Are you a marketing whiz with a knack for entrepreneurship?
If so, learning how to start a digital marketing agency might be the best move for your career.
The digital marketing industry is booming, with global internet advertising revenue expected to reach $723.6 billion by 2026. And as more businesses shift their marketing efforts online, the demand for skilled digital marketing professionals will only increase.
In this blog post, we’ll walk you through the essentials of launching a digital marketing agency from the ground up, from developing a business plan to finding clients and overcoming challenges.
Should I Start a Digital Marketing Agency?
Launching your first digital marketing agency from scratch could be risky, especially if you’re inexperienced. That’s why we suggest you start as a contractor.
Let us explain why.
The perks of becoming a contractor first
- Learn from other seasoned professionals: It’s an excellent way to expand your experience and knowledge in digital marketing.
- Experiment with different services: Before launching an agency, you can use various digital marketing service offerings to recognize your strengths.
- Portfolio & networking: It helps build strong portfolios & creates opportunities to meet and connect with prospects directly. You can, in turn, use your portfolio to draw in clients. Does it get any better than this?
- Save more money: Lastly, a contractor lifestyle can help increase your savings, which you can later invest to kickstart your agency.
What do I need to start a digital marketing agency?
Don’t worry. Here’s everything you’d need to start a digital marketing agency from scratch:
Branding & online presence
First things first, build a strong brand identity for your agency that reflects your core values (logo, tagline, website, etc.).
Over 93% of businesses actively use social media to build their brand; why get left behind? We strongly recommend digital marketing agencies establish a strong social media presence.
Skills & experience
Have a strong understanding of digital marketing principles and practices – from search engine optimization (SEO), pay-per-click (PPC), and web analytics to social media marketing, email marketing, content marketing, etc.
Planning & staffing
As evident, making a solid business plan helps precisely define your agency’s goals, strategies, and target market. Are you planning to scale your agency over time? Build a team of seasoned digital marketers – full-time, part-time, or freelancers.
Above all, running a digital marketing agency requires a robust and loyal client base.
Are you wondering where to start? Prospecting On Demand (POD) can help.
Learn how we can help you score high-paying and long-term digital marketing clients like a boss.
Choosing the Right Business Model for Your Agency
Remember, your business model as an agency directly influences your bottom line, client relationships, and business success.
To get started, pick one of the three options: commission-based, retainer, or hourly.
Hourly
These companies charge by the hour and bill their clients based on the time spent on a project. For the most part, marketing agencies that provide a wide range of services or work on short-term projects find it lucrative and easy to administer.
Retainer
Retainer clients pay a monthly fee for a set number of hours/deliverables. A retainer model provides agencies with a consistent revenue stream and allows them to plan resources effectively. Clients, on the other hand, benefit from a predictable budget and dedicated support.
Commission-based
In this case, agencies bill their clients based on a percentage of the sales or leads they produce. Such a model is profitable for companies that successfully drive results in a specific area (sales, lead generation, etc.) or work on long-term projects with clients.
The Importance of Finding Your Niche
Standing out as a newly formed agency is exhausting in today’s ever-competitive digital marketing landscape. Our suggestion? Find your “specialty niche” to start a new digital marketing agency.
The benefits of specialty niches in digital marketing
- Less competition: By focusing on a niche, you will compete with fewer businesses, making it easier to get noticed and attract customers.
- Understanding the target audience: Niche agencies thoroughly research and address their target audience’s needs, pain points, and interests.
- Brand image: Because niche experts are perceived as credible and trustworthy sources of information, they generate more leads, sales, and partnerships.
- Higher fees: Niche experts frequently charge premium fees and have higher profit margins.
Evaluating demand and competition
The truth is, without demand, you will not generate traffic or leads. On the other hand, too much competition will make differentiating yourself nearly impossible. Such a dilemma, if you ask us.
The question is: what should you do? It’s easy to analyze competitor websites and social media accounts timely and measure search volume using keyword research tools to determine the demand and competition in your niche.
Identifying your unique selling proposition
Lastly, ask yourself what makes your agency unique. Is it, say, performance marketing services? Or is it SEO?
Whatever the case, once you’ve identified your USP, use it to develop marketing messages that resonate with your target customers.
Scaling Your Agency for Growth
While running a digital marketing agency, focus on two main areas: expanding your team and outsourcing.
Making decisions on team expansion and outsourcing
When hiring for growth, look for people with relevant skills and experience who fit your culture well. When working with freelancers, we recommend carefully managing their workload and expectations, alongside having a clear contract in place.
Try outsourcing work to avoid hiring more staff – especially for email marketing, social media management, SEO, content creation, etc. Choose a trustworthy service provider with a solid track record, and before you begin, make sure your expectations are clearly communicated and understood.
Understanding financial considerations and profitability
To ensure your marketing agency generates enough revenue to grow sustainably, ask yourself:
- How much MRR do you need to cover all expenses and remain profitable?
- What are your fixed and variable expenses?
- What is your target profit margin?
Our suggestion: create a monthly budget spreadsheet and track income/expenses regularly to identify areas of cost-savings.
Working with prospecting on demand
At Prospect on Demand, we guide impact-driven entrepreneurs who aspire to create time and financial freedom.
We mentor everyone – beginners and experienced professionals alike on how to start a digital marketing agency from the ground up so you can succeed as a CEO and hit your MRR goals with ease.
Learn more about our digital marketing agency mentorship/training programs.
Marketing and Attracting Clients
Gaining new clients in today’s market requires a strategic approach, including these steps:
Creating a targeted marketing strategy
Prepare a targeted marketing strategy to attract new customers – here’s how:
- Define your ideal customer: What are your target audience’s traits, hobbies, and needs?
- Recognize their pain points: What challenges/problems are they dealing with and attempting to solve?
- Create resonant marketing messages: Be clear, concise, and persuasive throughout your campaigns. Speak to their needs and concerns.
Tapping into referrals and word-of-mouth advertising
At POD, we advise entrepreneurs to provide excellent customer service and referral programs to encourage referrals and word-of-mouth advertising.
Include social sharing buttons on your website and email signatures to make it easy for clients to refer you. Wait, why not go even one step further and make customized referral cards?
Content marketing and thought leadership promo
Content marketing is creating/sharing valuable content to draw in and retain a defined audience. Thought leadership promo, on the other hand, requires establishing yourself as an expert by sharing your knowledge and insights.
Choose any or both – these strategies can help raise brand awareness, generate leads, position yourself as an expert, and develop strong client relationships.
Start by identifying your target audience and creating relevant and valuable content. Don’t forget to share your content through social media, e-mailers, and other communication channels.
Establishing Client Relationships and Prioritizing Quality
Needless to say, client relationships and quality can build or break a business.
Clients who feel valued and respected are likelier to recommend and return business. Our #1 advice on building a successful digital marketing agency is to deliver outstanding services that exceed your client’s expectations.
Here are some pointers for building client relationships and prioritizing quality:
Setting clear expectations and communication channels
Ideally, we suggest setting clear expectations with clients from the initial conversation.
Next, discuss the scope of work, deadlines, budget, and communication preferences in detail. Always ensure you have open lines of communication to address any queries or issues ASAP.
Developing customized strategies for each client
Remember this: every client is unique.
92% of marketers believe their prospects expect a “personalized approach.”
Customizing your marketing strategies to meet their specific needs leaves a positive mark on your potential clients. Consider their target audience and budget to help them achieve their business objectives and build trust with you.
Monitoring and analyzing data to measure success
Lastly, measure success and identify areas for improvement by monitoring and analyzing data from client feedback, website analytics, and social media engagement. Agencies that follow this rule consistently deliver high-quality digital marketing services.
Overcoming Challenges in the Digital Marketing Industry
As the digital marketing landscape evolves, it creates numerous challenges for agency owners – increased competition, demanding clients, and evolving technologies. Here’s how to overcome them:
Dealing with increasing competition
Besides selecting a niche, differentiating yourself, and providing unparalleled customer service, we recommend building your brand reputation. As one of your most valuable assets, it attracts more customers in the long run.
Furthermore, staying current on trends and technologies allows you to create more effective marketing campaigns and gain a competitive advantage.
Managing client expectations
Establishing clear objectives and standards is vital in managing client expectations while running a digital marketing agency. You should also be open and honest about your agency’s processes and progress. Respond to feedback and concerns, and remain professional and respectful when dealing with a difficult client.
Simply put – under-promise and over-deliver.
Navigating changes in technology and algorithms
Follow this CTM rule:
- Continue learning
- Try new things
- Monitor your progress timely.
It’s simple: read industry publications, attend conferences, and network with other marketers to stay current on the latest trends and developments. Try new technologies and tactics more often. Lastly, use analytics and data to monitor your progress and make required corrections.
That’s it! You’re just a few steps away from transforming your dream into reality.
Frequently Asked Questions (FAQs)
You asked; thus, we answered! Here’s a list of FAQs that aspiring digital marketing agency owners usually have on their minds:
What are the risks of starting a digital marketing agency?
The risks of running a digital marketing agency include (but aren’t limited to) competition, client retention, staying up-to-date, marketing and sales, and client churn.
Is starting a digital marketing agency profitable?
Yes, with the right strategy in action, you can set up a highly profitable agency in this multi-billion dollar market. However, be assured it won’t grow overnight.
How much does it cost to start a digital marketing agency?
Depending on size, location, services, and founder experience, launching a small digital marketing agency can cost a few thousand dollars.
Conclusion
Learning how to start a digital marketing agency from zero is an excellent path to becoming your own boss and establishing a recession-proof business. However, do your research and measure the risks involved before taking the first step.
Are you ready to launch your own digital marketing agency? If so, Prospecting On Demand is the place to be.
Our digital marketing coaching and mentoring program has helped over 1000 agency owners scale their businesses and exceed their $10k+ MRR targets.
Check out our success stories.
With us on board, you’ll learn everything about setting up and scaling a lucrative digital marketing agency in today’s competitive landscape.
What are you waiting for? Get started today – schedule a FREE Agency assessment.