3 Steps To Stop Competing On Price in the Digital Marketing Industry

This article explores 3 steps to stop competing on price in the Digital Marketing industry.

Six years ago when I first launched my digital marketing agency, there was hardly any competition around for Facebook advertising services. 

Back then retargeting didn’t exist and businesses were mostly interested in garnering page likes – online ads weren’t even a line item in an average marketing budget. 

Because of that, it was easy to promote services with online ads across all sorts of niches and industries. 

It was easy to put an ad out and get leads booking in for peanuts. 

People were starting to wake up to the power of FB ads and the demand was huge. 

That kind of demand is what the authors (Renée Mauborgne and W. Chan Kim) of Blue Ocean Strategy refer to as a ‘blue ocean’.

Which for me feels fitting because it felt like my business was reveling in the advantages of having almost no competition in an almost untapped market.

The flipside of this is what they call a ‘red ocean’, where competition is stiff and each player understands the boundaries of the games. 

In red oceans, businesses try to outdo competitors by grabbing existing market share. 

Usually, this is done through competing on price or niching down of products.  

Through the years I’ve watched the Facebook Advertising space turn from a blue ocean to a red one and time and time again, have seen agencies and freelancers try to battle it out by competing on price or overpromising on results. 

Both are never a good thing for clients or the agency and don’t end up making any of the agencies any different from one another when you consider the value they each produce is essentially the same. 

When you compete on price in a red ocean, the waters get a bit murky -making it harder to tread. 

So how can a Facebook Advertising Agency create a blue ocean?  

The first step, according to the authors, is to identify the key factors the industry currently competes on, and what customers receive from the existing competitive offerings on the market. 

Figure 1 below illustrates an example of this using Facebook advertising services. 

Aside from competing on price, some of the key factors that the industry currently competes on includes:

Once these factors are identified, the next step is to chart where the market (competitors) are currently tracking, you can see this illustrated in the graph below with the line called ‘industry’.

From here, the key to identifying a blue ocean is to complete the following: 

When you go through this exercise, think about your core competencies, what are the facets of your business you are strongest at, what are the biggest complaints of customers buying similar services, what are the resource capabilities of your team and cash flow? 

As you chart this out for your agency you begin to realize that finding a blue ocean isn’t about differentiation insomuch as it’s about creating an entirely new market for yourself. 

It’s also not necessarily about a niche in terms of “doctors” or “eCommerce” or “solar clients” but rather think about how you can create demand for your services from the masses, from a segment of the market that isn’t even being spoken to. 

Sometimes this may require you to look at things like chain of buyers, complimentary services, emotional appeal, or alternative industries altogether. 

Once you’ve plotted out your value curve across the factors, remember that when a company’s curve lacks focus its cost structure will be high.  

When it lacks divergence it becomes “me too”, when it delivers high on all levels without profit/ market share it’s overdelivering. 

Need help to stop competing on price by creating demand for your services from a segment of the market that isn’t even being spoken to?

Then our Digital Marketing Agency Growth program, The Academy, could help.