Strategic Partnerships and SEO – A Better Business Model for Digital Marketers

If you do SEO for a living, chances are that you either provide SEO as a service for your clients for a nominal monthly fee or you rank your own affiliate sites and take a small affiliate commission. 

These are both very simple business models and you can make a great living doing either of them. However, I believe that most SEOs are not fully capitalizing on their skillset and there are far more lucrative ways to go about selecting niches and ranking websites.

To illustrate this point, let me show you the value you are currently providing and why you may be selling yourself short.

strategic partnerships and SEO

Your clients and the value of your SEO

If you are like many agencies, you charge somewhere around $4K per month to do SEO for a client. Let’s say your client is a home construction company. This is a sector I have spent some time in and I know their numbers well as my partners and I invest in this sector when owners are looking to sell their construction company and retire.

If you succeed in explaining to the owner of this construction company what SEO is, why it takes several months to work, why it is their best interest to pay you, and they sign up for your service, you’ll make less than $50K per year (gross) and likely around $30K net. Of course, you wasted time pursuing 10 prospects in order to get this one client to sign on with you. You’ll also have to continue to manage this client relationship. In addition, most agencies keep clients for less than 2 years on average. Let’s say each client is worth $50K in net profit to you.

Your construction client is now on page 1 for all of the terms that describe their service. Of course, this isn’t a terribly competitive SERP to rank for and these rankings will stay for a decade even after they stopped paying you to write content and build their links.

strategic partnerships and SEO

Assuming your client did ~$1M in revenue and $250K in profit when they first hired you, they could very well be doing upwards of $5M in revenue and $1M in profit per year. In addition, that number will likely increase annually. Let’s say the value of your SEO to your client is around $10M over the course of 10 years and equates to a present value of $7M in net profit to them.

...your $50K in profit for SEO services doesn’t look so good anymore.

SEO for lead generation

While this is an admittedly optimistic scenario, I believe the concept is valid: SEO agencies are undervalued.

Your value as an affiliate to ecommerce companies

Another popular business model among digital marketers is affiliate marketing.

You discuss various products or services that are available and link your readers out to these companies where they can then purchase the product or service that you recommended.

These keywords are typically more difficult to rank for as they are searched not just in local areas, but across the US and in some cases around the world. In addition, this business model is not untapped and you’ll be competing with dozens and sometimes hundreds of other SEOs all trying to rank their websites and get traffic. This means more money needs to be spent on building content and links in order to rank.

The most common way to monetize these sites is to signup for Amazon Associates and get a commission on each sale. Of course, Amazon is worth over a trillion dollars and is grateful for your contribution. So grateful that they pay you a generous 15% commission on each sale you bring them, even if it takes the visitor 30 days to finally make the purchase.

SEO and affiliate marketing

Okay, okay...Amazon pays very little, only 2%-3% on most categories. In addition, they’ve consistently lowered these payouts and it is getting more and more competitive every day to promote their products. 

affiliate marketing and SEO

If the low commissions weren’t enough, they only pay you if your referral makes a purchase within 24 hours. Even if it is in their cart and they checkout the next day, you still don’t get paid.

Let’s say you make 2.5% of revenue on average promoting softball bats. Many Amazon sellers report net margins in the 25% - 30% range and someone selling softball bats may be able to expect that. This means that with $1M in revenue, the seller will make $250K in profit while you make $25K. In reality, this is an optimistic scenario, as many people will take your product recommendations and not click on your link. Or, they will click through your link but not checkout for at least another 24 hours, leaving you with no commission.

In addition, if this client returns to buy another product from this seller in the future, you won’t get paid for that either.

strategic partnerships and SEO

As an affiliate for ecommerce businesses such as Amazon, you are doing most of the heavy lifting and your service is being undervalued.

affiliate marketing and SEO

While there are certainly upsides to the affiliate marketing model (low overhead, no customer service, little ongoing work, etc.) the space is simply too crowded to justify the value that your traffic is worth. 

Affiliate marketing is what W. Chan Kim in his best-selling book “The Blue Ocean Strategy” would call a “red ocean.” It's an industry that is packed with competitors that are not differentiated from one another. Because they are all the same, you can’t set your business apart from your competitors and you ultimately compete the profit out of it.

So how can you fully capitalize on the value that you are bringing to these businesses?

In order to understand the value you are bringing to various businesses as an SEO, you first need to understand the basics of their industry, how they acquire customers and what those customers are worth to them. 

For instance, at Minerva Equity, an investment firm that I am a part of, we acquire distressed businesses in construction and manufacturing and turn them around. For the manufacturing businesses we have acquired, we have calculated that the average customer will pay us $1.85M over the course of our business relationship. Our average profit on that $1.85M will be around $350K. We would, without question, be willing to pay $100K for someone to bring us a new customer.

Of course, driving traffic and sales for lucrative businesses is an opportunity that I am encouraging you to pursue.

While getting manufacturing clients is typically a high touch proposition and involves relationship building and industry expertise, there are many lucrative opportunities that are ripe for the picking.

What I'm advocating in this article is a 'lead gen' business model - marketing the leads themselves rather than the SEO services that generate those leads. If you'd like to read more on this topic, here's a useful article: Lead Generation: A Beginner's Guide to Generating Business Leads the Inbound Way

Identifying industries that could use your help in driving sales

In finding an industry that you could step into as an affiliate, I would suggest you apply the following criteria:

  • Doesn’t require specialized knowledge to promote
  • There are less than 10 companies that supply this product of service in any location
  • Each client represents at least $50K in profit to the business you are referring to

In looking at these criteria and applying them to various industries, I believe that you’ll come to the same conclusion that I have come to. Service businesses seem to be the best combination of low competition and high profit per customer. A few of the services that I believe lend themselves well to affiliates are:

  • Family counseling
  • Retirement plan administration
  • Stand-in CFO
  • Niche consulting (dentist consulting, restaurant consulting, construction consulting, etc.)
  • Investment banking and business brokerage
  • More…
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Selecting the right business and building a relationship

Okay, so you can probably look at those example businesses and think that some of them look easier than others. For instance, in order to promote investment banks, you can’t be a complete newbie to finance. That is true. But by the same token, because it requires previous financial knowledge, there will be less competition.

strategic partnerships and SEO

Should you decide to pursue this niche, you would need to have a basic knowledge of finance and the services that an investment bank provides. 

Once you arrive at a business that you know enough about, has enough searches and is not too competitive, then it is time to make relationships. The way I would recommend getting to know the key players in the industry is just by going through Google and Ahrefs for all the key terms. For instance, if you wanted to be an affiliate for a family counselors in your area, I would search:

  • Family counselor Los Angeles
  • Family counseling near me
  • Child counseling
  • Relationship counseling
  • Marriage counselors

Once you do this, you’ll be able to see some of the same names come up over and over again. Of course, if they are already at the top of page 1 for all of the related search terms, they may not need your help as much as some others that have only a couple reviews and are stuck on page 2 with a Wix site.

Reach out to a couple of the counselors that you have identified and introduce yourself. Explain that you are interested in blogging about family counseling in the area and would like to know if they are interested in being introduced to some of your readers who are looking for their service.

If the counselor sounds interested, you may want to offer to make the first couple of introductions for free. 

After sending a few patients to this counselor, it would be worth your time to reach back out to them to discuss how you could partner with them. Perhaps a 20/80 split on all business that you bring them would be fair.

Of course, you’ll have to negotiate with each person you do business with and each industry will be a bit different. However, many service businesses can easily support paying 20% of their revenue to acquire a good client.

I would encourage you to negotiate these partnerships on a recurring basis. This means that you aren’t just paid for the first appointment that someone holds with your partner, you are paid a portion of every appointment they hold ongoing. This is how you build a worthwhile relationship and fully capitalize on the value you are providing.

You’ll be able to turn a small website that you rank for low competition keywords into a sizable, ongoing revenue stream by partnering with quality service businesses. 

No competition from other affiliates + high margin service businesses = an easy to manage residual income stream.

This post was most recently updated on September 3rd, 2020

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