Agency-Based Business Model

The intent of any business is cost minimization and efficiency. Each firm seeks to produce its products and service at the lowest cost to maximize its profits. However, this is a challenge for many. To realize your business objectives, you need to invest in acquiring the right materials and workforce.

Also, you need to enhance your marketing and branding aspects. This aspect calls for having considerable amounts to hire and maintain the best talents in your business. For small businesses, realizing this goal is an uphill task. But this is no longer the case. Today, you can outsource some services to experts through agencies.

Some businesses specializing in various aspects are using the agency-based model on their operations. So, what does this model entail? Read on to learn more.

What is the Agency-Based Business Model?

The agency-based business model involves creating a pool of experts who offer solutions to client issues. An agency partners with companies seeking to outsource their non-core business activities. Some of such tasks include branding, marketing, advertising, and PR. Agencies use their expertise to help their client save on their labor costs.

The purpose of the agency-based model is to generate qualified leads for the clients. For this reason, businesses using this model must invest in enhancing lead generation and securing more projects from current and new clients.  

How Does Agency-Based Business Model Work?

As mentioned, agencies act as partner companies or part of the clients’ businesses. The model involves two parties. The first party is the clients or business owners. This party has a bulk of non-core tasks but cannot hire experts in the field. Or else, they want to minimize their labor costs.

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As you know, staffs require more than the salaries to maintain them. Firms must cater for their insurance, facilitation fees, compensations, overheads and provide a conducive working environment. This aspect increases the firms’ operational costs. To save on these costs, the firm contracts an agency to carry on the non-core tasks. They pay the agreed fees and expect results within a given period.

Agencies are the next party in this model. An agency takes up the assigned projects on behave of the clients. For instance, they will run branding and marketing campaigns for a given company. The agency uses its own resources to carry on these tasks and charge a fee to the assigning clients.

Though they act as partners, no limitation on the number of companies an agency can serve at a given time.  Also, an agency can carry projects in various fields depending on the number of experts it has. As they work as part of the clients’ company, they must enhance the privacy of any information available.

Examples of Agency-Based Business Model

Agency-based business models have been in use for an extended period. But with the rise of the internet and digitization, many agencies have come up. Most of them prioritize helping organizations enhance their digital marketing by offering services such as SEO, social media marketing and advertising, blogging, guest posting, and web hosting. Despite this, some agencies have been in existence for decades.

Ogilvy & Mathers is one of them. This agency offers marketing, advertising, and PR services to different companies. The company features qualified experts in branding and marketing. So, companies seeking to establish their brands hire them to perform the task on their behalf.

Ogilvy

Dentsu Aegis Network is the next example of a company applying the agency-based model in its operation. This company focuses on digital marketing and multinational media communications. The agency helps companies develop creative communication strategies to gain an international presence and recognition.   

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Pros and Cons of the Agency-Based Business Model

No doubt, this model is vital as it helps companies save costs for hiring experts to perform their non-core. Companies can access expert support that enhances their brands. However, it is not perfect. The model comes with a share of benefits and shortfalls as shown below.

Pros

Opportunity to use your expertise

The agency-based model focus on helping you utilize your expertise in supporting your client’s business. This aspect enhances your understanding and benefiting from different clients. Also, it allows you to do what you love and want. The agency brings other talents under one roof. So, your focus is on performing tasks related to your skills and passion. This aspect enhances personal growth and expertise.  

High chances of growth

Unlike in-house, agencies have no limitation on the clients they can handle. You can partner with numerous businesses as long as your agency can offer the services they need. Working with multiple clients enhances your growth opportunities. Also, you have a guarantee of regular revenue generation.

Apart from this, the agency brings professionals from different fields. This element opens you up to learning opportunities. You can learn new skills that will help you enhance your client base in the future.

Great creativity

Since you work with different clients, you understand how they operate. This enhances your creativity as you must come up with unique marketing and communication strategies for each client. Again, each new encounter with a client and experts offer a different experience. So, the agency model is an excellent way to boosting your creativity.

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Cons

Need huge investment

To start an agency business, you need to be an expert and hire professionals in the same field. Hiring experts require you to afford to pay them their expected compensations. Also, you must have resources for running the assigned projects.

For instance, if you want to work with big brands, you must have a good reputation and performance record. Again, you need to prove that you can complete the task. All these will require you to have adequate financial and physical investments.

Conclusion

In a word, an agency-based business model is a perfect option for people willing to monetize their expertise. Whether you are a marketing guru or an experienced SEO expert, you can launch your agency to offer your service to different clients.

The approach enhances your skills and expert growth through working with different professionals. However, you need to have the right resources to apply this model in your venture.

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