White Label vs. Private Label: Decoding the Best Path for Your Agency

Are you a start-up marketing agency deciding whether you should add white-label solutions to your product offering? A white label vs private label comparison can help make the final call. 

While private labeling isn’t a common practice when it comes to start-up marketing agencies, it’s still worth knowing the difference between the two. As your agency grows, you may consider entering into partnerships with developers of marketing tools who would build tools just for your agency to offer.

In this article, we will discuss the benefits and challenges of white-label and private-label business models and share tips on how you can choose the right one for your business.

What Is White Labeling?

White labeling is a business model where a developer of particular products or services sells them to a range of other companies that, in turn, brand these offerings as their own. 

In digital marketing, this business model enables agencies to expand their service offerings and enhance their value proposition while focusing on their core competencies.

Examples of White-Label Business Model

SEO Services

Marketing agencies can partner with white-label SEO providers to offer comprehensive SEO services, including keyword research, content creation, on-page optimization, and link building. 

By leveraging white-label SEO, agencies can deliver these services under their own brand, allowing them to attract more clients and retain existing ones without needing an in-house SEO team.

For example, Vendasta’s white-label SEO services can help your agency nail down search engine optimization for your clients.

Social Media Management

With the power of AI, it’s no longer necessary to invest in building out a social content marketing department. A white-label social media management software can handle thousands of client accounts through marketing automation. 

According to the data, 75% of marketers report time savings as a key benefit of using social media automation tools.

Email Marketing

Email marketing is a powerful tool for driving customer engagement and conversions. The cost of hiring email marketing specialists may be prohibitive for a marketing agency that’s just starting.

A white-label marketing automation solution can help agencies create and launch email campaigns under their brand in no time for a wide range of clients. 

According to data from Omnisend, which analyzed 17 billion emails sent through their platform, automated emails achieved significantly higher open rates, click rates, and conversion rates compared to non-automated emails. Specifically, automated emails had 84% higher open rates, 341% higher click rates, and a 2,270% increase in conversion rates.

Web Design

Building websites for clients may be costly for marketing agencies, as they need to hire web developers whose salaries are on the rise. According to Indeed, an average Web Developer salary is $80,258 annually.

White-label web design providers offer agencies the opportunity to leverage reselling white-label website solutions to expand their list of services without the need to hire designers or developers. 

Benefits of White-Label Business Model

Cost-Effectiveness

White labeling allows agencies to offer a wide range of services without incurring the significant costs associated with developing and maintaining these services in-house. By outsourcing to white-label providers, agencies can reduce overhead, minimize risk, and allocate resources more efficiently.

This cost-effectiveness is particularly beneficial for small to medium-sized agencies looking to expand their offerings without stretching their budgets.

Scalability

The white-label business model is inherently scalable. As an agency's client base grows, it can easily scale up its service offerings by leveraging its white-label partnerships. Whether the demand is for more SEO services, additional social media management, or web design projects, white-label providers can accommodate these needs without requiring the agency to hire additional staff or invest in new technology.

Access to Expertise

Partnering with white-label providers gives agencies access to broad expertise that may not be available internally. For example, an agency may need more resources to hire a team of SEO specialists, social media experts, and web developers. By working with white-label providers, agencies can tap into specialized knowledge and deliver high-quality services that meet client expectations.

Quick Market Entry

White labeling allows agencies to enter new markets quickly by offering services they do not currently provide. For example, an agency specializing in content marketing might decide to expand into web design or email marketing. Instead of building these capabilities from scratch, the agency can partner with a white-label provider to offer these services immediately, reducing time to market and capturing new revenue streams.

Focus on Core Competencies

By outsourcing non-core services to white-label providers, agencies can deliver exceptional service in their areas of expertise while still offering a comprehensive suite of digital marketing solutions.

Challenges of White-Label Business Model

Less Innovation

One of the potential downsides of the white-label business model is that since agencies rely on third-party providers for their services, they may have limited control over the product's customization. 

This is especially detrimental in marketing, where uniqueness is the key.

Marketing agencies can mitigate this challenge by choosing to focus on a niche market. In this scenario, for example, an agency could focus on developing marketing strategies for healthcare organizations and outsource routine content production to a white-label service provider.

Dependence on Providers in Terms of Quality

Agencies that rely heavily on white-label providers may find themselves vulnerable to changes in the provider's service quality, pricing, or availability. If a provider fails to deliver, the agency's reputation may suffer, leading to client dissatisfaction and a potential loss of business.

Maintaining open communication and setting clear expectations with providers can help marketing agencies ensure consistent service quality.

Tip: Vendasta’s white-label Task Manager empowers both marketing agencies and their clients to keep tabs on the progress of various projects.

What Is Private Labeling?

Private labeling in digital marketing is when an agency offers marketing services or products under its own brand, even though these services or products were developed by a third-party provider. 

For instance, an agency might sell a private-label SEO service that’s managed by an external provider, but it’s marketed, sold, and presented to clients as the agency's offering. 

This model allows agencies to expand their service offerings without the need to build expertise or infrastructure from scratch.

Examples of Private Label Business Model

One example of private labeling in digital marketing might be Vendasta’s offering of customizable websites on its marketplace. 

Specifically, Vendasta offers marketing agencies the option to provide tailored websites to their clients, which are built according to the unique specifications of each Vendasta’s partner agency. Unlike templated websites, tailored websites can accommodate a wide range of specific design requests.

This approach is a prime example of private labeling because, although the technical work might be carried out by Vendasta or another third-party provider, the end product is fully branded as the agency's own. The client sees the agency as the sole provider of their custom website, which strengthens the agency's brand and client relationships.

Benefits of a Private Label Business Model

Loyalty

Private labeling fosters client loyalty because clients perceive the agency as a comprehensive solution provider. By offering a wide range of branded services, agencies can create a strong, cohesive brand identity that encourages clients to return for additional services.

High Margins

Agencies can set their own pricing for private-label services. Since the agency has more control over the final products and services, it can charge a premium price.

Exclusivity

Private-label offerings can differentiate an agency in a crowded market. By tailoring products or services to the specific needs of their target market, agencies can create exclusive offerings that are not easily replicated by competitors. This provides a competitive edge.

Challenges of a Private Label Business Model

Lack of Full Control

One of the main challenges with private labeling is a lack of full control over the final product. There is always a risk that the service may not meet client expectations. If the third-party provider fails to deliver high-quality work, it could harm the agency’s reputation.

For example, if a customizable website doesn’t fully meet a client's specifications or is delayed, the agency must manage the client’s dissatisfaction, even though the issue might stem from the third-party provider. 

To mitigate this risk, agencies should carefully vet their private-label partners and maintain close communication to ensure that the final product aligns with client expectations.

Higher Costs

Private label solutions often come with a premium price tag due to the level of customization and quality assurance involved. Established agencies, which typically have more significant resources and a steady client base, are better positioned to absorb these higher fees. 

In return, they gain full control over the end product, ensuring it meets their clients' high standards and specific requirements.

Similarities and Differences of White Label vs. Private Label

Opportunities for Reseller Marketing Agencies

White Label Business: Opportunities for Reseller Marketing Agencies

White-label solutions are generally more cost-effective than private-label alternatives. Start-up agencies, which may not yet have the financial resources to invest in highly customized services, can benefit from the lower fees associated with white-label business opportunities. 

This cost efficiency allows them to offer a range of services without a substantial upfront investment, enabling quicker market entry and growth.

Another opportunity for marketing agencies is to opt for a white-label affiliate program. In this framework, your marketing agency could resell a white-label platform to those who can use it to sell white-label products or services to their end clients. 

Let’s take a look at an imaginary scenario when your agency becomes Vendasta’s affiliate. If that were the case, you would receive a unique affiliate link to market Vendasta’s white-label platform to agencies that might be interested in leveraging Vendasta’s white-label tools to expand their marketing services. 

Whenever a marketing agency converts, you earn a commission. 

Private Label Business: Opportunities for Reseller Marketing Agencies

Established agencies with the financial capacity to invest in premium, customized solutions will benefit from the exclusivity and control offered by private labeling.

Things to Consider When Choosing White-Label vs. Private-Label Business Models

Let’s go through key considerations to help you make an informed decision.

Time-Efficiency 

If your primary goal is to get to market quickly, the white-label model is a strong contender. White-label solutions are pre-developed products that your agency can brand as its own. This means you can start offering new services almost immediately, without the lengthy process of product development.

While private-label products offer customization, they typically require more time to develop. You’ll need to work closely with the provider to tailor the product to your brand’s specifications. While this process results in a unique offering that stands out from competitors, it can delay market entry.

Cost-Effectiveness

White-label solutions are generally more cost-effective. They allow agencies to offer a wide range of services without significant upfront investment in product development. This model is ideal for agencies looking to expand their offerings while keeping costs low.

Private-label products often come with higher costs due to the customization involved. However, this investment can pay off in the long run by allowing you to charge premium prices.

Focus on Core Competencies

One of the key benefits of white labeling is that it allows you to focus on what you do best—whether it’s client management, strategy, or sales. By outsourcing product development to a third party, your agency can streamline operations and focus on delivering exceptional service.

While private-labeling also allows for outsourcing, the need for customization means you’ll likely need to invest more time in product development. This can divert attention from your core competencies.

Expand Your Service Portfolio

White-labeling is an excellent way to quickly and affordably expand your service portfolio through the best white-label reseller programs. By partnering with a white-label provider, you can offer additional services such as SEO, social media management, white-label apps, or email marketing without needing to develop these capabilities in-house.

Private-labeling also enables portfolio expansion but allows for a more tailored approach. If your clients demand highly customized solutions, private labeling offers the flexibility to meet those needs while still expanding your offerings.

Scalability

White-label solutions are highly scalable. As your agency grows, you can easily add new services by leveraging the provider’s existing infrastructure. This makes white-labeling an excellent choice for agencies looking to scale quickly.

Private-label products can also be scalable, but growth may be slower due to the time and resources required for customization. However, once established, private-label products can offer a strong competitive edge, especially in niche markets.

Bolster Your Brand

White-labeling allows you to build your brand by offering a wide range of services under your name. However, the downside is that since these products are available to other agencies as well, it may be harder to differentiate your brand.

Private labeling is a powerful tool for brand building. Because the products are customized to your specifications, they reflect your brand’s unique identity and values, helping you stand out in a crowded marketplace.

White Label at Vendasta

Vendasta offers a range of white-label and private-label marketing services tailored to digital marketing agencies. With a focus on efficiency, scalability, and cost-effectiveness, Vendasta’s white-label platform and marketing services allow you to quickly expand your service portfolio while maintaining your brand identity. 

Vendasta was built with a reseller focus and has lots of helpful resources, including the ultimate guide to white label. Whether you are an entrepreneur or an established B2B seller, Vendasta has a pricing tier built to suit your unique needs.

This article was originally published in June 2023 and was updated in August 2024 to include the latest information and insights.