White label is the simple process of another business providing products or services on your behalf. The work is done behind the scenes and then supplied to your customers from your own business. As far as your buyers or clients are aware, the items or service provided has come directly from your company.
Using white label services to provide marketing work like social media post or content writing has risen in recent years, and many agency owners have realised that white labeling can be an efficient way to scale or growth their business without the hassle.
However, white label marketing is a paid service so their is a cost associated with outsourcing work to a third-party company, which can leave agency owners asking the question – ‘Can white label marketing drive real profits?’
Where did white labeling come from?
Although selling white label services is relatively new for digital marketing agencies, the concept of white labelling has been around for many years. Clothing manufacturers who mass produced items like shirts and trousers would ‘white label’ their products so that local retail outlets could add their branding and sell the products as their own, and record companies would produce promotional white label vinyl to send to night clubs and DJs before tracks were offically released to assess popularity and success of the record.
More recently white labeling has become popular with online services like content and marketing agencies, or for ecommerce sellers who wish to sell products online without the expense of manufacturing their own. Using a white label provider helps companies to maximize sales potential while limiting outlay and removing the need to hire their own qualified staff.
What kind of marketing services can be white labeled?
Once it was clear that white labeling could be used for services as well as products this opened up a lot of opportunity and white label companies sprang up online in their hundreds. Offering a range of different products and services each white label business targeted different areas of marketing or specialised in providing services for specific industries.
Some providers focus only on software or the beauty business, while other offer an all round solutions for marketing agencies to use. While many agencies offer things like social media marketing management or blog writing services, others will supply services like email marketing or paid advertising services.
White label companies that partner with marketing or content agencies can offer things such as:
- Digital advertising
- PPC ads
- Social media campaign
- Social media content
- Website design
- Written content campaigns
- Email marketing
- Inbound marketing
- Content Writing
Who uses white label services?
The short answer is that any company which sells a product or a service has the potential to white label their offerings. Smaller businesses may employ a white label service provider to handle some or all of their work.
This allows companies to do a few different things –
- White labelling makes it possible to manage higher order volumes and handle fluctuating work demands effectively
- It allows businesses to scale while keeping costs low
- New products or services can be added more easily and with less risk
Marketing agencies who use the services of a white label provider have much to gain from outsourcing their work, which is why many agencies pay for white label services. In fact there are some agencies which operate solely by passing their orders to a white label business and make a healthy profit by selling the work under their own brand.
Other companies use a mix of their own staff and partner with a white label service to handle large or specialised orders that they may otherwise have to decline due to lack of capability or resources.
What are some of the disadvantages of white labeling?
While using white label services seems like a great solution to help agencies manage work effectively and scale operations efficiently, there are some disadvantages to it. For a white label process to be successful it will depend on the effectiveness of the provider, and any partnerships will need to be approached carefully.
As the agency loses direct control of the work, the capabilities of the white label service will need to be verified and it is a good idea to request examples of socal media posts, blog content, and any other services that may be provided.
Other factors which may be considered negative by a hiring agency are:
- Loss of control
- Dependent on the white label team
- Work delivery may be slower
Although there may be a handful of negatives to be addressed, many of these can be mitigated by carefully reviewing any white label providers you decide to work with. Things like their business services, capabilities, experience or staff, and delivery times can all be checked to avoid running into problems.
Advantages of working with a white label service
The positive aspects of working with a white label service can far outweigh any negatives. Once the correct white label provider has been located, the business relationship can work well for both sides.
Work volumes can be handled efficiently and there can be much time saved with the agency not having to perform their own work, which reduces the need for specialized creators and designers. Extra services can be added to the agency offering with little effort and no need to expand existing staff levels, and the control of profits lies completely with the agency who may set service prices as they choose.
White label services can help agencies with:
- Order management
- Reduce staffing needs
- Time saving
- Expansion of services
- Control of profit margins
One of the most appealing things for agencies who choose to work with a white label provider is the control of profits. Once the fee for white label services has been paid, the agency is free to charge any amount they decide to their clients. With complete financial control, agencies can set the cost of services at any rate they choose and raise or lower their own profit margins.
How to find a good white label provider
This entire business model hinges on the white label company and their ability to provide professional and efficient services. Sourcing a good company is critical if agencies are to use this business model to their advantage, so it is worth researching any white label providers before committing to using their services.
As part of due diligence it is wise to dig in to the background and work of the white label company and look for any potential issues or red flags. There are many white label companies which advertise online, but not all are good, and not all will offer the services your need so it is worth checking the kind of work your white label provider specialises in.
White label companies come in all forms and may cater to specific areas like technical SEO or content writing, so it is important to ensure that what your white label service does, aligns with your business needs. No matter how great the provider looks, if their field is SEO and you need social media content, they may not be the best solution for your agency.
A lot of information can be gained from online reviews and customer testimonials so check these for any negative reviews or feedback. Keep an eye out for trends that run across complaints, for example if a company has 10 bad reviews out of 5000 that may not seem too terrible at first glance. However, if a closer look reveals that every bad review was due to late of missed delivery dates, then that is an issue to watch out for.
Check how your white label service plans to collaborate and communicate, there should be tools in place to make communication streamlined and effective, and there should be a mechanism for your agency to provide feedback, make suggestions, or ask questions. Work should be able to be tracked and monitored for progress on both sides and delivery dates should be easily visible.
How are profits achieved from white labeling?
Now we have covered the basic premise of white labeling and laid out some of the advantages in terms of time saving and price setting, we can dig a little deeper into how marketing agencies can profit from partnering with a white label company.
With the time saved from outsourcing work to an external white label provider, business leaders can turn their attention to business development and attracting new accounts. Client acquisition can be targeted to areas or industries which yield high profits and new business can be sourced from different market sectors. Agencies can explore new possibilities for revenue and generate orders from previously untapped areas. With solid support provided by the white label partner, high value clients may be targeted as increased orders or demands are no longer a problem.
Expanded service portfolio
As work volume presents no problem and orders are handled by the white label company, this gives agencies an opportunity to add more services or provide specialised support. With minimum investment needed as services will be provided by the white label partners, this gives agencies an almost unlimited potential to add new business offerings to their existing menu of services. For smaller agencies this can help to reach alternative business sources, and for larger agencies it can help to define their place in the market.
Average order value
Having the ability to add additional services and being able to offer more products to clients can increase the average order value of a customer. Agencies which offered only social media content for examples, may now be able to provide content writing and advertising services. Revenue that may have previously been missed may now be captured as clients can receive an entire suite of services from one agency without having to look for other providers. Using a white label company can have the effect of increasing the average order value for each customer due to the extended range of service offerings
Customer lifetime value
Interestingly, not only can the average order value for each client increase, but the lifetime value of your customers may rise. This is due in part to the wider range of services available, but also because of the time that can be spend attending to each customer. Relationships with clients can be nurtured and developed more positively and happy clients tend to keep doing business with their chosen agency. Clients can be reatined longer and spend more which is great news for your agencies bottom line.
Reduced staffing needs
Working with a white label partner can bring in higher profits in many areas, but in other it can actually reduce expenditure. One of the biggest cost savings for agencies is in recruitment and staffing. As the work performed will be done by the white label company’s designers and creators, there is no need for your agency to add to its staffing pool. Entire operations can be managed with a handful of customer advisors and admin staff, while high dollar graphic designers and software specialists are the responsibility of the white label provider.
Lower business investment
Your agency as a whole may benefit from cost reductions in a number of different ways. Less staff means less tax or employers insurance. A smaller workforce can mean that large offices and expensive overheads are no longer required, and there may be limited need for things like costly computer equipment and software licences. Your agency can operate in an entirely new and streamlined way and realised efficiencies and better expenditure control.
With a new and lean approach to operations this allows agency owners to concentrate on scaling their business. No longer limited by staffing or the restrictions of individual output, agencies can be scaled quickly to become larger and more prominent within their market sector. If local business is the focus then the agency can be positioned as a solution for companies within the area. If business is predominantly online, then new audiences and clients can be cultivated without limitation.
Higher profits, reduced expenses, and minimized staffing and equipment needs leads agencies to not only a more streamlined operation, but one that is more lucrative. Business focus can be targeted to areas where it really matters, or that will drive the most results and smart agency owners leverage this to the full effect. Tighter control of finances and a more efficient business structure gained from white label partnerships support agencies in achieving higher earnings and driving better profit margins
Agency owners who are concerned with business growth and success can achieve their goals sooner by partnering with a reputable white label provider. In today’s business environment using a white label service can be a viable solution. Apart from the financial advantages, using an external company to handle the day-to-day tasks can raise the standard, improve work performance and output and ultimately provide agencies with a stronger and more competitive market advantage.
Partner with Smarcomms today and find out how a white label partnership can help drive better profits for your agency.