency humming. Doing this literally means you’re looking for the same types of companies so that you can apply your out-of-the-box service to them.
As someone who enjoys what’s new and cutting edge, this got boring fast.
5. Stuck on the surface
When you’re solving the same problem for different companies (i.e., a productized service), it’s difficult to go deep into your field of specialization.
For example, say our productized service is evergreen content creation for SaaS companies that just raised their Series B. If they just raised their series B, they will want to build a base of bottom-of-funnel content. This is foundational in content marketing. Countless people and companies have worked on this problem.
Contrast this with what SEO teams like Airbnb do. Here’s an article on Medium discussing their SEO experiment and measurement process. Very few people in SEO get to work on these types of problems at the scale Airbnb is at.
If you want to work on cutting-edge projects for big websites, you’re better off going in-house than the agency route. And the incentives are greater for companies like Airbnb to build in-house teams rather than hiring agencies.
6. Context switching
I’ve mentioned context switching multiple times because it’s crucial to be aware of. It is the killer of productivity and reduces what you’re able to accomplish in a day.
When you land a new client, you need to learn about their business.
What does their product do?
What is their business model?
Who are their customers?
How are they positioned?
Now imagine having 15 clients.
You not only have to learn about 15 companies, but you also will be working on and thinking about those companies each month.
Can you say context switching?
It becomes exhausting keeping all these businesses straight. You end up wasting a lot of time context switching, and there’s very little you can do about it.
"Context switching is definitely one of the top challenges when running an agency. The best way I know to combat this on the client operations side is to either specialize deeply in an industry or specialized deeply in on service offering."
7. Clients are like dating
When you first start dating someone, you’re both on your best behavior. As time progresses, you start to show more and more of your true selves.
The same is true with any agency / client relationship.
Sometimes, things go extremely well, and the relationship is enjoyable for both parties.
Other times, things go horribly and the relationship is emotionally draining or even toxic. Fire these clients ASAP. Just know, this is something you will inevitably face being an agency owner.
8. You can’t just learn your trade
Let’s say you’re great at something in marketing like SEO, email marketing, etc.
You decide to start your agency because you love [insert what you’re good at] and want to help other companies with your skillset.
As you’re getting your agency off the ground, you realize you need a repeatable method for filling your pipeline of potential clients. You build a website and start marketing yourself and your brand. Leads start coming through the door, but to close them, you realize you need to learn to sell. You read a bunch of books on sales and then get a slide deck designed to pitch your services. You start signing clients, woohoo!
Now that you have some clients you finally get to do what you set out to do; use your skillset to help your clients.
But wait, they don’t quite trust you enough to give you full reigns over the aspect of their business for which they hired you. You start reading up on building trust and relationship management skills.
Now that you’re great at managing your client relationships, you need to scale your agency because you realize YOU are the bottleneck. You have to hire a good PM and a [insert marketing discipline] Specialist. Now you buy a bunch of books on hiring great people.
You hire a couple of all-stars, but now you have to train them. More books.
You get the idea.
When you start an agency, you’re making a decision to learn all the skills it takes to build, scale, and run an agency. There are many ways to peel an orange, but just know, if you got into the agency game because you love SEO or CRO, you’ll be responsible for doing much more than just those areas of marketing if you want your business to be successful.
"One thing that changed the game for me was creating standard operating procedures (SOP’s) for all the technical work I did. Breaking down each deliverable into several sub-tasks meant I could hire new talent to complete each task and help me get the work done as the agency grew. SOP’s allow you to “let go” of the technical work and have faith in your team to execute at a high standard so you can focus on other key areas like sales which are critical for agency success."
9. Recurring revenue is addicting
Nassim Taleb has a famous quote that goes like this:
The three most harmful addictions are heroin, carbohydrates, and a monthly salary
If I were to change this quote to align with the life of an agency owner, here’s what I’d change it to:
The three most harmful addictions are heroin, carbohydrates, and recurring revenue
My biggest issue with running an agency was not being able to work on hard problems. Assisted Reach wasn’t providing the novelty and problem-solving challenges to keep me happy. But I continued to do what I was doing. Why?
Recurring revenue and high margins.
I figured out a way to automate much of my agency’s client work, so our margins were much higher than the typical agency. I was doing less of the actual work and much more of the things I didn’t enjoy as much (i.e., relationship management, sales, etc.). But those checks were addicting..
I’ve now vowed to be honest with myself about what I like and dislike and to not let money ever sway me into doing something that drains me.
You have to decide how you want to spend your time. Then build your business around that. If you don’t want to talk to people, then outsource that work so you can focus on spreadsheets or whatever brings you joy. If you’re not proactive about shaping your day-to-day role, then you’ll be stuck doing whatever’s left over.
Who should start a digital agency?
If you read all this and still want to start an agency, it’s probably a good idea that you do.
No matter how things turn out for you and your agency, you’ll learn a ton. Learning creates leverage for whatever it is you choose to do afterward.
What my agency enabled
An agency can be an amazing enablement business for people earlier in their careers. It’s low risk (you usually get paid BEFORE you do any work), requires you to build a valuable and diverse skill set, and can put a little money in your pocket.
An agency can be a means to an end.
The cash flow from Assisted Reach allowed me to build and sell LinkIntelligence.io in less than 12 months. I would have never been able to do this without the recurring cash Assisted Reach was spitting out.
If your goal is something else, but that “something else” requires capital, an agency can be the perfect means to an end.
What’s next for me?
After building the Assisted Reach team, I learned about the importance of leadership in company building.
Strong leaders can create powerful leverage and weak leaders can kill companies.
I also learned that leadership is a learned skill and something I want to improve at.
I’ve decided to take a Head of Growth & Demand role at Scribe Media. I know the executive team and they're some of the most impressive people and leaders I know.
I'm excited to help grow the business and learn the leadership skillset in the process.
Until next time.