Digital marketing agencies struggle with differentiation. It's why shady agencies still exist—and, in some cases, thrive—and why we see so many clients arrive with sloppy PPC accounts or technical SEO optimizations implemented incorrectly (or not at all).
This isn't a problem Google's algorithm is going to solve. It's one your agency has to solve. Digital marketing will never have the free trials that help sell SaaS products or test drives that compare the handling of different cars.
So here's what we're doing.
What is differentiation?
Differentiation is not simply the uniqueness of your agency. It's the uniqueness that clients perceive. A smarter team or better strategies aren't differentiators unless prospective clients believe your team is smarter or strategies are better.
Markets with no differentiation are commodity markets. (Ask yourself: What's your favorite brand of sand, corn, wheat, or aluminum?) Commodity markets compete on price—and nothing else. As Peter Drucker said, "In a commodity market, you can only be as good as your dumbest competitor."
Market leaders are left with two options: Be best on price, or best on differentiation. Competing on price obscures differences and serves as an "anti-branding" agent—every time you compete on price, you move the industry toward commoditization.
Market leaders are left with two options: Be best on price, or best on differentiation.
We've been very successful differentiating for clients, even before the proof of long-term results rolls in. I've been in kickoff meetings where, after just a couple hours, a client remarked that they knew they had chosen the right vendor. Our PPC team has conducted initial audits that illuminated major shortcomings of previous vendors in a matter of days.
But the differentiation we've owned in execution has been far tougher to own in sales. In execution, process, knowledge, and results are all highly differentiated; in sales, they're commodities. Why? Because talk is cheap.
Everyone claims great results, cutting-edge techniques, personalized strategies. If you don't believe me, pull web copy from your site and three competitors and quiz your team on which copy came from which site.
In execution, process, knowledge, and results are all highly differentiated; in sales, they're commodities.
This gets more complicated because clients don't want informed decisions, they want easy ones. (We all do: How many times have Amazon reviews reduced a two-hour purchasing decision into a two-minute one?) Easy decisions exploit proxies, and in digital marketing those often are flashy web design, artificially high pricing, or slick proposal templates.
At the extreme, these are efforts to "fashionize" digital marketing—to make the primary purchase influencer an element outside the practical benefit of the service. In our industry, this has limits because no one cares who handles their digital marketing. We're not a pony or crocodile on a shirt. We're not a name on a watch or handbag. We are a behind-the-scenes industry.
That begs the question: Is digital marketing a commodity market?
Not according to Theodore Levitt: "The first lesson in marketing commodities is this: There are no commodities." Commoditization, then, is a failure to communicate. Success is moving differentiation from results to sales.
Success is moving differentiation from results to sales.
Here are the three ways to do it:
Branch 1: Segment
A favorite tactic in commodity markets, segmentation does not guarantee differentiation. You may shorten the list of competitors, but you may also end up as a commodity in a niche market, positioned to target only a subset of potential clients.
The most common form of segmentation is by industry. You can specialize in healthcare PPC or ecommerce SEO. You can be a content marketing house with expertise in B2B lead generation. But there are other options, too.
One alternative is to segment by risk. Find out the primary anxieties of your clients and develop service offerings that lower the risk they take by signing with your agency. In digital marketing, we see this with month-to-month contracts, money-back guarantees, or results-based compensation. This doesn't work, however, for agencies building long-term strategies that require major upfront investments.
A more effective way to segment is by client type. This means finding a partner who values more than just results— who also values the process for achieving those results (including the ability to communicate them).
If your process and culture align with a client's way of doing business, it insulates you from competitors focused solely on results.
Who are your strongest partners, and what makes them such a great fit for your agency? Is it size of the organization? Company culture? Personality types? If your process and culture align with a client's way of doing business, it insulates you from competitors focused solely on results.
Branch 2: Add
For many of us non-MBAers, the most logical way to differentiate is through value-added services. These span the gap from proprietary reporting tools to free upfront work or, down the road, folding a few uncharged hours of design or outreach into an existing contract.
Differentiation comes by bundling value-adds together with core services to form a "system." Retaining that differentiation depends on your ability to keep those components bundled together.
The challenge? Every value-add has a cost and reduces profitability.
Every value-add has a cost and reduces profitability.
There are other limitations, too:
- A client won't care.
- A competitor will do it better.
- A competitor will do it more cheaply.
- A client will prefer a lower price over the value-add.
Value-adds must be chosen carefully to maximize value and minimize expenditure. Even then, any differentiation strategy that depends exclusively on value-adds is precarious.
Branch 3: Push
This may be the most sustainable of all differentiating mechanisms:
Transition value-adds into content marketing materials to create prospect-facing results. In other words, show the human capability instead of giving it away.
Show the human capability instead of giving it away.
Everyone has case studies. Everyone has triple-digit growth. Achieving these results at scale helps, but case studies should be about more than just results. After all, how many digital marketing agencies pitch prospective clients exclusively on results?
We ask our analysts, "What have you done that made your clients gush? What would they say has been their best experience with our agency?" Most answers are not about a single metric or analytics report, or even about data at all. Case studies should touch every aspect of the client experience, from onboarding to communication of results to offboarding.
Case studies should touch every aspect of the client experience, from onboarding to communication of results to offboarding.
There are other avenues to pursue as well. We've created industry analyses for clients as value-adds. Using tools like STAT, we've aggregated keyword data within subsections of industries to provide competitive landscapes that informed billion-dollar decisions to enter new markets and acquire new businesses.
But prospective clients won't know about this capability—and how it differentiates us—until we translate these processes into prospect-facing results that cover other target industries.
Another option: If you have a custom reporting dashboard, show the power of it. We built a dashboard in-house that aggregates results from all platforms, but only our clients see the value and efficiency.
With more than a half-dozen APIs already integrated, a prospect-facing dashboard that offers real-time insights into an industry could become a differentiator, not just a value-add.
Prospect-facing results are more than a sneak-peak at value-adds. They prove expertise that validates the choice of your agency, even at a premium.
At the heart of successful differentiation is the process of learning about clients—your approach to internal marketing. Final copy or marketing materials are the outcome of an effort to understand what clients need and what makes them happy. Differentiation is superior client knowledge, communicated effectively.
Differentiation is superior client knowledge, communicated effectively.
This means connecting practical, emotional, and aspirational client goals, pains, and fears to services. This means expanding the conversation beyond the superficial links between digital marketing goals and SEO or PPC.
No one cares about a robots.txt file until it’s blocking everything on their site; no one pays attention to negative keywords until they're saving millions.
For prospective clients, this means personalization at every stage of the process, as early and deep as possible. This means talking less about process and results—forever commodities to prospective clients—and more about how your work meets their immediate needs and moves them toward their long-term goals.
Even if it's our universe, digital marketing is always a means to an end.