The Different Agency Models You Can Choose From | Ep.
Welcome to another episode of Marketing School. I'm Eric Su and I'm meal and today we are going to talk about the different agency models that you can choose from. Neil what is model number one the first model that you can choose from low end and you say hey we're gonNA take on. Small businesses charged very little money. And we're GONNA do. Seo In marketing for local mom and POPs or yellow page type of companies and we may charter McHugh hundred two thousand dollars a month. That business model you can get customers quicker easier faster but your turn is also higher harder to upscale customers as well yup another model that you can choose is far more. Riskier we call it an affiliate model or you can call a pay for performance model depending on what type of clients operate with but this type of model is basically what say. I go to one of Neal's companies. Let's say I go to Uber. Suggest and I say Neil. I'm going to help you drive leads. Neil might say okay. I'll pay you fifty dollars per lead right but the difference is I have to front the cash myself so this agency model. If I'm the agency I have to put up the cash. I I have to perform for Neil and then after Nielsen's good performance. He's going to pay me now. The good thing about this is that this type of model can scale exponentially. The negative is really being held accountable to results. And you can literally lose your shirt doing this. And it's very risky too. Because you have to have the float to keep the business going and then you know the other thing is if the client decides. Hey I don't WanNa work with you anymore. You obviously have to have good terms contracts. But because you're reliant on them giving you the cash you better have some type of backup Sarah because otherwise you can lose. Big sources of cash flows another model. Is You just do project basis? It's hard to get consistent income. It is easier to close deals. You JUST DO PROJECT. Basis hourly basis a lot of agencies run with this model. I hate it. Eric goes against this one as well. We both liked the consistent income but that is another model. It makes it easier one off stuff like site. Audits Web Design Shops. Do a lot of one off stuff like designing. Abc doing the. Ui Doubt Model works quite well from you. Just gotTa Keep Doing Marketing. Keep getting more users as well customers. Yeah I do want to go back to what Neil talking about earlier like when you charged a smaller budget mom-and-pop shops this is a tier above that word instead of charging you know five hundred thousand. Us dollars per month you might be charged a little more. Let's fifteen hundred twenty five hundred dollars a month. There's actually a lot of agencies that do that and they grow the revenues to a pretty good size now. You can definitely do that but the problem there is. You're still going to get a big volume of clients were. They aren't necessarily the ones that are the best fit clients for you meaning that they are more high maintenance they are going to be complaining more. Almost call it the well. It sounds bad but it's like the sweatshop model it's like an agency mill where they will sign a bunch of clients and the churn is very high clients will leave but it's a revolving door but because they're signing so many of them the business continues to grow the problem with that. If you continue to sign more clients you have to add more people there right so that's not necessarily a model that I liked the most and then I'll pass it off to to kneel now to talk about Amano where you can charge a lot more and then enter these enterprise type of deals Neil in the other model is going after big enterprise companies. Typically you get from our appease our Pisa requests for proposals. You get them from big conferences or the foresters of the role which is a research company the process to get those is very long time consuming. It's expensive but once you get a client. The chances are the stick with you for four plus years. The margins aren't bad. You can typically operate around fifteen twenty percent ten percent on the low end twenty percent on the high end. If you're terrible you operate around five percent of the people who I know who have the Type of business. The operating usually somewhere around like seven eight percent. All the way up to fifteen percent is the standard again. You can try to aim for twenty percent on the high end