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Niches For Small Agency
Posted By: rbooth3399* on 12/30/2006 6:41 AM (CST) 500 Points
Niche marketing works so well for so many different businesses, but does it work in the ad agency environment? How do you get around the "conflict of interest" issue when the agency is small (2 people.)

I'm a marketing goddess based in NW Ohio. The agency was formed in 1998, and we've specialized in dealing with strategy and creative deployment. Our specialty is direct mail. We have turned results for many clients, but I feel as if I'm "so close" to my own business that I can't see the forest through the trees.

Are there niches out there for a small agency like mine - if so, any suggestions as to what they would be?

Thanks in advance for your help.

Rebecca Booth

Posted by: mop Accepted Answer
12/30/2006 7:37 AM (CST)
Hi Rebecca-
I appreciate your question. I have given a great deal of thought to it throughout the years. My husband and I have had an agency for 30 years. We have always been small (anywhere from two to eight people) so I understand your concerns.

Regarding finding your niche:
1) Anyone can find a niche. The real success though comes in finding the niche that "speaks" to you... the industry or product that really drives your passion. When you do, the first thing that happens is that your creative starts to reflect that passion. It gets better and better. So my advice here is to think about what areas really excite you. It can take some time to clarify and develop, but for me it has been very successful

2) I believe that small agencies have to be very careful of creating a conflict of interest. Unlike large agencies who have entire marketing & creative departments built around each client, small agencies share their creative with every client. Because of that, in my agency, I have spread out my client base throughout my niche without creating a conflict of interest. For example, my niche is extremely high-end home and garden. (one premier cabinetry & library manufacturer, one custom conservatory manufacturer, one custom home builder, one estate landscaper etcetera). The reason I only take one-of-a-kind is because if I were to take 2 cabinet manufacturers, who gets the best idea? There is some play here... (for example, if a category had two very distinctly different markets), but each opportunity must be measured carefully.

I know there are some agencies who wouldn't give the conflict thing a second thought. My perspective is just different. There is a payback though. The vast majority of clients, once on board, don't jump ship. I believe that is because they mirror back the loyalty we built our business upon.

I wish you a booming, exciting 2007-
Mop
 
Posted by: telemoxie Accepted Answer
12/30/2006 10:23 AM (CST)
I've found that hanging out here at MarketingProfs really helps with those "can't see the forest thru the trees" issues... many folks are happy to give a fresh perspective, and I'll do what I can.

I'm a small outbound marketing company, and have to deal with the "conflict of interests" issues all the time. I've addressed this by having some outbound projects focused on national "vertical" markets (e.g. aerospace companies, telephony, legal, etc) - with ideally just one client company focused on each vertical - as well as regional folks in "horizontal" markets such as marketing communications or on-site computer services.

In some cases, I may have multiple companies in one vertical, e.g. I might target HR folks at legal firms for one company, and IT folks at legal firms for another company. This is similar to Mop's approach, where you get the benefit of industry expertise without the conflicts.

Regarding selecting a niche - if I were in your shoes, my first step would be to think back about all the projects I've done, to see which had best returns for and feedback from clients. I'd make a list of these projects, and see if I could segment them by industry. Then, I'd check each industry category to see: 1) did I have an incumbent client, 2) can the industry be honestly broken down into multiple niches? 3) do I have a competitive advantage in terms of industry expertise, etc? 4) Do I have follow-up materials (e.g. samples, letters of recommendation, etc) which can help me build credibility in this market? 5) Is this industry a good strategic move for me now?

At this point, you will probably find that you have several "openings" where you could apply your expertise without compromising your integrity or creating a conflict of interest.

Then, go for it. Now that you have a few industries to focus onn industry focus, do what you do best, and get the word out. Good luck... if I can help, let me know.
 
Posted by: mgoodman Accepted Answer
12/30/2006 6:19 PM (CST)
From where I sit, your "niche" is direct mail. The broader category is strategy and creative development. You don't do much broadcast or traditional print, I gather, or much Internet. That's fine. Your niche is direct mail.

Why do you feel it necessary to niche yourself any more than that? The principles of good direct mail creative apply to all industries, don't they? And it doesn't matter whether the target audience is in Omaha, Cleveland, or Honolulu -- as long as they speak the same language you use in your copy and have the same cultural biases.

The world is so large that the conflict-of-interests issue shouldn't get in the way. I've had a small marketing consulting practice for quite a while, and I'm always amazed at how many different industries, product categories, services, not-for-profits, and one-of-a-kind businesses there are who all need help with marketing strategy, positioning, and branding.

The real challenge is finding a new way to segment your market. If you've been segmenting it by industry, try segmenting it geographically. (If it worked well in Ohio, Michigan and Indiana, it will probably work well in Oklahoma, Texas, Louisiana and Arkansas.) If you've been segmenting by company size, try segmenting by distribution channel. Etc. Etc.

Hope this helps.
 
Posted by: W.M.M.A. Accepted Answer
12/30/2006 6:23 PM (CST)
Look closely at the business verticals in your region, and weigh the opportunities in each. In my area, we are giant in Oil and Gas Production, Geological, Transportation and Construction; Medical, Financial.

Those are the verticals I went with over a decade ago, and it has worked quite well.

Perhaps within the large verticals, there are support verticals in which you can specialize.

Randall
WMMA
 
Posted by: riddings Accepted Answer
12/31/2006 1:28 PM (CST)
I agree with Mgoodman, it does appear your niche is direct mail... You'll find every advertising agency has a niche, whether they want to admit it or not... Sometimes that niche is dictated to them by their margins (creative development)... sometimes by their organizational set up (media buying)...

I have found that "conflicts of interest" are avoided when clients do not view each other as competitors. For example, our agency maintains two residential developments... They're not next door to each other, the two developments have defined their own target markets, it's our job to be sure we communicate to their chosen markets effectively... The creative is different because their target markets are different. Wheras, we only have ONE regional bank as a client and cannot pursue another in the area... Our client views most other banks as competiors... We also do not pursue banks in areas where they have expressed interest in expanding to... However, we do have a mortgage brokerage firm... why? because our banking client is focused on a specific type of banking customer... which does not conflict with writing mortgages... Again, our creative is different because the target audience is different.

As an Advertising Agency it isn't our place to tell our clients how to run their business... We listen to what they want, how they've gotten to where they are now, and help them see the waters ahead and how to navigate them... Focus on your clients USP and not your own... each client should have one and that's how you get around conflicts of interest...

If you still think you may have a conflict of interest ask the client... Often competiting clients know each other and you may be pleasantly surprised to realize they really aren't competitors... For example, we once had two cabinet manufactures... One, that focused on expensive and unique cabinets and the other more standard, mass-produced cabinets... they both knew each other and understood they both served two different markets... so for us, there was no conflict of interest...

~Richard Iddings
 
Posted by: rbooth3399* Author Response
1/1/2007 9:29 AM (CST)
I greatly appreciate everyone's input. You've each raised some interesting things for me to think about. I'm going to accept all of the responses, but would like to keep the question opened for another week in hopes to hear more from people who were vacationing this week.

(Funny how us small business owners wind up working so much! ;) )

Happy New Year to All! and Thanks for your great input.
Rebecca
 
Posted by: shghosh Accepted Answer
1/2/2007 6:10 AM (CST)
Well,DM is niche enough. Conflict of interest would mean in that context for eg. if you are working with 2 financial services providers and mktg similar credit card offerings to both. The fact that you know both of their CRM strategies would be unethical and would make clients wary.
Way around it would be to sign up clients for projects. Finish the project and move on. Shd they need another project to be done- pitch and quote for the same. That way you can work with multiple clients on a per job basis- develop a niche within a niche of for eg. telecom expertise within DM.
 
Posted by: Focus Fields Accepted Answer
1/2/2007 2:39 PM (CST)
First, I think mop's response is right on. I would say the same thing as an owner of a small marketing consulting firm. We specialize in small businesses (less than $50MM in revenue) only and only deal with marketing strategy (brand positioning, customer segmentation, product messaging, brand development, etc.) We outsource other projects like logo development. In addition, we'll work on corporate identity, for example, and only do the part that includes the strategy behind what type of identity the company should have to appeal to customers and differentiate the brand....the creative work all goes external. So, we stay focused on small businesses, and their unique challenges, and only work on our specialty, marketing strategy. We lose a lot of business from really big companies and that's all right because we (a) don't like working with them (b) small business issues are more interesting and (c) we can try more innovative ideas that would never work in a big company. We get chosen by small businesses because they know all of the above...that's where we make our living.

I think you can focus more than DM, which is of course a niche in it's own right. This is something we do all all the time for companies and is our specialty: figuring out the market niche for a product or service. We even came up with a process, that you can try on your own, to guide companies through this decision making. If you Google "Perfect Positioning Process" the first 2 links will point to information that will tell you more about our process and link you back to our site for more details.

If you want to talk directly about this, use our contact information.

Good luck fellow niche marketer,
JMR for Focus Fields.
 
Posted by: Frank Hurtte Accepted Answer
1/2/2007 11:13 PM (CST)
This is exactly the kind of discussion that keeps me coming back to marketingprofs.
 
Posted by: rbooth3399* Author Response
1/3/2007 7:24 AM (CST)
WOW! My socks are knocked off. I really like what I've heard and thank you all for sharing. I appreciate your time and expertise.

Like Frank above, this is the reason why I keep coming back to Marketing Profs!

Have a rockin' new year!
Rebecca
 


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