What makes Social Media Agencies shutdown!

Aniketh Dsouza
Feb 16, 2012 05:54 IST
New Update
What makes Social Media Agencies shutdown!

This article is about to explain here are theories as to why I feel agencies will shut down in future. Kindly note, they are based on current events and might be geo-restricted to India!

Unethical Practices

Social Media Agencies buying followers might satisfy a client temporarily but the moment the client realises that such activity had taken place, they lose trust with the agency thus do not further recommend the brand to other potential clients for the agency and they look forward to cut all transaction with that agency


When agencies require money, they sell Social Media to any brand without actually considering the use of Social Media to that brand. The client in 3 – 6 months realises that such activity has had no impact on their business and decides to stop doing business with the agency. Imagine 10 clients doing the same together and you are cash-strapped to pay off those salaries & vendors!

Lack of Fundamentals/Funding

Most social media agencies come into business without actually looking at what made businesses in similar fields shut down. Defining clear set of rules, roles, objective and sticking by them is highly important for any start up so that they don’t waiver from the track. The other part of it is that when new start ups spring up, they don’t realize that they are going to require heavy funding in 2 years span. A 2 year survival span in the social media space is a hard thing to take care of as Social Media evolves to the whims and fancies of the customer.


Agencies & brands consider social media executives similar to advertising executives. This is a direct result of lack of operational knowledge. A social media activity needs a small robust team to work together to bring success to the brands initiatives. A small ‘robust’ team comes at a price, but it can make a big difference.

Seek advice from a Business Development Team

The Business Development teams of most Social Media agencies are Pundits! But guess what, they are not the ones who actually do the job or handle your brand. They are like consultants who advise and tell you this is how where you need to go and what you have to do but cannot actually handle it themselves. What you need in such cases is a little bit of advice. Ask the people who are actually into operations and they can tell what people are talking about you ‘now’. By this I do not mean to judge the business develop

Top Management Resignations

The top management crust of the organisation in Social Media Agencies who are paid on payroll are the ones who can attain a point of full control. They are the ones who drive the company to success. The problem here is that they might want to quit and start out on their own as they feel it is quite easy to start a social media agency. The reason is simple. Everything is in the cloud. Intel is within you. All you need is a laptop, a constant source for information and a good client. Although it takes more to set up the infrastructure, it’s quite easy to do so when you have the marketing talent within you. In this case, Social Media Operations hold the key for business survival. If the people in Operations quit, no matter a business owns a business, quality of work will suffer, unless the agency find the right person to fit in. Considering there is a small number of people who actually get Social Media, this cost can come at a hefty price!

Another reason would be that a lot of young people get the medium right and they are the ones who have been hired to set up new start-ups. These youngsters are here to make a difference but when time passes by they will realize and stop, look back at the future viability and scalability of the business, gain awareness of future threats and move out of that firm/business quickly. Besides, this group is known to jump for company to company in their early years. Its bad for a Social Media Business as they happen at a Top Management Level, which is technically unstoppable, specially when the demand for these intellectuals who get Social Media ‘right’ is 70:30 to the supply !


Tie-ups in the Social Media space might not necessarily mean to grow. It might rather mean to survive. Agencies have been tying-up in two years span. Those that have not tied-up have still got some steam in them with a steady funding but eventually are looking for one as the flow begins to stop! Once this happens, founders redefine their objectives. This might shatter the organisation or keep it alive if taken care of diligently.

Do you have further opinions/ more theories to add to the above? Feel free to do so and find my theory on solutions next week!

Original Post here

#Social Media Agencies #Revenue #Funding #Business Model #Sustenance #Unethical Practices