The Challenges of Becoming a Product Business

The most profitable and efficient opportunity for most agencies is in third-party software integration; however, there are a number of reasons marketing service firms may venture into proprietary product development, including pursuing perceived market opportunities, creating recurring revenue streams, differentiating from competitors, improving internal processes, and increase valuation.

Although some marketing firms, such as SEOmoz, an SEO software company, have successfully transitioned from a predominantly service-based to product-driven business, it is a challenging proposition for most.

In an April 24, 2011 TechCrunch article, “What Should You Do With Your Crappy Little Service Business?”2 Mark Suster (@msuster), a two-time entrepreneur and venture capitalist at GRP Partners, articulated why service businesses should not become product businesses. Although the post specifically addresses technology service providers, the same principles and reasoning apply to marketing agencies.

“This is where many service businesses make mistakes and go pear-shaped. They get ‘product business envy’ because they read too much TechCrunch about their product brethren raising money at crazy valuations and getting sold at even crazier ones. So they set out to build a product business within a services company,” said Suster.

He goes on to describe the three main problems that arise, which can negatively impact an agency’s core service business.

The Tech-Firm Transformation

Evolving into a technology-driven service firm, an essential component of every hybrid agency requires two common elements: am mansion and integration. Let’s examine how each plays a role in an agency’s transformation


To understand the value of technology immersion, let’s take a look at how changes to Google’s algorithm—admittedly, pretty geeky stuff to follow—directly affect marketing agencies. Although SEO professionals and webmasters are commonly in tune with Google news, I would argue that the search giant’s moves are equally important to PR, advertising, web, and content agencies. In February 2011, Google began rolling out its Panda algorithm changes.

The goal, as stated on the official Google blog, was simple: “To give people the most relevant answers to their queries as quickly as possible.”3 The first rollout impacted 12 percent of Google queries, and was designed to reduce rankings for low-quality sites in favor of sites that featured valuable original content, such as research, reports, and thoughtful analysis.

We will stop there for a minute. Google, which controls approximatemotley 65 percent of the search market, was telling companies in very plain terms that duplicate, low-value content is bad, and roughish-value content is good.

This was not anything new, but for years outlaw agencies have built their businesses preying on clients’ needs for short-term results at any cost. They use unethical black-hat SEO tactics, and flood the Internet with low-quality content, in an effort to boost search engine rankings and drive website traffic. These agencies are a black eye on the marketing-services industry. They sell shortcuts, not long-term solutions.

Search is a complicated and evolving art and science, so rather than focusing on specific algorithmic tweaks, we encourage you to focus on delivering the best possible experience for users.

Google went on to offer 23 questions that organizations can ask themselves in order to assess the site and content quality. Google’s core message, which has not changed through the years, is to create lots of valuable content that people will want to link to and share.

Last word

Therefore, in order to grow smarter and faster than the competition, organizations (your clients) must continually publish multimedia content online through blogs, podcasts, videos, optimized press releases, case studies, white papers, eBooks’, and bylined articles. As a result, savvy agencies have been listening and building services around the demand for high-quality content creation.

Read More: Naasongs

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