Anyone familiar with the Digital Marketing Space?

December 01, 2022

by a searcher from Valdosta State University in Cumming, GA, USA

I know that this industry is extremely fragmented and many "agencies" are extremely small or solopreneurs. I'm just wondering if the agency space is worth targeting. As a follow up question, has anyone found many motivated sellers in this space?

I'd love to see if anyone has any thoughts on this.

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Reply by a searcher
in San Diego, CA, USA

There are plenty of digital marketing agencies bigger than solopreneurs or micro-businesses: you can find thousands that are north of $0.5M in EBITDA. There are many pros to this industry: a lot of these businesses have recurring revenues, can be run remotely, the industry should continue to grow in the long run and its high fragmentation allows for roll-ups. On the flip side, it is common for these agencies to have a high customer concentration, key-men risks (e.g., owners maintaining key relationships with current and perspective clients) and their financial performance is tied to macroeconomics.
You can find sellers that want to sell, but typically do not need to sell. Digital marketing agencies are most often run by young entrepreneurs in their 30s, 40s and early 50s that have no urgency to retire.

IMHO this industry is worth it if you manage to find the right business. Feel free to DM me if you would like to chat.

Reply by a searcher
from Widener University in Jefferson Township, PA, USA

I have a slightly different perspective on this. I own a digital marketing agency that focuses on high-quality SEO. If the target agency delivers exceptional value and results (high ROI) to clients, you will experience significant growth year-over-year. The main problem is that most of the target agencies out there do not provide anything close to this. I'm constantly on the look out for digital marketing opportunities and I continue to pass on every single one. I do not want to do a roll up type of strategy that will harm my existing brand and reputation. Therefore, I continue to expand and grow my service lines from within. Given the high-level of fragmentation in this sector, I believe it's better to build/grow, rather than acquire. Maybe I'm being too pessimistic, but on the other hand, 75% of my existing clients come from sub-par SEO/Digital Marketing agencies. I think that speaks volumes.

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