One of the biggest challenges of starting a social media agency is how to choose a profitable niche.
The best social media marketing clients can be unassuming, while the worst ones may look phenomenally exciting. In light of this, we’ve decided to share our experience on how to choose a profitable niche for your social media career. Over the years, we’ve figured out these reliable criteria by which to objectively evaluate a potential niche and client.
Keep in mind: you are the sum of the five people whom you spend the most time with. Don’t waste your time and effort with dud clients that drain your energy and make you hard to work with.
If you’re starting a social media career, and want to pick a profitable niche for your Social Media Agency, remember these four criteria:
How Long Have They Been In Business?
Work with established and profitable businesses.
I recommend you look for clients that have been in business for at least 5 years.
According to a vast number of stats and studies, only 50% of businesses survive for five years. And if they do survive, you can be assured they understand their audience. Therefore, you don’t have to put in work trying to figure out who their target market is and what messages resonate — they’ll already know what works.
Also, this means that they’ve got a bit of cash to invest in growing their business. Conversely, new businesses are typically trying to get a “good deal” and will require you to do the market research footwork.
A good rule of thumb is to only work with people who are a lot more successful (i.e., richer) than you and learn as much as you can from them.
Having rich clients means you’re spending more time around people with more money which WILL, in turn, raise your status.
Are They Profitable?
Most products and services on the market are profitable. Otherwise, they wouldn’t be sold. That being said, I’ve seen a lot of struggling businesses with very small profit margins and they don’t even realize it. One of our top tips on how to find a profitable niche for your social media career is to look at the profit margins of the businesses you’re targeting. Ideally, you want to find businesses that have a margin of 50% or higher. These margins are often found in high-ticket products and services in the “experts niche” such as training, speaking, coaching, and consulting.
Typically we stay away from eCommerce, Retail, and Restaurants – these industries have notoriously low margins.
What’s Their Customer Lifetime Value?
Sometimes you may find a business that has a low-cost front-end offer with the profits in the back. Businesses should know their lifetime value. Typically it is based on how much the average customer spends with them over 2 or more years.
If you’re selling a product or service that is worth $1000 or more per sale, you’ll have more money to spend on advertising to acquire new customers. The benefit here is that you won’t need to spend too much time optimizing your campaigns.
If you spend $200 in ads to a customer worth $1000, your client’s ROI is 5:1 and they’re happy.
Are They Willing To Invest In Advertising?
To see results for high-margin, high-ticket items, you need a small advertising budget to work. You want to start by testing their offer by showing it to their target audience.
If for some reason you meet resistance on the initial “test” budget, reassure them that this is a test to see if Facebook Advertising will work for their business. If it does, it could be a gold mine of opportunity for their business. They have a profitable product or service and have made several sales for it before (even if it wasn’t advertised online). Therefore, you should have no problem generating sales for them through Facebook.
The goal of the initial $500 ad spend is to discover the CPA (Cost Per Acquisition) for their customers. If your client meets all of the previous criteria, this shouldn’t be a sticking point for them. Close the deal around this contingency and be prepared to walk away if it’s not a good fit.
Top 20 Highly Profitable Niches For Social Media Agencies
Now that you know how to find a profitable niche for your social media career, check out the top 20 highly profitable niches listed below for clues on where to find your next dream client: