Mason Pelt

Founder of Push ROI, and somewhat sporadically a writer, mostly on tech blogs.

Why I'm Wary of White-Label Services

Last month I saw the funniest headline I can recall outside of The Onion. As USA Today put it:
“Hitman outsourced a murder to the hitman, who hired hitman, who hired hitman, who hired hitman."
This was not a joke; it very accurately described the story of a real estate developer who put out a hit on a competitor. The hitman he hired subcontracted the job to someone, who in turn, did the same, and so on, as described by the headline.
In this case, no one got killed, and it's generally best that hitman are foiled, but I saw this as a metaphor for white-labeling services.
Every week I get two types of emails asking about white-labeling services for my company, Push ROI.
These inquiries come both from companies wanting us to do work as them and from companies wanting us to sell their work as our own. The answer is "no" to both offers, with some rare exceptions that I will address later. Not because white-labeling is altogether bad, but because our services don't lend themselves well to being white-labeled.

Products (and Productized Services) Don't Require Strategy

For software, packaged goods, or productized services, it can absolutely work to let someone else put their logo on your product and sell it, and vice versa. After all a bottle of water is a bottle of water, no matter what logo is on the front, but consulting-type services are customized to a project’s needs and don't yield themselves so well to white-labeling.
People do sell white-labeled services like SEO & PPC, core services my agency offers. But my experience is that white-labeling these are subpar for the service provider and the end client. It's not always everything it's cracked up to be for the party selling the white-labeled service.

Communication Becomes Convoluted

There is a big difference between partnering with another agency when the client knows that part of the work is outsourced, and being a white-labeled silent partner. For my part, I love the former and will not do the latter. These are my reasons:

Projects Are Poorly Defined

Companies do not frequently approach an agency knowing precisely what they need. SEO has become a word that for many means anything related to the internet and marketing in any way. Often the first task as a service provider is figuring out the true scope of the project and building a prioritized framework based around the budget. Most of the time, if a company cannot do the work in-house, they need guidance during this process. For my money, it's unlikely this guidance can be effectively provided by an agency that is unable to do the work themselves.

The Foundation Is Not In Place

Companies also often need foundational tasks completed before they can start on the main course. If a company has a slow, poorly designed website that is not converting, that is not the time for a big press push — being able to explain what foundational steps are needed and why, goes far more smoothly with direct communication than playing a game of telephone.

Sometimes The Service Never Should Have Been Sold

What I've seen with other agencies is that when they need a white-label service, many times it is because they sold something they shouldn't have. They had no real knowledge of the service and therefore no business pitching or promising it. For example, an IT services firm that negotiated in a line item for digital marketing into the scope of work, because they could get more money on retainer.

The Service Provider Lacks Influence Over The Project’s Success

On the other side of that coin, the agencies which white-label often have problems not limited to the communications issues I described above. Many agencies I've seen depending on revenue from acting as a white-label provider end up in trouble due to actions outside of their agency. If XYZ MegaCorp bids on a project encompassing marketing, design, video, management consulting and development, then outsourced sections of the work to several vendors, any single vendor messing up could end the contract.

The Client’s Costs Are Driven Up

For the end client, white-labeling normally fails to provide the best (or even mediocre) results. I'm not a plumber, so if I start bidding on plumbing projects, charging a markup, and hiring an actual plumber to do the work, it's safe to assume I would be in the way. Even if I was not a direct hindrance to the plumbing project success, am I adding value commensurate with the amount of cost I added to the project? Unless the answer is yes, Mason's Whitelabel Plumbing is not a company worth hiring.

The Exceptions

I said that there are some exceptions for when I would white-label. As is the case with most small companies, most people wear many hats. Sometimes people get sick, have kids, or want a vacation. If a project is already scoped, on track, and now needs temporary day to day management, that is the exception to the rule. In that case, white-labeling is more like hiring a skilled temp to do a job, not outsourcing strategy.
Another exception for white-labeling would be a micro task. Specifically a task that will take a few hours, and that can be easily, and clearly defined. Think of an ancillary task that’s required for a project, but is not the core service being sold. For example, hiring a developer for a task requiring technical skill I lack to complete.
If a project grows bigger, it is my preference to simply make an introduction between the client and the actual provider of the service. The client's preference may be that I manage that person as part of a team for the project, but no matter what, it avoids asking someone to work in the shadows.
I'm sure I have other exceptions, but my general rule is if I am adding cost and no value it's time to make an introduction.

Header Image: "General Sense of Caution" by cogdogblog
I’m Mason Pelt, my company is Push ROI and I write somewhat sporadically for several tech blogs



November 7th, 2019

It’s tough to determine what parts of your business and job should be outsourced or not outsourced. As CEO, maybe the logical solution is that all your work should be outsourced, as in, whatever work you’re actually doing is work that can’t be scaled. But in practice it never works like that, and if any service is involved, talent performs as talent is. SEO is such a funny industry, @masonpelt really like how you put it as “a word that for many means anything related to the internet and marketing in any way.”

November 7th, 2019

I agree with you fully, my focus on agencies & pro services firms is that they are already one layer of outsourcing. If a company has already said, “we want to outsource this.” – How many middle layers between that company and whomever is providing the services are really acceptable?

I mean, assassin, subcontracts to a hitman, who white-labels a gunslinger, who goes to an in network freelancer, who hires someone from craigslist… :wink: At some point the client is getting ripped off.

November 7th, 2019

haha that is such a funny title.

counter point: maybe the customer who’s hiring a hitman deserves to be ripped off.

November 7th, 2019

Well, perhaps services like design, production, advertising & development can strive to be just a bit more trustworthy than murderers.

December 8th, 2019

This was a great read! White label in the service industry is definitely not all that’s it’s cracked up to be.

The irony of the “turtles all the way down” hitman scenario is the more layers deep, the more covert they can make it—easier deniability.

However, in professional agency services, if I have to chase a subcontractor (who happens to have outsourced to another person who ends up being 3 levels deep), that’s not in our best interest nor the client’s.

December 8th, 2019

Exactly. We are a small shop, and we do work with contractors. But they are the same people we have worked with for years. If I cannot handle a video shoot, I know who can. Something that everyone I love working with has in common is a belief that quality is a unique reward, separate from billables.

I wrote this after talking to someone who’s company had a nightmare scenario. They hired an agency that farmed out each piece of work; many of those agencies had also subcontracted. The webmaster was unreachable directly. Everything was a game of telephone, and after a year and many thousands of dollars, the business had no results to show.

A business is rarely so aware that an agency had not done anything — most businesses defend even bad agencies. Because it is easy to see results, but hard to see when results are less than they should have been. In this case, the results were nothing, and the cost was high. Also, it was hard to hold anyone to account for the failure.

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