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What type of agency should you create – six options (And some niche agencies)

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Updated on:
February 24, 2024
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You’re an expert who can provide a specific service.

Perhaps you’re a marketing guru who specializes in getting a company’s websites to the top of Google. Alternatively, you know your way around a real estate deal and can help people buy or sell houses. Whatever the case may be, you sell a service, rather than a product.

And that means the agency model is right for you.

Now, the question is obvious:

What type of agency should you set up?

That’s the question this article answers as it explores the various types of agency and what each type does.

What is an agency in business terms?

There are two ways to look at the term “agency” in the business world:

  1. The legal definition of agency as it relates to a business.
  2. The agency business model.

They’re easy to conflate, though they mean very different things.

On the legal definition side, you have the concept of “agency theory.” This is a principle that explains a representative relationship in business. One party – the agent – represents the other, often called the principal, in day-to-day transactions. In most cases, the principal delegates decision-making responsibilities to their agent to act on their behalf.

For instance, an employee is an agent of an employer.

The employee has been appointed to a specific position, assuming responsibilities in the process. As a result, the employee has “agency,” at least within the scope of their employment. For instance, a project manager may have the agency to organize a project without direct input from their employer. However, that project manager is still acting as a representative of the employer. The work they produce is ultimately owned by somebody else.

Agency theory often applies in an agency business model in this respect.

But they’re not the same thing.

The agency business model is one in which you create a team of experts to solve an issue for a client. There are two keys here. First, the agency sells a service, rather than a physical product. In digital marketing, this service might be SEO, online advertising campaigns, or social media management. For the travel industry, an agency essentially sells the convenience of booking a holiday on your behalf. The actual products involved in that service – such as hotels – are provided by somebody else.

The second key is that an agency isn’t legally bound to act on behalf of its client.

In other words, it doesn’t represent the client. Rather, it receives requests or orders from that client, which it then fulfills. Sticking with the digital marketing example, imagine that you create a piece of content for a client’s website. That content is written from the client’s perspective and goes directly to the client.

It needs approval before it can be placed on a website.

As such, an agency isn’t a direct representative of a client in the way that an agent might be. It’s a tricky separation of concepts to wrap your head around. But in terms of the type of agency you create, you’re going to be focused on the business model rather than the legal definition.

Use a software to streamline your agency

No matter the type of your agency, Bonsai is the perfect tool to help your team run smoothly. You won’t be needing a lot of tools because it has all the features every agency owner needs. Here are some ways Bonsai can help:

Manage your clients effectively

With Bonsai, you can easily keep track of your clients and manage your relationship with them. It has an integrated CRM that allows you to build your client list and keep their information in one place. 

Learn more about Bonsai's CRM tool

Enable your client portal so they can access the projects, documents and links you’ve shared with them. Your clients will be able to view their invoices here as well. You can add automations to streamline the way you work with your clients. For example, you can set a trigger that when a client signs a contract, Bonsai will automatically redirect them to the onboarding page. 

To help you stay even more organized, you can add tags to your clients list so you can easily identify which products they are interested in or what sales stage they are in.

Stay on top of your projects

Agencies often work with multiple clients that’s why it’s crucial to stay methodical all the time. Bonsai’s project management feature is perfect for your team’s collaboration. You can easily invite your team members to work on projects together.

On the Projects tab, you can easily see an overview of the tasks, files you’ve shared, and billing details of a specific project that your team is currently working on. This can help managers organize and plan the project delivery efficiently. Track every time spent on projects and manage your tasks using Bonsai to implement a smooth internal process.

Keep your projects under budget

Bonsai can also help you manage your agency’s finances without having to switch to another financial software. Setting project budgets is a breeze and ensures you're financially on track without any surprises. You have the flexibility to set budgets either based on fees or time. For instance, if you're on a recurring contract, you can set a monthly fee. Adding an end date is optional for added convenience.

Once set, you can monitor your budget in real-time on the project overview. As you start tracking hours and adding them to your project, you'll see a live view of how your budget is pacing. This feature becomes even more powerful as you manage multiple projects, with visual elements in board and list views displaying your budget status.

Updating your budget mid-project is easy. Simply navigate to your project settings and make the necessary adjustments. For projects where you haven't yet started tracking budgets, just enable the feature in settings, input your budget amount and you're good to go. Bonsai simplifies budget management, ensuring you stay within budget and avoid unnecessary overtime.

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What are the types of agencies to start?

The real answer to this question is simple:

Almost any service you can think of can have the agency business model built around it. If it’s a service that experiences demand, there’s a type of agency you can create.

With that in mind, don’t think of this list as a collection of the only agency types available. They’re simply the most common – with each offering specific types of agency services.

Type of agency 1 – Digital marketing agency

When most think of the agency business model, it’s this type of agency that comes to mind. Digital marketing agencies are responsible for enhancing their clients’ online presence. The concept is simple – the agency uses a host of techniques to drive traffic to websites and social media pages. Those techniques have the goal of driving conversions for the client.

A conversion could be a sale.

It could also be something like a sign-up to an email campaign, which the digital agency also oversees.

The key is that the agency gets more people talking to – and buying from – their clients.

If you’re considering forming this type of agency, you’re not alone. The digital marketing industry is growing rapidly and will be worth $965.6 billion by 2028. That growth represents a lot of opportunity for the prospective agency owner, though it also means tons of competition.

Types of agency services

A ton of services fall under the digital marketing agency umbrella, including the following:

  • Search engine optimization (SEO)
  • Pay-per-click advertising campaign creation and management
  • Social media marketing
  • Email marketing
  • Website design and development
  • Online reputation management
  • Content creation

However, not all digital marketing agencies offer every possible service. For every full-service agency, there are several focused on a specific niche. For instance, a content marketing agency is a digital marketing agency. But it’s not the agency to use if you need a PPC campaign created. Rather, it could create copy for that campaign without managing it. In some cases, a digital marketing agency can even provide clients with software to help with marketing campaigns.

Type of agency 2 – Travel agency

Travel agencies help individuals – or even entire groups – to plan, book, and execute vacations to various destinations. Think of them as service providers serving as intermediaries between a client and the various products or services they need for a vacation. For instance, travel agencies often book flights, hotels, and even car hire on behalf of their clients.

However, they don’t offer those services themselves.

They’re simply the grease on the cogs of vacation planning that ensure the whole trip comes together without a hitch.

Type of agency services

A travel agency’s services are divided into two categories:

  • Consultation
  • Making Bookings and Reservations

The consultation side is all about figuring out what the client wants from their vacation. Where do they want to go? What do they want to do at their destination? Where will they stay and are there any visa issues the client needs to handle? In short, the travel agency works with the client to determine what their vacation will look like.

That consultation feeds into the bookings and reservations aspect of the service.

Once the client has decided on what they want, the agency makes the appropriate reservations on their behalf. Flights, hotel rooms, cars, and activities are all pre-booked for the client. So, all the client has to do is pay their money and receive their tickets.

Type of agency 3 – Real estate agency

A staggering 4.8 million people bought homes in the United States in 2023. Of those homebuyers, 86% used a real estate agent to help them with their purchase. That amounts to 4.128 million people using this type of agency to help get them into a home.

So, what does a real estate agency do?

Like travel agents, real estate agents serve as intermediaries. When somebody wants to sell a property, they list it with a real estate agent who then advertises that property for them. That property attracts potential buyers. And when a buyer makes an offer, the agent delivers that offer to the seller, along with advice based on their market expertise.

Ultimately, these agents make it easier for people to buy and sell properties.

Type of agency services

Real estate agents offer several services as part of their function as property intermediaries, typically in service of a seller.

For instance, they’ll handle the marketing of a property by listing it for sale on their website along with property aggregators. They’ll also conduct viewings – allowing potential buyers to see the property – and carry out negotiations for their client. However, these negotiations ultimately go through the client, meaning the real estate agency doesn’t act as a business agency.

Some real estate agents also work as property managers.

In this role, they’ll oversee rental properties on behalf of their clients. Marketing and finding tenants is a part of that service, as is ensuring rents are paid on time. As they offer a more advanced service than simple selling, property managers will usually need a good agency CRM in place.

By the way, there are also real estate agents who act on behalf of buyers – they’re called buyer’s agents. Their primary functions are to find properties that match a client’s requirements and then negotiate a price with the seller.

Type of agency 4 – Branding agency

Hold on a second.

The article has already covered digital marketing agencies. How are branding agencies any different?

It all lies in the focus area. While both digital marketing and branding fall under the general “marketing umbrella,” they’re two different things. A digital marketer focuses on getting more eyes on a company. Branding specialists ensure that the message being delivered to those people remains consistent and aligned with their client’s values.

A branding agency’s service is mostly about distinguishing a client’s company from its competitors. What makes the client special? What is their unique selling point (USP)? What is the company’s target audience and what message does that audience need to hear from the client?

These are the questions a branding agency answers. And while there’s a crossover with digital marketing – branding companies may create content guidelines that copywriters follow, for instance – they’re distinct specializations.

Types of agency services

Branding agencies focus mostly on strategy.

They help clients understand the concept of a “brand,” which is essentially a product or service that’s distinguishable enough to be considered unique. With that concept in place, the agency works with its clients to create that brand. This may involve starting from the ground up – developing mission and vision statements. But it’ll more typically involve ensuring the client’s messaging on every platform aligns, both with itself and with the target audience’s needs.

A branding agency may also be responsible for logo design and other graphic representations of a company. Plus, it’ll typically solidify the company’s branding in guidelines that may be used by other agencies.

Type of agency 5 – Artificial intelligence (AI) agency

Though the concept of AI services had existed long before, ChatGPT ushered in explosive growth for the AI sector. It’s projected to become massive in the coming years. Statista says that AI will enjoy a compound annual growth rate (CAGR) of 15.83% between 2024 and 2030.

The result?

A market volume of $738.8 billion.

So, where does an AI agency fit into all of this?

Rather than being the creators of AI solutions, they help businesses to make the most of this emerging technology. That could be as simple as introducing clients to project management software that includes AI-powered workflow automations. Or, it could be much more complex – the creation of a full AI strategy designed to cut costs and boost revenue.

Type of agency services

It’s difficult to define specific AI agency services.

The technology is so new – and the services surrounding it so nebulous – that AI agencies can branch out in multiple directions. Many focus on marketing. For instance, an agency may include “prompt experts” who can ensure that software like ChatGPT outputs publishable marketing content for clients. Others may focus on the data analysis side, which is especially useful to larger companies. The volume of data large companies generate is massive. Having an AI agency to help develop solutions for sifting through that data to find real insights can be a massive boon.

Ultimately, these agencies use AI to achieve at least one of three things for their clients:

  • Improve operational efficiency
  • Enhance decision-making capabilities
  • Save money by cutting down on manual work

Type of agency 6 – Recruiting agency

Also known as employment agencies, recruitment agencies help businesses to find suitable candidates for vacant roles. Similar to real estate and travel agencies, they’re essentially intermediaries:

The hiring company tells the recruiting agency what they want and the agency goes out to find it.

So, the agency’s role is twofold. It’ll work with its clients to determine what an “ideal candidate” looks like for a role. Once it knows that – and what the role entails – it’ll advertise to jobseekers. Often, recruiting agencies will keep some of the best roles their clients offer in-house to encourage job seekers to sign up.

The question is why would an employer use a recruiting agency?

After all, services like Indeed and Monster make it easier than ever to advertise roles. Surely, the recruiting agency is being phased out because of these new technologies.

That’s not the case for a simple reason – many business leaders find it hard to fill positions with skilled people. Specifically, nearly three-quarters (70%) say it’s hard to find talent to get rid of the skill gaps in their companies. So, recruiting agencies serve the purpose of finding that talent on the recruiting company’s behalf.

Type of agency services

The main service a recruitment agency offers are covered above. They find potential candidates for their clients.

However, the service extends beyond that simple requirement in many cases.

For instance, the agency may essentially act as a candidate repository for its client. It gathers candidates and stores their details in a database – typically using CRM software – for the client to peruse as needed.

Recruitment agencies also have a marketing component.

On the obvious level, they “sell” candidates on the role a candidate wants to fill. This marketing may include helping the client create attractive job postings and ensuring those posts are placed on relevant websites. Some recruitment agencies even have a branding component – they ensure job posts align with the client’s messaging.

Exploring niches – The type of agency that’s a little less ordinary

The six agency types discussed above are either the most common or agency types that are becoming more popular thanks to new technology. But remember the statement made at the beginning of the article:

Almost any service you can think of can have the agency business model built around it.

To demonstrate that, the following is a quick list of niche agencies that are a little outside of the norm.

Remote work optimization agency

With 32.6 million Americans anticipated to be working remotely by 2025, businesses have to adapt. The old office setup won’t work for many anymore – they need to introduce remote or hybrid models.

That’s where this kind of agency comes in.

Remote work optimization agencies typically serve as consultants and change management experts. They help clients – usually businesses – to adapt to the work-from-home concept. They may even help with policy drafting and technology recommendations.

Podcasting agency

People love podcasts.

Statista says that 79% of American adults were aware of podcasting in 2022. The previous year, an enormous 81 million had listened to at least one podcast.

Podcasting agencies help people with podcasts reach the people who listen to podcasts. They’re one part marketing agency – helping listeners to discover the podcast – and one part representative. For instance, a podcaster may use an agency to help them get on popular platforms like Spotify and Apple Music.

Sustainability consulting agency

Consumers and businesses care more about sustainability than ever before. On the consumer side, 78% of Americans say living a sustainable lifestyle is important to them. That puts the onus on companies to provide sustainable products to serve that need.

But it’s not just about products.

Companies also need to adopt sustainable practices as part of their branding if they’re to appeal to more environmentally aware clients.

Enter the sustainability consulting agency.

These types of agencies work with businesses to help them become more sustainable. They may include conducting audits – of the company’s products and practices – to determine where wastage occurs. The agency might also make recommendations, or even formulate strategies, to boost a client’s sustainability credentials.

The only limit to agency choices is your imagination

You’ll see that this is far from an exhaustive list of agencies. However, you’ll also see that there’s a common thread running through each type of agency covered:

All provide a service – or services – that is in demand via a business model that makes it easy for clients to work with them. And therein lies the secret to agency success. As long as an agency owner streamlines their service to make it as easy to use as possible, they’ll always have clients.

Of course, backing up the promises the agency makes is crucial.

But that’s the same for any type of business. Service delivery will ultimately determine how many clients an agency attracts or fails to reach. Add to that the use of appropriate software for agency management and the only limit is your imagination.

If it’s a service that people (or businesses) want, it’s a service around which you can build an agency.

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