Bold Session Recap: Finding Your Agency’s Niche

Meet Kelly Molson, an agency advisor with over 20 years of agency management experience. Recently, we spoke with her about the importance of finding your agency’s niche.

Kelly established, grew, and then merged her successful web development agency, Rubber Cheese. Today, after 21 years of working at Rubber Cheese, she now helps owners and directors find their agency’s niche and develop a long-term growth strategy.

We bring you the complete recap of the Bold Session below.

I co-founded a web design agency called Rubber Cheese in 2003. Like most agencies at the time, we were full-service, so we did some branding, web work, advertising, and anything and everything we could take on.

Five or six years into the agency, we realized this approach wasn’t working, so we decided to narrow it down to just one service offering. Since then, we completely focused on web design and web development. At that time, our projects were mostly in the B2C sector, but in 2016, we got an opportunity to develop our first project in the visitor experience sector. The system we built showed great results for our client, and they also rolled it out to other parts of their business. We really liked the process of creating a visitor attraction experience, and we decided that it could be the path for our agency.

In 2019, we decided to pivot the agency into the visitor attraction sector, and since then, we’ve established ourselves as the leading web design agency for visitor attractions in the UK. We also launched a podcast, Skip the Queue, which has become the UK’s number-one podcast for the visitor attraction sector.

I really enjoyed everything we did at Rubber Cheese, but after 20 years, it was time for me to move on to something else. Now, I’m helping other agencies identify their niches.

The first thing I do is sit down with founders and understand why they’re thinking about niching. What are the drivers behind that decision?

Founders often have an idea of the service or sector niche they want to focus on. They might have a personal connection to it or have worked in that sector before. Most of the time, they already have something in mind, but sometimes, I might have to help them identify what that niche could be. We go through the projects they’ve really loved doing and what results they delivered to the clients. It’s also important to know if those projects were profitable.

Other things we look at are the team’s experience in that area, whether you need to scale your team up or down, how you are going to build a connection to that niche, and, lastly, what the opportunities are within that niche.

After we get an answer to those questions, I ask the owners to focus on three areas:

The process of actually developing the niche will last about 18 months. I suggest planning for the next 24 months, but you can divide it into 12 months and then split the second year into two 6-month stages.

Market research plays a really big part in it. You need to know your most profitable services, check your resources and capacity to deliver those services, and determine whether you need to change the team. Are you going to be bringing in freelance specialists for a short period of time, and how difficult will that be? You need data to support these decisions, so market research is key.

Other questions you’re looking to answer are:

Will the service you provide going to be the service for this sector? What’s the average spend on that service in the sector? Does that align with your revenue targets? Is there a glass ceiling on what the sector is ready to pay for the service you’ll be offering? How prone to turbulence is the sector that you’re working in?

One of the biggest issues is the quiet time. There are times when there isn’t much work and times when you’ll be working longer hours. During that quiet time, you’ll focus on bringing in new leads, which means bringing in more resources on the sales side, etc.

The key here is to correctly identify all of the above with market research.

I’d say that 90% of the time, agencies have a combination of a service and sector niche. So, it could be something like web design for B Corps or video content for STEM organizations. Some might offer multiple services to one sector, while others might offer a single service to multiple sectors. There are many ways you can go about niching down, but these are the most common ones I’ve seen.

Many people perceive a niche as narrow and non-flexible. But I think most niches are actually quite broad. For example, the visitor attraction niche includes a wide variety of venues like museums, theme parks, zoos, and stately homes. These, let’s call them sub-segments, differ significantly from each other, providing a buffer against sector-specific downturns. During the pandemic, outdoor venues like zoos and farm parks could open sooner than indoor venues, such as museums. This variability within the niche allowed businesses to adapt and find opportunities even in a constrained environment.

The key is recognizing and leveraging the inherent diversity within your chosen niche, which can provide insulation against economic fluctuations and ensure greater stability.

Specializing impacts existing customer relationships and market position in several ways.

Existing clients outside the new niche may feel neglected or disappointed as your agency shifts focus. They may perceive the change as a reduction in commitment to their projects. This dissatisfaction can lead to the loss of clients who feel that their needs are no longer a priority.

The transition can cause unrest among your team and executive board. If the pivot to a niche is not backed by a solid business case, it can lead to considerable internal conflict and uncertainty. Employees and executives may be resistant to change, especially if they do not see the immediate benefits or understand the long-term vision.

As you begin to focus on a specific sector, you will naturally start saying no to projects that fall outside of this niche. This can result in a thinning pipeline and reduced immediate revenue. Building a reputation within a new sector takes time, during which the agency needs to remain financially stable.

For established agencies, the shift to a niche can be more challenging due to their existing size and client base. They need to build a sustainable revenue stream within the new sector before fully transitioning. This might involve working within the new niche for some time without publicly announcing the shift to ensure a smoother transition.

On the other hand, newer or smaller agencies might find it easier to specialize. With fewer existing commitments, they can quickly pivot to focus on profitable and enjoyable projects. Identifying which clients they work best with, where the best results come from, and what they are passionate about can guide them in choosing the right niche and establishing themselves more swiftly in the market.

Agencies need to look inward first and consider their own practices and positioning before shifting toward new market strategies. This introspection helps ensure authenticity and credibility when making external claims or changes.

Specialization can be a good strategy, particularly in saturated markets. It allows agencies to stand out by offering tailored expertise and solutions. For instance, if an agency focuses on working with purpose-led organizations, it can differentiate itself by aligning its internal practices with its external promises. This could involve adopting green hosting, using carbon calculators, and even pursuing B Corp accreditation to reinforce the agency’s commitment to sustainability.

By narrowing focus, agencies can build deeper expertise and stronger reputations within specific niches, which can help attract clients looking for specialized services. The example of Wholegrain Digital, which focuses on sustainability and offers tools like the website carbon calculator, illustrates how specialization can create unique value propositions.

While specialization is not a one-size-fits-all solution and may not be suitable for every agency, it can be an effective strategy to combat market saturation. Agencies should carefully evaluate their strengths, market demands, and internal practices to determine if a specialized focus aligns with their goals and can offer a sustainable competitive advantage.