AgencyFinder Turns the B2B Industry Directory Model Into A Highly Profitable Subscription Business

Matchmaking sites for consumers are a growing multi-billion dollar industry — but B2B trade directories have had a much harder time profiting online, particularly

Quick Overview

Matchmaking sites for consumers are a growing multi-billion dollar industry — but B2B trade directories have had a much harder time profiting online, particularly because they must compete with Google for ad budgets. But AgencyFinder, a matchmaking site for ad agencies and their would-be clients, has a clever, profitable business model that beats the odds. Find out the details in our exclusive Case Study.

Founded:  1997 online
No. of Sites: 2
Employees:  6 full-time, intern for summer
Business Model:  Subscription-based
Subscribers:  3,000 paying accounts
Location: Richmond, VA
Websites: www.agencyfinder.com
www.agencyfinder.eu

Target Market

AgencyFinder’s target market consists of advertising, marketing and PR agencies that are seeking new clients with budgets upward of $5 million.

The secondary — and equally critical —  audience consists of prospective clients seeking an easier way to find the right agency for their needs.

Content/Services

AgencyFinder’s CEO Chuck Meyst is quick to say that the site is not just an online directory; instead he refers to it as “eHarmony for the advertising industry.”  But the service goes beyond simple introductions and database algorithms. AgencyFinder is more like a real-world yenta, handholding prospects through both online and offline activities to help them land a deal.

Historically, agencies have been particularly poor at filling their sales funnels with new business leads beyond their personal connections.  They’re good at actual sales pitches — but first they have to land them.

AgencyFinder steps into this breach, not only generating new, qualified business leads, but also handling the relationship all the way down the sales funnel until the prospect has agreed to a sales pitch meeting. 

Here’s how the process works:

  1. Prospects (organizations seeking a new agency) register for free on the site.
  2. Registered prospects can then use AgencyFinder’s proprietary search system to look for an agency that meets their specific needs.
  3. The search results reveal a grid of dozens of compatible agencies that are paid subscribers to the matchmaking service.  The grid does not reveal agency names, only an ID number with a thumbnail profile.  This means prospects can’t use the initial search results to go off on their own to make a deal.

    Agencies get an automatic email whenever their listing comes up in users’ search results.  The email does not reveal the prospect’s name; however, it does helps subscribers see value in the service (encouraging retention) and reminds them to update their on-site profile so they look their best. 

  4. AgencyFinder then assists and guides prospects step-by-step through the process of narrowing the field, which often includes prospect-side telephone interviews with AgencyFinder staff to determine the best fit.
  5. Subscribing agencies are then invited to pitch for the client’s business through a Request for Dialogue (RFD).  Usually, around 15 agencies are invited to pitch.
  6. Prospects select the winning agency.

Through this process last year, AgencyFinder helped its subscribers close 235 new business deals. 

And agencies can run a “Free New Business Audit” that allows them to compare their specialty against prospect searches for the past 12 months. This shows them if the service may be worth subscribing to, and whether they’d get more prospects if they changed specialties.

Revenues

It is important to note that AgencyFinder’s revenue model relies on subscriptions. The site does not sell ads, or charge for leads en masse like most B2B industry sites and directories sites do; instead its services are sold on an annual, renewable basis.   The service offers three pricing options:

  1. A total annual subscription rate of $5,500, paid in two installments.  A $500 initial installment is paid up front by on-line credit card and renewed every 12 months. The remaining balance of $5,000 is due only if and when, during those 12 months, an agency decides to accept at least one pitch invitation.
  2. A budget option, where if an agency is willing to pay the remainder of its fee 30 days after the initial $500 installment, it gets a 20% discount, having to only pay an additional $4,000. That’s a total annual subscription for $4500.
  3. A “Victory Fee” option for highly specialized searches.  For example, one prospect needed an agency that specialized in the Hispanic market, which is a niche with only a limited number of qualified agencies.  Since fewer than 15 agencies were contending for the pitch opportunity, it meant AgencyFinder would make less money at the normal $5,000 pitch fee. So instead of a pitch fee, the agency that won the job was obligated to pay a finders’ fee known as a Victory Fee. The amount of this fee is determined by Meyst based on the size of the client account, and is a multiple of $5,000 (i.e., $10,000, $20,000.)

Meyst says new agencies sign up on a nearly daily basis.  The first option is the most popular with the agencies, and the Victory Fee is currently the least (mainly because it is the newest option offered only at AgencyFinder’s discretion for certain prospect searches).

The pricing model is designed to maximize cash flow from an industry that resists spending money on advertising or buying “leads,” but doesn’t begrudge a $5,500 fee in exchange for a strong shot at $5 million or more worth of business. By dangling a pitch invitation in front of agencies, and offering a walloping $1,000.00 discount, AgencyFinder has found a fascinating and clever way to work around an obstinate industry culture.

Marketing

Meyst has to drive two different types of traffic — prospects and agencies. Both are driven to the site through the following SEO tactics:

  1. Longevity: Having a site that’s been getting good results for its keywords for 15 years gives AgencyFinder a significant leg up in the SEO game. The site is consistently in the top three terms for general terms like “hiring a marketing agency.”
  2. PPC advertising through Bing to drive prospect traffic for terms like “find advertising agencies.”
  3. Press Releases through online wire services (see a sample here)

AgencyFinder had an affiliate marketing agreement with AdWeek for years, which gave the site some good traction when it was starting out, but that arrangement has since come to an end. Meyst also does extensive outreach through his professional network of contacts in the industry, including people he meets by speaking at trade shows.

AgencyFinder does not currently engage in any other outreach methods, such as social media, direct mail or advertising.

Conversion

Instead of offering a free trial, AgencyFinder offers the “Free New Business Audit” described above. To run a new business audit, interested agencies are required to submit a telephone number (Meyst considers these more precious than credit cards since agencies don’t mind handing over money for new leads, but getting in touch with the right person is often a bigger obstacle than getting their money).

Meyst also says that some agencies “do everything without any interaction with us, including making their initial $500 payment.”

Retention

While Meyst doesn’t know the average account lifetime, he says that some agencies have stayed with AgencyFinder for almost 10 years now.

Given that some agencies change their target market or focus during the course of their time with AgencyFinder, Meyst has also created something called “PitchCast” whereby agencies that are outside the normal results of a client’s search are informed of the search anyway, just in case they’re considering changing or expanding their services. It’s also a great way to advertise how many people are coming to the site and generating qualified new business opportunities.

About Chuck Meyst

After decades as a consultant teaching agencies how to land new clients, Meyst saw the Internet as a great way to harness his particular expertise and consulting skills to hand agencies qualified leads they weren’t getting from other industry directories and online databases.

His advice for publishers stems from his business development background: “I have had a number of businesses and work with a lot of companies looking for agencies that all suffer from same malady — under-capitalization. So anybody contemplating a new business, they should do everything possible to become adequately capitalized. The same is true with clients — a good deal of what we do with clients is to get them to understand they can’t accomplish the impossible with $50,000. One of the things I’ve learned going back to my publishing days, is that you can never anticipate the amount of funds you’ll need.”

Vendors & Technology

AgencyFinder does a large proportion of Web development in-house, and uses third-parties for marketing, design and other functions. Here are some of their vendors:

Analytics:
Google Analytics — http://www.google.com/analytics
Visistat — http://www.visistat.com
Webilizer — http://webalizer.org

Payment processing:
First Data — http://www.firstdata.com/en_us/home.html

Press Release distribution:
PR Web – http://www.prweb.com

HTML/Web development:
Kermit Woodall — http://kermitwoodall.com

Insider Analysis

Most service businesses — no matter how big and profitable — won’t pay much more than $10-50 for a sales lead from an online site or lead generation campaign. And they are continually pushing publishers to lower their per-lead price while upping qualified lead volume. B2B publishers wind up in a crazy race, continually driving masses of new leads and competing head-to-head with Google.

AgencyFinder’s business model is a brilliant way around that rat-race. Instead of selling thousands of cheap leads, they sell hundreds of sales pitches for exponentially more. 

We believe this business model has legs in service business niches well beyond the agency world. 

As for AgencyFinder, given the number of companies seeking new and specialist agencies each year in the U.S. alone, there’s a lot of room for expansion should Meyst wish to grow. However, it would mean staffing up, teaching his yenta-skills to a team of matchmakers, and it would require he be far more aggressive with his marketing. Currently, he’s in a sweet spot — a consultant who uses the Internet to sell far more in services per year than he would probably normally close without it. He may not want the pressures of hiring or expansion, but rather to simply enjoy his no-doubt extraordinary profitability as it is.

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