If SMB web dev is like a marriage, can outsourcing make it easier?

Website development creates a close long term partnership with advertisers. But it is also one of the most difficult services to perform well. 

First the advantages of getting into the business: SMB´s are often "stuck" because they need changes to their website before launching ad campaigns. Developing their website creates a closer, “sticky” relationship and is more like a marriage than an advertising buy; this relationship the can be leveraged to gain "share of customer." Finally, hosting and managing websites provides a long term revenue stream. Even StreetFight´s 2018 conference focused on how creating deeper, stickier services, should be an important goal for providers of SMB marketing. 

So  what is the best way to go about running website development as a service?

The answers vary depending on the size of the media and its agency strategy. Most local media, even those with full service agencies, struggle to make web development profitable.

There are two basic models to choose from: Building inhouse or outsourcing via a third party partner.

Let´s look at these alternatives in more depth:

1. The inhouse model - Customer websites

Pros

At first glance, developing websites inhouse looks attractive:

* Revenues are not “split” with a wholesale/retail third party.

* Someone on staff may appear to have the knowledge and free time.

* It is a core skill for a digital agency.

* It cements the relationship; no one else is involved

The inhouse option works best for media who already have a separate agency infrastructure and processes in place, when sales of web development to SMB´s add depths to the agency model and the company has long term commitment to the website development team. 

But there is are good reasons this model does not work for many local media companies. 

Cons

* Inhouse website development increases the start up costs. At least one full time developer is needed, with multiple sales required to sustain that position.

* Easy to lose money on projects. 

it is a true service not a product, and as any web dev guru can tell you, customers are late to deliver key assets and make innumerable changes and requests for customization. 

* Hard to scale. Projects come and go and its difficult to right-size the team.

* Steeper learning curve to pricing, tracking, and billing. 

Most media are not used to tracking and billing for time, change orders, and the like.

Is your digital agency able to accurately track time against price, spec out agreements in ways that are flexible, and stay in control of the process? If not it may be better to start out with a third party who has the experience.

2. Building inhouse with turnkey platforms

Building on a turnkey platform like Wix or MonoSolutions seems like an attractive alternative:

Pros

* The templated technology is easy to master. 

* Small, good-looking sites can be built from templates in a couple of  hours.

* Pricing can be reduced and margins retained for smaller businesses. 

These are good choices for very small and one person businesses who do not yet have a website.

“You can build a $500 website with a 50% margin in a couple of hours,” on the Monosolutions platform, according the Matt Materga, VP of U.S. sales.   

Materga contends that turnkey websites should be in local media agency stack, but concedes that  most businesses large enough to advertise will need a more customer solution, such as WordPress or Shopify.

* Cons

Most wmall businesses have custom needs, so some of the work will need to be created on Word Press or Shopify anyway. 

3. Supplementing with an e-lance service

Another way media agencies can keep the development team flexible is to use an e-lance service.

One new entry to the market, Lorem.tech has top notch specialists in WP and Shopify who charge on completion.

Pros

* A media company´s project manager with a basic understanding of WordPress or Shopify can run a small development team working on multiple projects.

* Every project has a hard bid, so jobs are predictable.  

* Adds flexibility to the team if it is suddenly short staffed. 

Cons

* The downside is that Lorem.tech is not wholesale priced, although media may be able to negotiate. So again the pressure on margins is too high for this to be more than a supplemental strategy. 

3. Outsourcing using a third party partner

For most local media companies the best solution may be to start by partnering with a turnkey white label web development service. Many full service agency partners provide web development on a per-page pricing basis.

A better option may be to partnering with specialized SMB web dev builder, like BeyondPrivateLabel.  

Pros

* Lower start up costs. With a wholesale, retail model every customer is profitable from the start. 

* Margins appea to be pretty  good. Kevin Wendt, VP of sales, says partnering media companies yield a 40 to 50% margin on web dev sales.

* Fully white labeled relatonship.

Unlike some digital agencies,  the account managers assigned to clients appear to be from the media or agency, not a separate brand. 

* A broad base of media customers, 13 years experience, and a track record of success.

* Development is WP-based allowing customization and online ordering adequate for most SMB´s, large and small.

* The kinks in process are already worked out. Beyond Private Label trrains account managers how to engage with clients and writes all the content. “It´s easier for customers to  edit than write,” Wendt said.

* There is no charge to SMB´s for small changes.

A flat monthly fee of around $40 a month covers it, making this model attractive to SMB´s. Lorem.tech, for example, can charge up to $150 for a small change, such as a set of click-by-click instructions.

* At scale the residual long term revenue stream can be significant, and add to control of the client relationship.

While unable to disclose client lists due to NDA´s, Wendt says BeyondPrivateLabel has launched 1500 sites for one media partner, with an average monthly fee of $40 a month.  That's a significant revenue stream and  marketshare.  For most local media, a  third party partnership can provide the best of all worlds, predictable margins, long term revenue streams, scalablility and client control. 

Interested in sharing your experiences iwth us? Reach out to  alisa@techrefs.com.