Creating a successful business model for a marketing agency involves understanding customers, competitors and trends in the external environment combined with the right strategic decissions on how the agency business model should look like. In this article we go step-by-step through our Business Model Canvas for marketing agency example. Also we share 3 Business Model Hacks that can inspire owners of a marketing agency. Ready to get inspired?

Let’s study a conventional agency business model first

Before exploring alternative, winning business models for marketing agencies, it’s important to understand the foundation: the conventional agency business model. This model is applied by multiple agencies nowadays.

1. Customer segments | Business Model Canvas for marketing agency example

Traditional marketing agencies typically serve a wide range of clients. Some marketing agencies targets several customer segments and other choose to focus on a very specific segment like Waste management departments within a municipality or Startups who tries to raise funds by a Kickstarter campaign. Here are a few key categories of customer segments for agencies.

• Local businesses: Small to medium-sized enterprises (SMEs) that operate within a specific geographic area. Local businesses rely on agencies for community engagement, brand visibility, and targeted advertising campaigns.
• Corporate clients: Large corporations with established brands often seek conventional agencies for comprehensive marketing campaigns. They require services like public relations, media buying, and traditional advertising to maintain their brand presence.
• Retail and consumer goods: Companies in the retail sector often depend on agencies for promotional activities, seasonal campaigns, and point-of-sale marketing. These businesses require creative strategies to attract consumers and increase sales.
• Non-profit organizations: Non-profits work with agencies to build awareness, manage fundraising campaigns, and engage with their communities. Agencies help craft messages that resonate with donors and supporters.
• Government and public sector: Government agencies hire marketing firms for public information campaigns, event management, and outreach programs. These clients focus on compliance, transparency, and clear communication with the public.

2. Value propositions | Business Model Canvas for marketing agency example

The value propositions offered by conventional agencies revolve around providing comprehensive and reliable marketing solutions. Here’s are some examples of propositions in a conventional agency business model.

• Full-service offerings: Conventional agencies provide a wide range of services, including print advertising, TV commercials, radio spots, public relations, and event management. This all-in-one approach appeals to clients seeking a single partner to handle multiple marketing needs.
• Expertise in 1 medium: Marketing agencies that focus on 1 expertise (such as GoSpooky – Social Media) or 1 medium (such as TikTikBoom– TikTok). Clients benefit from the domain expertise of the agency.
• Brand building: Agencies focus on developing strong brand identities and messaging that resonate with target audiences. They help clients position their brands effectively in the market, fostering long-term customer loyalty. A great example is AdProfessor – who focus on great advertisements for brands.
• Interim marketing secondment: Agencies that focus on providing ”head & hands” for the customer. They supply marketing experts who work for the customer temporarily or for a longer period on an interim basis. They often have the support of the agency as a backup, which can make them much more attractive than individual freelancers. An agency who has applied this in their business model is HelloThere.

There are many different value propositions that marketing agencies use, so here I would like to note that the overview is not complete.

3. Customer relationships | Business Model Canvas for marketing agency example

The agency business model is focused on establishing long, strong relationships with customers. In the agency business model there is really a question of ”Retaining existing customers and upselling them, yields more than attracting new ones”. The folowing components are often involved in the business model.

• Personalized (Account management): Dedicated account managers ensure clients have a consistent point of contact for all their marketing needs.
• Long-term partnerships: Conventional agencies aim to establish long-term relationships with clients, positioning themselves as valuable partners in business growth.
• Feedback & adaption: Agencies actively seek client feedback to improve and streamline the collaboration.
• Co-creation: Some agencies really cocreate with their clients and some of them even starts Joints Ventures with their clients.

4. Channels | Agency Business Model example

There are a wide range of channels that marketing agencies use to bring their value proposition to clients. Examples of channels in a marketing agency business model are:

• Direct sales teams: sales teams are instrumental in building relationships with potential clients through face-to-face meetings, presentations, and pitches.
• Networking events and business clubs: agencies participate in industry and networking events to showcase their expertise and connect with potential clients.
• Traditional advertising: print advertisements, TV commercials, and radio spots are used not only for clients but also for the agency’s own promotion.
• Referrals and word of mouth: Positive client experiences lead to referrals, which are a significant source of new business for conventional agencies.
• Website: provide information about services, case studies, and client testimonials.

5. Revenue streams | Business Model Canvas for marketing agency example

Conventional marketing agencies generate revenue through a variety of streams, allowing them to sustain operations and invest in growth. Here’s a look at the primary revenue streams:

• Project-based fees: Agencies charge clients based on individual projects, with pricing determined by the scope and complexity of the work.
• Retainer agreements: Long-term retainer contracts offer clients consistent marketing support for a fixed monthly fee. Retainers ensure predictable revenue for the agency and ongoing strategic partnership for the client.
• Commission on media buys: Agencies sometimes earn commissions from media buys, where they receive a percentage of the advertising budget spent on media placements. This model incentivizes agencies to optimize media spend for maximum impact.
• Consulting fees: Consulting services, such as strategic advice and market analysis, generate additional income. Fees are typically charged on an hourly or project basis, appealing to clients seeking expert guidance.

6. Core activities | Agency Business Model example

Key activities define the core operations that a conventional marketing agency undertakes to deliver its value propositions and meet client expectations. These activities include:

• Marketing & sales: Get new clients & establish relationships with excisting ones.
• Project management: Developing and executing marketing campaigns across various channels is a central activity.
• Conduct creative and design services: Agencies provide creative services, including graphic design, copywriting, and video production, to bring marketing concepts to life.
• Media buying and negotiation: Agencies negotiate media buys and placements, ensuring optimal reach and cost-effectiveness for client campaigns.
• Market research & skill development: Agencies conduct thorough market research to understand industry trends, audience behavior, and competitive landscapes. They invest in learning themselve state-of-the-arts skills to help themselve & clients to stay ahead of the competion.

7. Key resources | Business Model Canvas for marketing agency example

Key resources are the assets were companies relies on to deliver its value propositions and sustain its operations. Examples of key resources in a marketing agency business model are:

• Skilled workforce: A talented team of marketing professionals, designers, copywriters, and media planners is essential for executing successful campaigns.
• Reputation: A well-established brand reputation attracts clients and builds trust in the agency’s expertise and reliability.
• Technology and tools: Subscriptions on marketing tools and reliable hardware to run those programs.
• Office space: A dedicated office space for collaboration, creativity workshops and client meetings.

8. Key partners | Business Model Canvas for marketing agency example

Key partnerships are crucial for agency’s success. Here are some examples of key partners in the marketing agency business model:

• Media outlets: Partnerships with TV, radio, print, and digital media outlets enable agencies to secure favorable rates and placements for clients.
• Specialized external partners: Agencies often work with external partners for specialized creative services, such as video production, photography and printing.
• Partnerships with authorities & software suppliers: A great example are agencies who are Google Marketing Partner or Wix Studio partners.
• Industry associations: Collaborations with industry associations can give marketing agency’s a strong competitors advantage.

9. Cost structure | Agency Business Model example

Here are some examples of costs in a conventional marketing agency business model:

• Employee salaries: Salaries for a skilled workforce is a significant portion of agency expenses.
• Media and advertising costs: Expenses related to media buying, advertising placements, and production are significant components of campaign budgets.
• Third party hiring: Cost for hiring third parties expertise.
• Software subscriptions: For example the Adobe-programs most agencies use.
• Hardware costs: Laptops, monitors etc.
• Training costs: Investing in talent is essential for delivering high-quality services and maintaining client satisfaction, but creates costs offcourse.
• Office space: Rent or interest of the loan for the office.
• Marketing & promotion: The own marketing expenses.
• Overhead: All the other things that costs money.

We want to challenge you! Explore other agency business models

I hope the step-by-step explanation of the Business Model Canvas for marketing agency inspired you and gave a clear insight on how conventional agency business models can work. We want to challenge you!

• Which alternative business models are there for an agency?
• Which alternative business models create superior value for the customer?
• Which alternative models gives you a competitive egde and helps to thrive and beat the competition?

Tip: Use Business Model Hacking to find new, innovative business model options!

Get the book Business Model Hacking. This book gives you access to a powerful innovation method which helps you to get innovative business model ideas. The core of the method is to use proves patterns while ideating instead of reinventing the wheel. It consists of more than 200 proven elements that helps you to create better, more resilient business models. You won’t regret it. To inspire you we want to highlight 3 Business Model Hacks that can be interesting for agencies.

Hack 1: Performanced based contracting | Inspiration for marketing agencies

What if?… Performance based contracting is a core component of your agencies business model. Does it make your value proposition more compelling? And can it help your company to boost profits? Here are some of our ideas:

Hack 2: Self-service | Inspiration for marketing agencies

Imagine… Your company make the decission to fully focus on a self-service business model. Or a part of the activities? How does it looks like? Which elements of your services are labor-intensive and dont create a lot value for customers? Here are some of our ideas:

Idea 1: Online proposal and pricing tools

Implementing online proposal and pricing tools streamlines client engagement by allowing potential clients to explore services, customize packages, and receive instant quotes. This self-service approach accelerates the proposal process, simplifies decision-making, and enables agencies to respond to inquiries quickly, ultimately boosting conversion rates.

Idea 2: DIY Branding Kits

Provide downloadable DIY branding kits that include logos, color palettes, typography guidelines, and more. Clients can use these kits to maintain brand consistency across all marketing materials without needing constant agency support. You can sell ”custom” templates and support services around this. For the total self-service solution you can charge a monthly subscription fee (DIY Marketing As A Service).

Hack 3: Pre-defined packages | Inspiration for marketing agencies

What if? Your decide to offer only pre-defined packages. Here are some of our ideas that you can embed in your Business Model Canvas for a marketing agency.

Idea 1: Offer a comprehensive SEO starter kit

A package that includes keyword research, on-page optimization, and a basic backlink strategy. This pre-packaged service helps clients improve their search engine visibility quickly and is perfect for small businesses or startups looking to enhance their online presence without committing to long-term contracts.

Idea 2: Website in a week

Launch a “Website in a Week” package where clients receive a fully functional, professionally designed website in just seven days. This productized service caters to businesses needing a quick online presence and offers a fixed scope, timeline, and price, making it attractive to clients with urgent needs.

Are you ready to discover a new, winning agency business model?

I hope this blog and our Business Model Canvas for marketing agency example has inspired you. Subscribe to our innovation newsletter for more inspiration. Need help to create winning business models? Consider Business Growth Consulting, were we help you boost your business.