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Which industry vertical should your PPC agency focus on?
Choosing a focused vertical, or niche, is something that many agency owners underestimate. They appreciate how alluring this approach can be for prospective clients, but they get distracted by any opportunity that comes within earshot.
A lack of precision when it comes to prospecting and customer targeting is one of the most common reasons agencies fail to scale. Your copy is generic and uncompelling to anyone that lands on your website. Your messaging in sales conversations is broad and disconnected from your prospects. And your knowledge is spread thin across industries instead of being deep and penetrable in one.
By picking an industry vertical for your PPC agency, you and your team become known experts in that sector. You also begin to understand the problems you solve for clients, how they articulate those problems, and how you can position your solution as a better option than the other agencies in the market.
So, what are industry verticals?
An industry vertical is a subset of a broader market which is focused on a specific type of product or service. For example, the industry would be “Information Technology,” and the industry vertical would be “3D printing.”
There is an almost endless list of potential verticals that your PPC agency can choose from. Many of which will end up being successful and profitable. However, there are just as many that will create headaches, with a high cost-per-lead, low margin, and severe competition.
That’s why we wrote this article – to help you identify a high-performing industry vertical for your PPC agency. Let’s jump in…
The first area that is important when you are choosing an industry vertical is the viability of the businesses in the sector.
What type of business operates in this niche? How do they charge? Will they be a successful candidate for AdWords services?
Here are some things to consider:
#1 – Profitability
Think about the profit margins of the businesses in this vertical. You can’t sell PPC services to a commoditized business with low margins.
For example, let’s say they are a shoe retailer, or they sell low-ticket accessories. Their margins to pay for your services are going to be very small. The cost of AdWords combined with their one-time product purchase won’t equate to an appropriate financial buffer.
It doesn’t make a lot of sense to prospect in these low-margin industries. You want to be servicing clients who make enough money from their PPC leads so that they are able to reward you.
#2 – Seasonality
Seasonality is the second aspect to consider when it comes to the businesses operating in this space. Let’s say you choose a niche that only operates and sells products for six months of the year. You’ll have a very lean six months following that period!
Of course, the above scenario may actually pose an opportunity. For example, other PPC agencies may run scared from a niche that only operates for six months of the year. This means you can stand out and get your foot in the door.
One thing you can do to mitigate the risk of seasonality is to find industry verticals for all times of the year. Pest control in the summer and roofing in the winter is one example of this.
Be careful and strategic if you decide to work in an industry vertical that is affected by seasonality.
#3 – Market Size and Growth
Next, take into account the market size of your chosen vertical.
You will want to go into a market where there are enough potential clients to grow your business. In most industries, this won’t be an issue. There will be a plethora of opportunities. A smorgasbord of juicy PPC prospects. But there are times, especially in some B2B niches, where you’ll find that there are only a handful of buyers and suppliers. If that’s the case, it won’t matter how successful you are with your clients – growth will be impossible.
As well as the size of the market, consider if it is on a positive growth trajectory.
If you’re looking at newspaper advertising or business cards, for example, growth is going to be stagnant or declining. There are other sectors that are growing like crazy at the moment and could be more prosperous.
Don’t only think about today, plan ahead for tomorrow and pick a niche that has the capacity to grow.
It is vital to determine whether you or your white label service provider can get results for your clients. There is nothing worse than going through the heartache and effort to win new clients if you can’t deliver for them. Happy clients breed more happy clients.
Here are two elements that contribute to the likelihood of delivering results for your clients:
#4 – AdWords Potential
A key thing to think about when choosing a PPC sector is whether or not you are allowed to run AdWords campaigns. Google’s AdWords policy restricts certain content and industries from using their platform, which is an immediate red flag.
You also want to look at the potential cost of AdWords for the industry. Take a look at the data. What is the average cost-per-click, cost-per-lead, and cost-per-sale for this niche? Does this provide an adequate profit margin on the goods sold?
Make sure that you are working in an industry where businesses have enough budget to spend, compared to these metrics. If the cost equation is misaligned with their budget, or their margins are getting squeezed, then you are unlikely to deliver a positive outcome. Not to mention you won’t be making any margin yourself. It’s not an attractive position to be in.
Find an industry vertical where the price points and margins, over the lifetime of a customer, are high enough to justify your service.
#5 – Sales Cycle
Another point to evaluate is the sales cycle or lead time for the businesses in the sector. It’s something that many agencies overlook, and it can catch you out if you’re not careful.
From the time they receive an inquiry, to when they actually get paid for the product or service – how quickly does a sale happen?
In some industries, the lead time is immediate. They click on an ad, buy a product, and the transaction is complete. For other sectors, this sales cycle could be days, weeks, or even months long. Don’t forget that your clients have to be able to fund the ad spend as well as your service. If it takes them too long to get paid, then they are paying you out of their reserve cash flow, and many businesses can’t sustain that.
Generally speaking, the shorter the time from inquiry to getting paid by the customer, the easier it is for you to retain that client.
Here are a couple more tips to take into account when picking your PPC niche. These are less industry-related and more about the people you will be working with.
#6 – The People
Do you like the kind of people that work in this industry vertical? It may sound trivial, but you are going to be working hand-in-hand with these people on a daily basis, so it’s important you get along.
If you like to deal with blue-collar types, don’t focus on the financial services sector. Or if you connect with corporates, don’t go for plumbers. Think about the type of people you enjoy talking to and make sure you’re working in an industry where those kinds of people are active. Otherwise, you’ll have a number of difficult and unpleasant conversations.
#7 – Reachability
You’ll need a predictable prospecting system so that you can go out and acquire new clients. So, you need to ensure that you are working in a vertical where the decision-makers are contactable. If you can’t get in front of anyone of note within the industry, then it is a crazy place to go and sell your services.
Ineffective prospecting results in stunted growth, which makes the reachability of your prospects a key factor of a successful niche.
There is a certain magnetism associated with narrowing your focus and sticking to it.
You build a wealth of industry knowledge and expertise that positions you as a thought leader, enables you to charge more for your services, and attracts the type of clients you love working with.
But picking the right industry vertical is no easy task. Especially if you are planning on going all-in on one niche, it feels like a risky play. So, you need to get the selection process spot on.