Why use the Business Model Canvas to understand SEO agencies?
As the pandemic continues to change the market and business as we know it, we want to understand our industry segment better.
In the last month, we’ve been researching approximately 36.000 digital marketing agencies worldwide, from both our own users and trials, and international aggregators like UpCity or Clutch, with a strategic angle in mind: deconstructing an agency’s business model with Alexander Osterwalder’s Business Model Canvas or BMC, to capture insights, current pain points, opportunities.
In the creator’s words, BMC is a strategic tool for painting out an existing business model and making it concrete for all the business stakeholders. It includes 9 building blocks and accompanying questions for you to capture an in-depth description of your business value and functions.
The right part is all about capturing your business value with an in-depth look at customer segments and relationships, value proposition, channels and revenue streams, while the left part is all about the means to deliver that value with key activities and partners, cost structures, and resources.
So, in the end it’s about creating a visual tool to communicate a concentrated story of your business model — the idea which started its creation —, while evaluating its current status or thinking about ways to challenge it, ways to pivot it, ways to optimize it, ways to develop new branches etc.
In today’s uncertain context, it’s even more useful as part of a strategic toolkit for an SEO agency owner who wants to grow the business in novel ways.
If you’re ready to create your agency’s BMC, look no further and use this interactive one below. If you need a reminder, you can scroll down to read more about the 9 building blocks & examples from other agencies:
How to use the Business Model Canvas
We’ve built this article as an interactive piece for SEO agencies leaders to create their own BMC as they explore each of the 9 building blocks.
Let’s dive straight into every section and its strategic guiding questions!
In this segment, think about the people and companies you’re creating value for. The guiding questions are as follows: Who are the customers? What do they think? See? Feel? Do?
As an SEO agency you’re probably segmenting your clients, based on geographies, size, or specialization. This offers leverage in the market, as you can showcase a deep understanding of an industry or a certain region or town.
By geography, you can have:
- Local and/or regional businesses
- International brands
- SMBs from your local or regional segmentation
- Consumer brands
- Address a single vertical with industry clients that you know really well. Regionally or internationally.
- Multiple verticals.
- B2B clients only.
- Online-focused only: clients that derive their income from online business.
- White label services only, targeted at digital marketing agencies or brands.
Focusing on a single vertical signifies deep expertise in that area: SEO for lawyers for instance or Dealer Spike targeting dealerships in 8 branches, while highlighting more verticals that you excel at means you’re positioning the agency in terms of local/regional market know-how and accessibility, as is the case for Blue Corona.
Catering to both SMBs and consumer brands with a varied selection of services are agencies like Ignite Visibility that position themselves as international experts with multiple-industry know-how.
There’s also the case for B2B- or online-only focus: OuterBox is a relevant example to study here, as is Directive Consulting. They highlight their eCommerce or software expertise in their value proposition, so you know their interest from the get go.
Based on your desired customer segments, you can think about why customers buy or use your services: What’s compelling about the proposition? Which Problems or Needs of the Customer segments you can solve?
If you’re vertically-focused, then the added value will be your deep knowledge of the targeted market and your previous performance in the industry.
If you’re targeting enterprises or consumer brands, then your multiple expertise can be a significant value proposition: proprietary tools or specialized technologies you use for digital growth, international SEO know-how, your digital mix services (SEO, content marketing, PR, analytics) etc.
Best Response Media and Smarketa highlight their knowledge of specific software like Magento or Shopify, while Upswing’s COVID-19 Data Trends or TitanBOT from Titan Growth enter the owned software category to obtain a unique advantage in their preferred markets. On the other hand, Found, a UK-based agency, which specializes in SEO, PPC, social, content, and data analytics offers full digital growth capabilities to their clients.
If you’re targeting SMBs, you can think about the pricing angle as a relevant value proposition: be it bundles of SEO services sold at a monthly fixed price just like a regular subscription, so the client feels safe and in control, be it project-based costs that solve specific SEO issues etc. WebFX, Pixelcutlabs, Guerrilla Agency etc., are just a few of the agencies that decided to go this path.
There’s also the particular case of leading with your credo or methodology. This is a powerful differentiator as it explains the way you think about your role and what type of client relationship you want to grow. Re:signal does this with their dedicated methodology page of Think - Plan - Do - Measure.
This segment highlights client touchpoints and how the value proposition is promoted, sold, and delivered to your customer segments. Where do your consumer segments consume your type of information most? How do they buy your services? Why? Is it working?
List all your channels, both conventional for the SEO industry and specific to you. Here are a few to get you started:
- Events and business networking: industry conferences, meetups, and gatherings. Events created by your agency. Events you co-organize with a specific customer segment etc.
- SEO: what better way to present your SEO performance than do campaigns for yourself as well? For instance, a local agency targeting keywords like “SEO New York” or “SEO Toronto” presenting their results as a strong case study.
- Referrals and recommendations: word-of-mouth is still one of the most efficient and cited channels for sales.
- Educational marketing content: general marketing advice and insights on the agency’s blog or on social media (LinkedIn, Youtube etc.), hosting webinars and Q&As, podcasts with experts etc. — the SEO team can highlight its know-how depending on the customer segments you’re targeting and their preferred content.
- Media coverage: not as widely used, but effective — some agencies do PR for themselves by leveraging data in reports, studies, press releases etc. that get them national newspaper coverage, industry publications references, influencer guest posts and so on.
Depending on targeted customer segments, the channels will vary and will be prioritised in accordance:
Digital Nexa uses educational content in the form of their webinar series: the Digital Growth Show, to present general marketing know-how or to answer client questions. Builtvisible creates resources and sustains an active blog to help their clients and potential clients understand what services they need.
These are just a few examples, as every agency has multiple channels to sell, but also to design customer relationships, beyond the account management / customer success teams, as seen in this section.
In combination with the channels above that focus on acquisition and brand development, this building block challenges us to evaluate client management and retention: how the client relationship looks and what’s particular for an agency. The questions guiding this section: How do you interact with the customer through their ‘journey’? Do they have a dedicated account? In-person or call? Is all the interaction online?
For an SEO agency, the account manager is key in being a dedicated point of contact, for clients to stay in control of their campaigns, budgets, results etc. But, there are other things to consider: the sales journey, the monthly reports and meetings, the specific pitches etc. What is their ideal version?
This point is significant if you can connect Customer segments to Value Propositions to Revenue streams. Think about the pricing mechanisms in place and the following questions: How does the business earn revenue from the value propositions? Do we have cross-selling opportunities?
Again, considering the conventions of the industry, most agencies function based on monthly recurring revenue or MRR. That means creating income from monthly fees on SEO services, content management, or even SEO packages.
Apart from these, depending on the variety of provided services, we can include one-time technical audits, one-time consultancy projects, training sessions etc.
Then, in terms of SEO packages optimized for price and SMBs, you have agencies like Digital Geckos, while Salted Stone and SEOinc practice affiliate fees for software like Hubspot or Shopify. Thinking in terms of consultancy, a great example is Orainti, while offering training is another opportunity as Uniseo discovered.
It’s time to assess your business assets: what Key Resources does an agency require to fulfil its value proposition? What about resources needed in connection with channels or revenue streams?
The first key asset of a business is, of course, human capital. In SEO agency terms: the in-house team, but also the outsourced workforce (content & design freelancers, developers etc.).
Then, include the digital infrastructure you need to properly execute key activities. Just as familiar as the first one, this resource is vital, including both tangible and intangible assets. Yet, if we go further down the line, something agencies can have in particular, which creates a unique value proposition and market advantage, is the proprietary methodology involved in these key activities: in-house developed software, free tools for brands to use, data analysis frameworks etc. Like Titan Growth’s Titan Bot or Upswing’s Trends & Visibility Report free tools.
How do you fare on this part?
We’ve reached the key activities mentioned above, meaning what you need to do to satisfy your customer segments’ needs: What Key Activities do our Value Propositions require? What uniquely strategic things does the business do to deliver its proposition?
This building block implies what SEO agencies choose to offer as their services, helping clients achieve their marketing targets, thus getting more customers and revenue.
Some agencies choose to focus on SEO-related services, while others take the full-service route, in order to capitalize on the various needs a digital marketing project has:
- Outreach and link-building
- Website design and implementation
- Local business presence management
- Content writing
- Paid search campaigns
- PR with a link-building focus
- Conversion rate optimization or CRO
Higher Visibility developed a full range of search services like local SEO, link building, eCommerce SEO, paid search, through franchise SEO, social media, CRO, and even penalty recovery, while targeting both SMBs and Fortune500 clients.
Koozai offers integrated digital marketing services, including audit, and training, while highlighting SEO, content marketing, digital PR, paid search and social. They also pinpoint at their AI-led technology as a further added value to their services.
Straight North presents itself as an internet marketing agency, having a full-fledged suite of services in SEO (local, national, B2B, enterprise etc.), PPC, display advertising, email marketing, and web design. Being a full-service digital agency permits them to target a plethora of markets, including agriculture, manufacturing, marine, pharmaceutical etc.
And the list goes further and further.
What is your case?
Because you need to focus on the quality of your services, you also need to take into account strategic partnerships that support you in achieving the required goals: Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform for us?
Depending on the range of your key activities and customer segments, you can access the following types of strategic collaborations to enhance your projects:
- Media companies for link-building
- Rank Tracking platforms
- CRM platforms
- Web Hosting platforms
- Complementary agencies
What is on your list?
The final building block to analyze, the cost structure is closely influenced by key activities, resources, and channels: What are the most important costs inherent in our business model?
Which Key Resources are most expensive? Which Key Activities are most expensive?
You can start with the following points to highlight your agency’s costs:
- Office spaces: although this is a cost reduced by the current prevalence of remote work, for agencies that target brands or are looking for proximity, it’s still a relevant cost.
- Payroll: your in-house and extended teams, including account management, technical SEOs, content creators, outreach, just to name some of the main departments. This can be expanded to developers, a business development team, and so on, depending on the size and scope of the agency.
- Software: software fees for research, ranking, reporting etc., software development costs, specific tools subscriptions etc. The tools of the trade are crucial for quality work, so they represent a major cost and an opportunity for cost-efficiency.
- Outsourcing: freelancers for content development, graphic design or other complementary services are another relevant cost line.
Depending on your agency profile, this list can include other major costs for PR/marketing budgets, research & development etc.