The growth of the internet means digital advertising is now increasingly used by businesses of all sizes.
But it is particularly challenging building an agency that is focused on SME clients.
Even the smallest company now has at least an elementary appreciation of the benefits of digital marketing techniques such as pay per click (PPC).
Small and medium-sized enterprises (SME) advertisers are increasingly looking at paid search programmes to run alongside (or even replace) other traditional marketing such as local press advertising.
And social media is increasingly on the radar as a means to engage customers and prospects. But they often lack the time and in-house expertise and processes to run campaigns and have a need for an agency, even though they have limited budgets.
This demand has helped the UK-wide growth of digital marketing agencies targeting the SME sector.
But many agencies find it hard to scale and grow in this market, due to five key challenges:
1. Finding and keeping the right people
Staff with PPC skills are in great demand, leading to greater competition amongst agencies for their services.
Salaries are consequently rising, meaning you have to balance billings and staff costs if you are to ensure that you are profitable and also have head room to grow your agency.
At the same time overloading staff with too many small clients risks burnout or employee churn. Agencies also need to retain the best people by providing interesting, varied work and opportunities to grow their skills and knowledge.
Smaller local clients might be good places to learn the basics, but many employees eventually want to move on and work on bigger brands.
2. Overcoming time-consuming manual processes
Onboarding a client, setting up a campaign and reporting on results can be a very manual process, particularly for smaller agencies.
You have to work with multiple platforms (such as Google and Facebook), replicate and manually change individual ad copy, pause ad groups and campaigns, spot opportunities and monitor for poor performing campaigns.
Now multiply this by the hundreds of clients that an SME focused agency might have and these manual processes take up more and more staff time, leaving little time for developing the business.
Given that the wage bill is one of the biggest costs for all agencies finding ways of reducing the time needed to service clients, but without risking revenues, has to be a priority.
3. Not enough time for providing strategic counsel
If the majority of staff time is spent on manual processes, agencies will not be able to find the time to develop those smaller business accounts.
This impacts the ability to grow client revenues as it limits the opportunities to build a stronger relationship with clients, better understand their business and provide strategic counsel that can allow you to recommend and cross-sell other services.
In turn, this holds back overall business growth – if an agency can increase billings from its top 20 clients by 10%, it can grow organically and smoothly, rather than solely by bringing in new business, which is much more unpredictable.
4. Curbing client churn
Many SME advertisers don’t have a deep knowledge of digital marketing, what it can realistically deliver – and more importantly its limits.
Consequently churn rates can be high as they can quickly feel they are not getting the attention they deserve or results they require and move elsewhere.
This can keep agencies in a seemingly never-ending drive to bring in new business just to remain the same size. It is like having to constantly refill a bucket with a hole in the bottom.
Again, time spent on finding and onboarding new customers is time that can’t be spent with existing clients or developing the business, holding back company development.
5. Staying on top of innovation
Change is central to digital advertising. Platforms, from Google to Bing and Facebook to Twitter, are constantly evolving, with new ad products and features launched on a quarterly basis. Understanding these new opportunities and incorporating them into your campaigns is crucial to ensuring better results for customers and increasing their spend with your agency.
However keeping up to date can be difficult, both in terms of having the time to research new ad features and also coping with the additional workload they can bring if dealt with manually.
All of these challenges boil down to the fact that digital agencies are people-based businesses, selling a finite resource – their skilled time.
Balancing how you apportion your time is critical for all agencies, but particularly so for growing businesses where there are fewer hours available, and time is in demand from more and more smaller clients.
To succeed, SME agencies need to find ways of automating processes through bespoke technology platforms that can manage high volumes of digital advertising campaigns.
By removing manual work where possible and freeing up time to grow your existing clients as well as for seeking new business, you will be able to break through and scale your operations for the long term.