Transcription
In 2025, the AI automation agency market is around 11 billion. The SAS market, around 300 billion. But there's a $3 trillion market being disrupted by AI that nobody's talking about: the service industry.
And while most attention in AI goes towards AI agencies or AI SAS, thousands of business owners are quietly attacking the biggest market of them all and using AI to transform boring service agencies into highly scalable, highly profitable businesses. And in this video, I'll show you why this is such a massive opportunity, show you real examples of AI-first service agencies, and show you exactly how to start your own.
If you don't know me yet, I'm Ben. I run my own AI agency, AI software business, and recently started with this new service model, which has grown surprisingly fast. So, in this video, I'll cover why there's such a huge opportunity in the service industry. I'll cover what an AI-first service agency is and give you plenty of examples, and how this model compares to an AI agency and an AI SAS. And lastly, how you can start one today.
Now, as I said, most people in AI are focused on the AI agency or AI consulting market or the SAS market, but they're both tiny in comparison to the service market. Just the digital marketing services space is 600 billion, and the talent services market is 800 billion. So, the point of this video is not to say that you shouldn't do an AI agency or you shouldn't do a SAS. There are huge opportunities in all of these markets, and all of these are being transformed by AI and actually converging a bit.
But I think the service market is being overlooked a lot. While it's actually by far the biggest market, it's a market businesses are already paying for, and a market where traditional agencies and businesses are falling behind, and where some smart business owners are already using AI to disrupt this market and building really interesting and scalable businesses out of it.
So, the service market can be broadly divided into three categories: growth services, which help businesses generate new pipeline or revenue; we have talent services, which provide companies with new talent; and operational services, which include many categories like legal services, outsourced customer support like call centers, accounting, bookkeeping, etc., etc.
Now, for the purpose of this video, I'll mostly focus on digital marketing services and talent services. These actually make up the bulk of services provided to businesses because generally they provide the highest ROI to a business. Because the biggest bottlenecks, if you think about it, to scaling a business in general are either new pipeline, new leads, or uh, new people being able to handle those new leads or customers.
So, of course, these are still broad categories. Uh, with talent services, you can think of recruiting agencies, staffing agencies, headhunters. And with digital marketing services, there are literally hundreds of small categories from content agencies to paid ad agencies to SEO agencies to lead generation agencies.
So, what is happening? Basically, a new wave of what I call AI-first agencies are tackling this market and building really interesting businesses. They're basically combining that traditional domain expertise with AI and automation to completely transform the traditional, unsexy agency model. Why was it traditionally unsexy? Because running a service agency generally just has low margins, right? Even the best agencies generally don't have higher than 20 or 30% margins. There's a real bottleneck to scaling because you can only scale through hiring and transferring the knowledge to the new hires. And to keep your margins high, you have to constantly chase new leads, and it is an extremely competitive market.
Now, what this new wave of AI-first service agencies is doing, like Cold IQ, Superside, Rocket, and us, is combining that domain expertise with AI and automation in the back end to systemize their processes, automate much of the service delivery, and therefore they're able to handle many more clients per account manager, increase their margins to levels traditional agencies could never get to, and deliver far better outcomes to clients because they're using AI in their services.
As an example, Cold IQ is a lead generation agency that mostly focuses on doing outbound email campaigns. They heavily use AI and automation in their prospecting research, lead research, their email personalization with tools like Nanon, Relevance, uh, Clay, etc. And therefore, they can heavily systemize their processes, being able to work with many more clients and grow faster. I think, uh, last year they did $6 million dollars in ARR with a relatively tiny team for a service agency, right? Like I think they have 30 or 35 employees.
Another example is Rocket, which is a recruit, basically doing the same but in the recruiting space, right? The recruiting partner for high-growth companies. "We pair talented recruiters with proprietary AI to source with position, deliver better candidates, and help you hire faster." So again, this is not a product. This is a service. They're just using AI to automate their service delivery and deliver better outcomes to clients.
Superside is another example. They do anything, it's like more of a broad marketing agency, and they do everything from, uh, uh, creatives for all social media, website design, uh, uh, packaging, you can see branding, etc. But heavily use AI in their internal processes to again, really scale up their service business to, uh, to the next level. I think they doubled their, uh, their yearly ARR after they started using AI, and I think now they're a $60 million service agency.
And lastly, us. We've recently started with this business model too, with our AI SEO agent we have developed. Instead of us selling the actual product, which we still do to SEO agencies, we are also using the product ourselves to deliver SEO services directly to our clients, generally to like e-commerce clients, because they are not that interested in having the product themselves. They just want the outcomes, and they're happy to pay us for the services we deliver, even though we're using AI and our AI system in the back end to deliver the services. And because we're using our AI SEO system in the back end, we can handle many more clients per account manager. We can run our operations with way higher margins, and we can undercut our competition in terms of pricing and come with a unique value proposition.
Now, some business owners are taking this approach so far to completely productize what was traditionally a service into a self-served product, right? So, Hoppy Copy, for example, is a great example. So, Hoppy Copy is a newsletter tool that basically allows anyone to create high-quality newsletters really fast by themselves, basically replacing a traditional newsletter agency or a newsletter freelancer or even on-hire.
Another example is POPAI, which basically makes it really easy for small creators to do, uh, scripts for video, YouTube videos, uh, uh, short videos, etc., which traditionally might have needed a service agency. Opus Clips is a good example of this too. Of course, traditionally you need maybe a content or an editing service agency to, uh, cut your clips up. Now, these are being transformed into completely productized solutions. And this is why I say here, the productization of the service industry. Slowly but surely, more and more of smaller services are being packaged into complete self-served products.
Now, the key thing with these businesses, and the reason why it's different from an AI agency, is we're not selling AI, right? We're selling outcomes. Cold IQ is selling new leads to businesses. They're selling results. Superside, brand awareness. Rocket, new talent, right? We are selling SEO results. So, we're just using AI in the back end to systemize and optimize our service delivery, but to the client, it doesn't really matter. They care about the outcome. So, you can see, not even all of them really communicate that they use AI. Some do because it can help sort of in the marketing, but it's really about selling the outcomes.
And the point I want to make here is you don't necessarily have to make this step here to productization. High-budget companies are happy to pay for services, to pay for outcomes. They don't necessarily want an extra tool to manage inside of their own company. So, staying a service provider is perfectly fine for the right audience, right? And I'll get to that more in a second.
And these AI-first agencies can really now come with a unique value proposition because they can automate much of their service delivery. They can undercut on price, offer a way lower retainer, or even go full outcome-based pricing. I am, for example, at the moment in the process of working with some agencies, and some of these AI-first agencies offer me a far lower retainer, and some even have complete outcome-based pricing, making it a complete no-brainer for me as a business owner to go with them.
Second, because they use AI and automation, they can speed up the delivery and deliver results to clients a lot faster. And lastly, because they're using AI, they can deliver better outcomes, right? And therefore, there are really two huge opportunities for AI-first service agencies.
First is to compete in the red ocean where you target the existing agency clients, right, the high-budget clients. At the moment, services are mostly being delivered to high-budget clients because services are simply expensive. But we can really compete now in this market because of this unique value proposition, right? We can undercut on price. We can offer complete outcome-based pricing. We can deliver enhanced outcomes, faster outcomes through AI, and we don't have the scaling issues that traditional agencies have, right? We don't have the expert overhead, and this is really what you see these companies going after.
But the second huge opportunity is the blue ocean strategy, right? Which is targeting underserved niches. Because again, we can lower the price so much, we can now target businesses where traditional agencies were too expensive. There's a gigantic market of smaller businesses that were previously underserved by agencies. They still need some of these services, but they were simply too expensive or not interesting enough of a target for the existing agencies. But now that we can productize these services, or at least heavily automate these services, all of a sudden all of these new markets open up. And that's why there's really zero competition there, untapped demand, and there are millions of small SMBs we can target, specialized verticals, specific regions.
And in a sense, that's really what Hoppy Copy does, right? Maybe traditionally a small or tiny business owner hiring a newsletter agency wouldn't make sense, but now he can have a self-served product to do this himself at a low price.
Now, Gloria is another example. I know the founder. He ran a paid ad agency, and he, for example, noticed that it was just too expensive for many of the small SMBs. So, he productized it, made it into a self-served platform for these small business owners to create their own ad creatives and ad copies at a far lower price than a traditional agency, and he grew, I think, to 100k MR in a little over a year.
So, how do you productize these services? Really, it's a combination, as I said before, of having the proven processes and AI automation expertise that can lead to productized services. Right now, most traditional agencies and most people in the world are stuck in stage one, which is using the tools, right? Using ChatGPT, Claude, etc. But this is really stage one because it might give you some extra productivity. But stage two and three is really where you transform into an AI-first service agency and really where you're going to get that competitive edge and that unique value proposition, right?
And in stage two, you really have to start building automations on platforms like Nanon, Make.com, etc., and automate some of your key processes in your business, right? Just start with the repetitive ones. Build granular and slowly but surely build more and more automation. If you don't have automation in your expertise in your agency right now, look for talent, right? Because it's going to pay you back 10 times, I can tell you.
So, the first stage is really automating some of these key processes, for example, in SEO, keyword research, idea generation, content generation. Then the next phase is really to bundle these smaller automation tasks or workflows into an AI system to really get more of an end-to-end system, AI system that can deliver almost the entire fulfillment of the service. And then the last stage is really to make it into a self-served product, where instead of you internally managing your AI systems to deliver outcomes, it becomes a client-facing product where the client itself can manage the entire process.
Now, that's the thing I talked about before, right? With the red ocean strategy, you can stay here, right? You can just deliver services, use these AI systems to deliver outcomes to clients. You don't have to make this. This is one thing we learned. We tried to sell the SEO product to our e-commerce clients, but they actually a lot of time asked us, "Can you just give us the SEO services?" So, this is one thing we learned. They actually prefer just getting the outcomes. They don't necessarily want an extra tool in their tool stack. So, you can safely stay here.
If you're targeting the high-budget client, if you're going after the blue ocean strategy, which is the right lower-budget clients, then eventually this productization step makes a lot of sense because you can lower the price even more for them, making it even more of an interesting value proposition for those smaller clients, right? Uh, and if you're interested in learning how to make this step, in my last video, I'll cover step-by-step how to set up a fully self-served AI SAS from an AI system, right? So, could be interesting.
So, how do you monetize an AI-first agency? Really, there are three ways to monetize. First, you can, of course, deliver the services. So, if I take us as an example, we deliver SEO services to our end customers, which are, let's say, e-commerce or SAS businesses, to deliver SEO results. We can charge a low retainer and an outcome-based pricing. The more outcome-based pricing you can have, the more unique and better your value proposition. So, if you can do that, even better.
Uh, then second, if you slowly but surely productize more and more of your services, you can eventually build it into a self-served product. And then, of course, the obvious target for that self-served product, the initial target at least, is actually targeting the agencies themselves. So, us, that's what we're doing. We've productized our AI SEO system. We sell it mainly to SEO agencies and marketing agencies because, of course, they see a huge ROI by using our system. But eventually, of course, you can also target your end customers with these AI products, like Copy, etc.
And of course, because the market is so undereducated and behind, especially these traditional agencies, they know they need to use AI. Any business, any of these agencies eventually, if they don't adapt and adopt AI, they are going to be outcompeted, so they need training on AI, right? And this is really another business model you can offer to these agencies, and eventually maybe even to the end customers. And you can see businesses like Cold IQ, Navo, it's very similar value proposition doing this too, right? They're offering also coaching programs to agencies on how to implement these AI systems and tools into their own lead generation agencies and, you know, stay up to date.
And now, if you want to look at the examples in more detail here, um, I'll make sure to put the present link of the presentation in my community too. So, uh, it will be in the link in the description below.
So, how do you start an AI-first agency? Again, you need the combination of the domain expertise and the technical expertise. If you only have domain expertise, highly recommend, if you're an existing agency, I highly recommend you start working with someone technical, partner up, hire someone who knows these platforms today. This is going to be the best investment you made in a long while because this person can really transform your business, right? So, highly recommend doing that. The other option, of course, is learning it yourself at platforms like Nanon, Make.com. They are not rocket science. I have many tutorials on my YouTube channel too. So, you can take that approach too. Of course, if you have both, you can directly, I would definitely consider going for this right away.
And if you have only technical expertise, I think a really interesting strategy you can follow, which is sort of the strategy I follow too, which is first start out as an AI automation agency delivering custom projects to clients and specifically target the agency market, specifically probably the talent market, right? The recruiting agencies, lead generation agencies, or marketing agencies because while doing that, you're really building up your domain expertise if you're working with these clients in that specific niche. Second, maybe potentially you can partner up with them, but at least you're building up the domain expertise to eventually maybe transition into this new model, which is the AI-first service agency.
Now, if you don't know which type of service to offer yet, I first of all highly recommend to focus on growth services, right, with an outcome where you deliver new pipeline or revenue to businesses, right? Because this generally businesses are very happy to pay for this and it delivers a lot of ROI. Of course, if you have a recruiting background or an HR background, you can definitely consider that one. There's a huge opportunity there too. But I'll focus it right now on growth services.
So, a very easy way to figure out what you can do is just think of all the channels to communicate with potential clients: Email, Facebook, Instagram, LinkedIn, YouTube, TikTok, X. Choose one of these. Don't go too broad, right? In general, I don't recommend starting out as a general agency because the more niche you'll be, the easier it will be for you to systemize a process and deliver outcomes across multiple clients and really get to a more productized service, right? So, pick one of these.
Then pick the type you want to do. You can do inbound, outbound, paid ads, or organic, right? So, that could lead into, you know, LinkedIn organic LinkedIn or outbound LinkedIn strategies, or email outbound Instagram paid ads. Then you pick a niche. Now, the interesting thing here is if you choose the SMB market, this is really a blue ocean market. These traditionally could not really work with service providers. So, if you can offer a low price or offer outcome-based pricing because of your systems, this can be a really good initial target because there won't be a lot of competition, right?
Or the other one is going after the red ocean, which is the mid-size to large businesses. Of course, here you have to compete a bit more with the traditional agencies and the existing agencies. But of course, with your better value proposition, outcome-based pricing, and lower retainers, you can definitely compete in this market too. And then you combine this with AI tools and AI automation, you slowly but surely productize this. You don't have to productize it from day one, right? You can do this while building, while doing this for clients, right? And of course, you're delivering outcomes to clients, right? You're not delivering AI or AI services. You're delivering new pipeline and revenue, new leads, etc. That's your value proposition to companies when you go out to the market.
So, that's it for this video. If you want to learn more about how to productize services, I did a full tutorial on my channel, which I'll make sure to link up here too. Also, if you want me and my team to help you build an AI business, you can also check my community where we offer one-on-one tech support, two weekly Q&As with me and my team, and we really try to help you with everything you need to build your own AI business or scale your AI business. So, if that's interesting to you, check the link in the description below.
Thank you so much for watching, and, uh, if you got any value out of it, I highly appreciate a like and a subscribe. I hope to see you in the next one. Uh, bye.