Starting a digital marketing agency from scratch can be tough, but it’s not impossible. If you’re looking to enter the exciting world of digital marketing as a service provider, you’ll need to follow a long process to establish your business, get clients, and hire employees.
I know it’s not easy, but trust me, it’s worth it. I started my own digital marketing company in 2012 after ten years as a part-time SEO freelancer. The transition wasn’t easy, but it was full of opportunities. I made a lot of mistakes along the way, but I also learned some valuable lessons that helped me improve my business and turn it into a successful agency.
So, if you’re ready to start your own digital marketing agency, I’ve got you covered. In this guide, I’ll share my experiences and tips to help you avoid the mistakes I made, minimize your risks, and maximize your chances of success.
What is a Digital Marketing Agency?
Gone are the days when traditional marketing ruled the roost. With the rise of the internet, smartphones, and other connected devices, digital marketing has taken center stage for businesses. On average, we spend 5 to 8 hours a day online, giving companies the chance to connect with their customers where they spend a third of their day.
But not every business has the resources to handle all of their marketing in-house. That’s where digital marketing agencies come in, offering expertise in all things digital or specific niches like SEO, social media, PPC ads, email marketing, video marketing, influencer marketing, content marketing, and website design.
A digital marketing agency can help you reach customers online through websites, blogs, social media, email, and even TV. The result? Increased sales, brand loyalty, and a bigger customer base.
Types of Digital Marketing Agencies
Running a digital marketing agency is pretty sweet – you have the freedom to work with any client, offer any service, charge however you want, and work whenever you want.
But let’s face it, some types of agencies are more popular than others. Here’s the rundown of the most common ones:
- Full Service: These agencies can handle all or most of a client’s needs, with a team of experts in web development, SEO, social media, and ad campaigns.
- Single-Channel: These agencies specialize in one area of digital marketing, delivering unique results in that channel.
- Multi-Channel: These agencies offer a few complementary marketing channels, like SEO and web design or social media management and ads.
Why Start A Digital Marketing Agency?
Starting a digital marketing agency is a smart move for those looking to break into the business world.
Here’s why starting a marketing agency is a good idea:
1. High Demand for Digital Marketing Services
With more and more businesses moving online, competition is on the rise and so is the demand for digital marketing services. The growth in the number of businesses looking to establish an online presence means there’s a huge opportunity for digital marketing agencies to thrive.
2. Work from Home with Remote Teams
Starting a digital marketing agency is a great option if you’re looking to escape the 9 to 5 grind. You don’t need a physical business presence to operate, as all operations can be performed remotely using email and Skype. As a business owner, you can minimize costs by working from home and hiring remote teams to assist you.
3. No Prior Experience Required
Don’t let a lack of prior experience hold you back from starting a digital marketing agency. You can gradually build your digital marketing skills using online courses and practice on your own websites before offering services to clients.
4. Be Your Own Boss
Take control of your career and become your own boss by starting a digital marketing agency. You’ll have the freedom to work on your own terms and build a business that aligns with your goals and values.
5. Scalable Business
A digital marketing agency is a scalable business, allowing you to start small and grow as you acquire more clients. You can begin by providing services yourself and then hire more people as the business grows.
6. Low-Cost Business to Start
Starting a digital marketing agency doesn’t require a big investment. All you need is an internet connection, subscriptions to a few tools, and a website. Office space, employees, and other expenses can come later as the business grows.
Digital Marketing Agency Business Model
Finding the right pricing model for your digital marketing agency can be a challenge. You want to offer a compelling deal that your target market can’t resist, but at the same time, you need to generate enough revenue to cover your expenses and make a profit. If you’re new to the game and wondering how digital agencies make money, here’s a rundown of the most common pricing models.
The retainer model is the most popular among digital agencies because it offers predictability. When you secure a retainer from a client, you have a guaranteed upfront payment that allows you to plan ahead and deliver better results. This model can help you better predict revenue, manage cash flow, and make informed hiring decisions, which is essential for growth.
The hourly model is straightforward and simple. You charge clients for every hour spent on a project, based on your hourly rate. The only catch is that you need to make sure you charge enough to compensate for non-billable hours. When managed properly, the hourly model makes it easier to track profitability, team-hour management, and project schedules.
The performance-based/commission model is suitable for agencies that can tie their work to a measurable outcome for clients, such as leads generated that turn into customers. This model can be highly lucrative, but it comes with some risk as clients can drop you at any moment. To ease the risk, some agencies charge a flat fee upfront.
4. Flat Fee/Fixed Fee
The flat fee/fixed fee model involves charging clients a fixed amount for the project. You estimate the total number of hours required and multiply it by your hourly rate. This model works well for agencies that offer one-off services like website development and SEO audits or have clear deliverables with well-defined endpoints. To make fixed-fee pricing work in your favor, you need to have a clear understanding of your expected costs for projects.
In conclusion, there’s no one-size-fits-all pricing model for digital marketing agencies. The best model for your agency will depend on your services, target market, and business goals. Consider trying out different models and see what works best for you and your clients.
13 Steps to Starting a Digital Marketing Agency
Now let’s get down to business. When starting a marketing agency, there is no set order you must follow. Rather than relying on a cookie-cutter approach, follow this rough outline to ensure your agency starts strong.
1. Gain confidence and skills in digital marketing
Starting a digital marketing agency can be a great business idea, but it requires more than just digital marketing know-how. You also need to have strong business management skills and confidence in your abilities. Here’s a breakdown of the three main areas you need to focus on to get your agency off the ground.
Digital Marketing Skills
To run a successful digital marketing agency, you need to have a good understanding of the different components of digital marketing, including SEO, Google Advertising, Facebook Marketing, Social Media Marketing, Content Marketing, and Email Marketing.
While you don’t need to be an expert in all of these areas from the start, it’s important to have hands-on experience with these processes so you can figure out what works best for you and your clients.
The best way to master digital marketing is to learn from established experts and get plenty of practice. There are plenty of online resources available to help you build your skills, so make use of them.
Business Management Skills
As a business owner, you’ll need to have a basic understanding of running a business, including project management, time management, invoicing and billing, contracts, and HR management. While you don’t need a degree in business management, you should gradually build these skills as you grow your agency.
Confidence is key when starting a business, especially in the digital marketing industry where you’ll need to take risks and have faith in your abilities.
Before serving clients, make sure you have working experience by either working in an established agency or on your own websites. This will help you achieve real, measurable results and know that you’re ready to become a service provider.
2. Decide what kind of services you’ll offer
Hey there, starting a digital marketing agency can be exciting but also overwhelming with all the services you can offer. But don’t worry, it’s all about taking it one step at a time.
A full-service agency usually offers:
- Web design and development
- PPC (Google Ads, Bing Ads, Facebook Ads, etc)
- Content marketing (including content writing)
- Social media marketing
- Email marketing
- Conversion optimization
As a startup, it’s better to stick with the services that align with your skills. If you’re an SEO pro, start with that and expand as you grow your client base and cash flow. The goal is to keep costs low and rely on your strengths.
From experience, the services that bring in the most revenue are the ones that provide real value to clients: SEO and PPC.
3. Plan your business operation
Time to decide how you want to run your digital marketing business. You’ve got three options:
virtual from home with remote workers, traditional office with local employees, or a combo of both. Each has its pros and cons, so consider costs and where your clients are located.
If you’re serving a specific city, having a physical presence there can help build your brand and snag local clients. But if you’re serving clients globally, having a physical office just means more monthly costs.
One perk of starting a digital marketing agency is you can run it from home with remote workers. Lots of online and SaaS companies do this and it’s the future of biz. As you grow, you can hire local employees who can work from home too, avoiding office expenses for now.
Just make sure you have a designated home office space and the best internet connection.
4. Register your business
Alright, it’s time to make things official. Here’s what you need to do:
- Pick a business name
- Register a domain name
- Design a logo you love
- Register your business with the proper authorities
- Get a fancy toll-free number
- Find an accountant & auditor
- Line up a trusty lawyer
- Make some business cards
Do all these steps now, even if you don’t need all of them right away.
5. Create a website
Start your online journey with a bang by creating a website for your digital marketing business. This is your agency’s “front door”, so make sure it’s on point and reps your brand well.
Your website should look pro and give potential clients all the info they need to decide if they want to hire you. Make it about them, not you. Explain what they’ll get out of working with you, and create specific landing pages for each of your services. Make it easy for people to contact you, no complicated forms necessary.
The goal is to get leads, filter ’em, and focus on the ones that are most likely to become clients.
Don’t forget to claim your brand name on all the big platforms (FB, LinkedIn, Twitter, Insta, etc.) and create biz pages. People will check you out, so make sure everything looks good and professional.
Finally, register your biz with websites like Crunchbase and any local or government orgs that can prove your legal status.
6. Demonstrate your expertise and experience
Finding new clients is a tough challenge for any digital marketing agency. But, once you’ve got their attention, it’s crucial to convince them to choose you over the competition. Here’s how:
- Share your story and milestones on an “About Us” page.
- Highlight success stories and case studies.
- Show off your academic credentials and past work with known companies.
- Include customer testimonials and partnership agreements.
- Display certifications and mention from other websites.
If you’re just starting out and don’t have all these elements yet, don’t worry. Start with what you can and work towards the rest. Offer to work on a friend’s website and ask for a testimonial. Get certifications from reputable companies. Use your own website as a case study. Do some guest posting on well-known websites and mention it on your homepage.
And most importantly, be honest about your experience and only share real reviews and case studies. A business built on fake reviews is not a recipe for success.
7. Pick the right tools
As a digital agency, having the right tools can make all the difference in efficiency and success. From optimizing digital marketing campaigns to invoicing, it’s important to choose tools that offer features you’ll actually use and not just nice-to-haves. Keep in mind to choose tools that can be used on both your own website and your clients’ sites when comparing pricing.
First on your list should be a digital marketing platform like SEMRUSH, Ahrefs, Hubspot, or Moz. These all-in-one platforms have tools for SEO, content marketing, social media, and PPC management. The author recommends SEMRUSH for its great features and reasonable pricing.
Other paid tools to consider include lead generation software like Optinmonster and an email marketing solution like MailChimp. Grammarly is a must-have for avoiding spelling and grammar mistakes in online writing. Canva is a great option for creating graphics and presentations.
There are also several essential free tools, including Google Analytics, Tag Manager, Search Console, Data Studio, Keyword Planner, Docs, Slides, Forms, and Skype.
Take the time to learn and familiarize yourself with these tools before taking on clients as your time will be limited once you start working. Make sure to choose the tools that best fit your agency’s needs and budget.
8. Define your business model
Your next step is to define your business model, that is, how you will charge.
The most common models are charging per hour, per project, or monthly.
- Per hour means you charge based on the time you spend on a project. This rate can range from $30 to $120 per hour, depending on factors like your experience, client location, and the type of work.
- Per project means you agree on a fixed amount with the client for the whole project. Just be careful with your estimations, or you could end up losing money.
- Monthly fee is when the client pays you a monthly retainer for agreed-upon services, like SEO, PPC, or social media management. This is typically the most profitable model, but it’s also the hardest to get started with.
As a new agency, my advice would be to start with either the per hour or per project model. While it’s not the most profitable, it’ll help you quickly get new clients and build your portfolio. You can also adjust your hourly rate to attract clients.
9. Get your first client
To turn your idea into a business, you need clients. Here’s what worked for me in the early days:
- Tap your network: Reach out to friends and family who own businesses or work for one. Offer to help with their digital marketing and present a detailed plan with specific goals. Explain why investing in their online presence is crucial. Keep your pricing attractive, as your goal is to build your portfolio.
- Online job boards: Check out Upwork and PeoplePerHour for digital marketing job postings. To stand out, reply quickly and answer all questions in the posting, be honest, and keep your prices low.
Don’t forget, the lessons you’ll learn from your first client will be invaluable.
10. Make a blog about digital marketing
Want to grow your agency and get more clients without spending a fortune on advertising? Then you need to start your own blog, ASAP. Trust me, a well-written blog with valuable content is the best way to attract new clients and show off your skills.
Think about it: when potential clients find you through a Google search, they already know you’re good at ranking websites. That makes their decision to sign up with you a lot easier. To make the most of your blog, aim to target keywords related to the services you offer.
Blogging has been the main source of leads for my agency for the past decade, and we’ve worked with hundreds of clients worldwide without spending a dime on ads. In fact, growing your blog should be a top priority for your business.
As your blog grows, so will your agency. And the best part? You’ll be on your way to turning your company into a profitable business faster, without relying on advertising.
11. Build your portfolio and reputation
If you’re in the digital marketing game, your ultimate goal should be to keep growing your portfolio and collecting those customer testimonials. It’s a no-brainer that a strong portfolio and positive reviews will help you attract bigger and better clients.
Now, I know you may be tempted to offer low-cost services to quickly build your portfolio, but trust me, it’s worth taking your time to focus on quality over quantity. Having a solid portfolio and happy customer reviews will make it easier to land those high-budget clients that can really boost your profits.
Just remember, building a strong reputation takes time. Don’t get discouraged, just keep working with each client and before you know it, you’ll have a portfolio to be proud of.
12. Develop your team-building processes
So you’re growing your agency and getting more clients, which is awesome! But eventually, you’ll reach a point where you just can’t handle everything on your own. That’s when it’s time to think about hiring some help.
Before you start bringing on new team members, make sure you’ve got your processes in place. We’re talking about having a set of standard operating procedures (SOPs) that document all the steps you take for each task. This includes client onboarding and all the services you offer. Trust us, it’s way easier to do this now before you’ve got a full team, otherwise, you’ll waste a ton of time explaining everything to everyone.
Use your current experience with clients to create email templates, proposal templates, custom reports, and checklists that anyone can follow. Keep it simple and don’t overthink things. You can use Google Docs and Gmail to organize everything in folders.
13. Recruit the right people for your agency
So you’re ready to expand your digital marketing agency and bring in some fresh talent? That’s a big step and means your business is doing well. But if you’re not quite there yet, hold off on hiring unless you’ve got the funds to take a risk.
I know from personal experience that finding the right people to take over your tasks can be a challenge, but don’t worry, I’ve got some tips to help make it easier.
- Start small – delegate tasks that are easy to execute and make sure to clearly explain what you expect from your new hires. Document the steps and keep your processes up-to-date.
- Hire freelancers first – this will keep costs low and give you more flexibility. Plus, you can bring in extra help on a project-by-project basis.
- Give a pilot project – it can be tough to know if a freelancer is a good fit for your team, so try them out on a pilot project before making a full-time hire. Trust me, it’ll save you time and money in the long run!
Is a Digital Agency Still Profitable?
Starting a digital marketing agency can be highly profitable. In fact, the average profit margin is 7.9%, according to a database of over 7,000 companies by NYU Stern. And with the ability to work fully remote, some digital agencies have been known to have profit margins of up to 40%. Don’t miss out on this lucrative opportunity!
Is Starting a Digital Marketing Agency Worth It?
Wondering if starting a digital marketing agency is worth it? The answer is a resounding yes! If you’ve got the drive, skills, and commitment to deliver results, manage a team, and market your agency, there’s no reason why you can’t build a profitable business.
Starting a digital marketing business is a great idea. You can work from home, be your own boss, and grow the biz without a ton of cash. Before you dive in, there are a few things to keep in mind.
First and foremost, know your stuff. If you’re new to the digital marketing game, take time to build your skills and gain experience. Start by doing some marketing on your own sites and testing different techniques until you know what’s working and what’s not.
Once you’ve got results under your belt, you’ll have the confidence to offer your services to others. Start small, don’t try to do everything at once, and grow gradually. One client at a time, add to your portfolio.
When it’s time to bring on new people, make sure your processes are in place and build your team gradually. Hiring remote employees is tricky, so be prepared to try out a few candidates until you find the right fit.
Blogging should always be a top priority. It will help you land new clients without spending on advertising and give you a major biz advantage.
Last but not least, always remember the motto “the customer is always right”. Give your clients the attention they deserve and turn them into repeat customers. This will minimize your cost of acquiring new customers, increase profit, and help you scale faster.