Any angler will tell you that he doesn't cast only in the middle of the lake, or the middle of the ocean. He looks for specific types of places to cast, areas where fish tend to congregate. If he gets a good one he might even keep it a secret.
Finding clients looking for Search Engine Marketing or Online Reputation Management can be the same. Starting an SEM or ORM firm and expecting to get your clients from the web at large means you're competing with older, more established firms. Basically you're fishing the whole ocean, and there's a thousand other anglers right next to you. It isn't impossible to catch a fish this way, but it takes an awful lot of work.
Another way to go about generating clients is by finding a spot nobody is fishing, a.k.a. a niche market. That can be done both on and offline. There are literally hundreds of thousands of niches all over the world that have never heard of Search Engine Marketing or Online Reputation Management and are in desperate need of such services.
I'll give myself as an example. I live in Manila, Philippines and my niche is Filipino celebrities. You're thinking: Huh? That's right: Filipino celebrities. And its a great niche, because their names as keywords are low volume compared to a lot of other keywords. My website exists mostly to refer people after I've first met them in person, which is why the URL is my name and not my company name. While some say "Bad for SEO," my niche isn't searching for me on Google, they're finding me through word of mouth, or because I pitch them in person. I found this fishing spot by accident. I was at an awards party for celebs here in Manila, and the host asked me what I do. When I described Online Reputation Management, he said "I didn't know that was possible! I'm going to introduce you onstage soon, so be ready!" He brought me up between awards and introduced me and my business, and over the rest of the evening I was approached by a half dozen celebs who wanted to talk to me about engaging my services. None of them had ever heard of ORM or SEM.
So what other niches are there? The possibilities are endless. While you and I are surrounded by somewhat like-minded people who know the ins and outs of the Internet, keep in mind that there are even more people out there who use the Internet for email only! These are the ones you find offline, and they're less work to land because nobody's fishing their spots.
I once wanted some work writing Wikipedia articles, and so I targeted 25 marketing and PR firms in the city I lived in, printed up a nice brochure, and hand delivered it. I did my research so I could ask for the Managing Director by name. Of the 20 firms, I spoke with 5 decision makers on the spot, got appointments to speak to 4 more, and left my written materials. I left a special URL so I'd know who visited, and over half of them looked at my site. I picked up regular work from several. Most of them didn't know how to go about finding someone to write a Wikipedia article about their clients, so were glad I approached them. If I had written an email blast, it likely would have been ignored, because that's where everyone else fishes.
So find a niche where you think SEM or ORM could be useful, but the niche market itself may not be aware they exist. By being the only one fishing at that spot, you'll have a de facto monopoly on the market. At least until others discover your spot and decide it is lucrative enough to compete with you. And if that happens, congratulations, because you'll have been catching lucrative fish there for a while.