When we talk to companies offering digital marketing solutions for small businesses, from full-stack solutions to focused offerings like SEO or websites, many express a common refrain. They want to explore new reseller channels.
Most have worked with media partners (Yellow Pages, newspapers, broadcasters), digital agencies and some other channels (verticals, online publishers etc.) for some time now. While there is still opportunity in these channels, securing them and generating yield from them is getting more and more difficult.
It’s akin to the concept of “peak oil,” which contends that while the world still has plenty of oil, the oil that remains is harder to get to and more expensive to extract. Hence the pressure to find new sources of energy. We may be at “peak reseller” with media and digital agency channels.
Which brings us to the notion of the “tech agency” channel partner. This is an evolving definition. The thesis is that there is fertile hunting ground for channel partners among organizations that have relationships with small businesses that haven’t yet appeared on the local search radar. Instead of selling small businesses advertising, they are selling them IT services (wifi, data hosting, network security and so on).
Like any small agency serving the SMB market, there is pressure to grow revenue by growing spend among existing customers and acquiring new ones. New services like websites, listings and reputations management, social media management, could service these objectives. At least in theory.
While we are seeing more and more examples of these tech agencies offering marketing related services, the notion that they can become a channel at scale remains untested. However, some organizations from the local search community are already testing this notion and are beginning to attend and exhibit at gatherings of master agents, agents, MSPs (managed service providers), VARs (value added resellers), etc. These are the channels that companies like Cisco Systems rely on to sell their products to SMBs.
My colleague Neal Polachek first raised this issue on the Tech Adoption Index blog back in April when he posted on his experience at the Channel Partners Conference & Expo in Las Vegas, attended by some 6,000 people, most of them wearing polos with embossed logos for the tech agencies they represented.
This is what Neal wrote at the time:
“So, here are my takeaways from 48 hours in Vegas. There’s something in this marketplace. Here’s why — there are 150,000 SMBs operating as agents, MSPs, VARs and partners that are serving millions of SMBs downstream. They all need to distinguish themselves in the marketplace, they need SEO solutions, they need reviews, they need CRM tools – they need help. Will it be easy to march on into this marketplace. No, but with some discipline and patience, there may well be a jackpot for some lucky players.”
The Tech Adoption Index Wave II survey provided some evidence to support the notion of pursuing tech-first channels. One survey question, detailed in the chart below, asked SMBs which channels they would trust to sell them services outside of their core offering. In other words, would you rather buy CRM from a tech agency or accounting software from a media company?
The survey results suggest “ISPs” have established a level of trust among small business owners. We surmise that ISPs are a stand in for the actual agencies that delivers the service, which are the MSPs representing the ISPs (forgive the alphabet soup). In other words, what we are calling tech agencies have a real shot at expanding their service offering to include marketing related products.
Questions remain. How do companies efficiently build these reseller partnerships? Looking good on paper is great, but can these tech agencies sell websites or SEO or CRM? Will SMBs really look to these agencies for services way outside of their core tech offerings? Companies are just beginning to do the work necessary to answer these questions. We believe the answers will begin to emerge in the coming months.