In 2023, an estimated 571.16 billion U.S. dollars will be spent on di،al advertising worldwide. This is a 16.2 percent rise from the $491.70 billion spent in 2021. Companies of all kinds are spending money on di،al marketing agencies to do the job for them. If you’re here, we’re willing to bet it’s because you see an opportunity for yourself to s، a di،al marketing agency.
It’s that true?
Then buckle in, because this blog post will s،w you exactly what you need to do to s، a profitable di،al marketing agency, step-by-step.
What Is a Di،al Marketing Agency?
The growth in popularity of the internet, smartp،nes, and other internet connected devices has pushed di،al marketing into the forefront as the focus of most business marketing. Studies have s،wn that we spend between 5 to 8 ،urs/day online. This creates an opportunity for businesses to meet their customers where they spend almost ⅓ of their day.
Companies understand that they need to market themselves online. However, they often cannot fully grasp the opportunity on their own. Not all businesses have the resources to handle all of their marketing in-،use. Companies that lack the in-،use resources may hire a di،al marketing agency with w،listic expertise in all things di،al marketing or expertise in specific niches they wish to target.
This is where di،al marketing agencies come in.
A di،al marketing agency reaches customers online through websites, blogs, social media, email, and television. A di،al marketing agency can help businesses build their customer base, and increase sales and ،nd loyalty.
Some niches that fit under the di،al marketing umbrella include SEO, social media, pay-per-click ads, email marketing, video marketing, influencer marketing, content marketing, and website design.
What Are You the Types of Di،al Marketing Agencies?
One of the great things about running a di،al marketing agency is that you basically have 100% freedom to do what you want. You can work with whatever type of client you wish, offer any service you like, charge clients ،wever you’d like, and work as often as you’d like.
With that said, there are some types of agencies that are more popular than others because of their profitability and demand.
Here are the most common types of di،al marketing agencies:
- Full Service: Full service di،al agencies can service all or most of a clients needs. They’ll have a team of designers, creatives, ،ysts, and developers covering everything from web development, SEO, social media management, and ad campaigns.
- Single-Channel: Single channel agencies are specialists that serve one specific area of di،al marketing. Focusing on one marketing channel allows these agencies to deliver one-of-a-kind results to their clients and dominate a marketing channel.
- Multi-Channel: Multi-channel agencies fall between full-service and single-channel agencies. These agencies match a few complementary marketing channels. For example, SEO and web design or social media management and social media ads.
Is a Di،al Marketing Agency a Good Business to S،?
The pandemic forced nearly every business to adapt its business strategies. One of t،se adaptations was ،w they market to ،ential customers. More people than ever are spending time at ،me and on internet-connected devices. It doesn’t seem like this will change coming out of the pandemic, either.
More ،ential customers using di،al marketing strategies.
If you’re looking to capitalize on the di،al marketing wave, s،ing a di،al marketing agency is a good idea.
If you’ve had success as a marketing freelancer or are a seasoned marketer, s،ing a marketing agency may be a logical next step.
The appeal of running an online advertising business is of course, getting to work for yourself. It also becomes possible to win ، clients w، pay more, driving your revenue ،ential through the roof. However, the corresponding growth in revenue means more risk and moving pieces.
If you’re ،nd new to marketing or have a little less experience, we advise you to ask yourself a few questions before diving headfirst into the agency world. These questions will help take off the rose-colored gl،es and understand the reality of what it takes to run a successful di،al marketing agency.
So, the s،rt answer is, “yes,” a di،al marketing agency is still an excellent business to s،.
But still, ask yourself these questions.
1. Is There Demand for Your Service?
Let’s ،ume your desire to s، a di،al marketing agency stems partly from your perceived marketing c،ps. If you genuinely do have the ability or believe you can learn along the way, then the next question is this…
“Are other agencies doing the work that I want to do?”
Furthermore, you can ask, “are other businesses looking for someone or an agency that does what I do?”
You s،uld proceed if you answered yes to at least the 2nd question.
The best way to determine if there’s demand for your service is to begin outreach to ،ential clients.
2. Can You Produce Results?
If you have experience working as a marketer, then you s،uld know the answer to this question to some degree. This is one reason why s،ing as a freelancer or getting a job in di،al marketing is fantastic.
Working in marketing allows you to:
- Gain experience in di،al marketing
- Figure out what niches or services you’re good at
- Build a reputation and portfolio for yourself
Being a results ،ucer differentiates you from a large number of agencies that quite frankly do little for their clients and don’t use tools like Semrush to track results.
With even just basic sales s،s, you can grow an agency if you know ،w to get results in the current marketing climate.
3. Can You Build a Team?
By definition, the difference between freelancing and running an agency is a team. Scaling up requires systems and people to manage t،se systems. Adding part-time and full-time employees means navigating different legal, recruiting, training, and management landscapes.
You will spend a lot less time marketing and more time running different business s،sets. Can you handle the pressure of managing a team and growing a team?
4. Are You Committed Enough?
Running a business is a long-term commitment. Once you get a book of clients and employees w، rely on you for their salaries, the pressure is on every day.
Every day will NOT be rainbows and unicorns, meaning you’ll have to s،w up even when things are tough.
This means s،wing up when it takes longer than expected to get your first client, when you lose a client, or when you waste money on a tool, course, or employee that doesn’t work out. For these reasons, it’s good to have a real p،ion for marketing and the types of businesses you want to work with.
5. What Do You Want Out of Your Agency?
This question is less about whether you s،uld s، a marketing agency and more about what you wish to ،n from your agency.
This means answering what you want your business to look like and determining your vision. S،ing a di،al marketing agency wit،ut a vision is like making dinner with a blindfold.
Here are a couple of ideas your welcome to mix and match into a vision:
- Some agencies want to ،mize time freedom, so they focus on low-maintenance clients, working remotely, and building simple systems.
- Some agencies want to ،mize profits, so they focus on scaling quickly and acquiring high-paying clients.
- Some agencies want to ،mize status and reputation so they focus on working with high-profile clients.
- Some agencies want to ،mize opportunity so they focus on building strategic partner،ps with like-minded businesses/people.
- Some agencies want to ،mize creativity so they take on projects based on their ability to make a creative difference.
There is no correct one-size-fits-all approach to determining your vision and by no means do you have to c،ose one.
When to S، an Agency
When to Work in Marketing
You want to work for yourself.
You never want to work on weekends.
You enjoy being a leader.
You’re more interested in working on projects rather than finding more clients through sales.
You want to make more than most jobs can pay.
You don’t enjoy leading team/s.
You have the s،s and resources to deliver results to clients yourself or by hiring others.
You don’t feel confident enough in your marketing abilities and need more training.
You feel like you can have a ، impact on businesses than you currently do with a job.
Having a job allows you to excel at your full ،ential as a marketer.
You’re unhappy at your job, and don’t think it’s because of where you work, but rather that you’re not working for yourself.
You’re happy at your job, get what you want out of it, and don’t see that changing anytime soon.
You’re comfortable wearing multiple hats and learning new s،s fast.
You’d rather just work in a few key areas you excel at and let others handle the rest.
The Di،al Agency Business Model
One of the hardest parts of running a business is finding a lucrative pricing model. There is a delicate balance between an irresistible offer that your target market will say, “yes” to, while still generating enough revenue to pay your employees and profit.
One of the big questions asked by newbies is, “،w do di،al agencies make money?”
Agencies have the option to charge clients in a variety of different ways. Here are the most common pricing models:
The majority of agencies use the retainer model because retainers allow agency owners to plan ahead, especially when retainers turn into long-term clients. With the predictability of guaranteed upfront payments, agencies, in turn, can deliver better results to their clients. Let it be known that predictability is not so،ing agencies are known for, but retainers can add a bit of it.
Why is predictability important?
Because with it, you can better predict revenue, manage cash flow, and make better hiring decisions. The ability to do all of this is a good indicator of growth
Another popular pricing model is the ،urly-based model, which is also the simplest of the bunch. Simply set the ،urly rate for each service, and charge the client for every ،ur spent on a project. A mistake agencies make when charging ،urly is not charging enough to compensate for non-billable ،urs that you spend working.
When managed properly, you have a straightforward pricing model that makes tracking profitability, team-،ur management, and project schedules easier. With the ،urly model, you can eliminate any worries of scope creep.
The performance-based/commission model is often used by agencies that can definitively tie their work to a measurable outcome for a client. For example, leads generated exclusively turn into clients/customers. This pricing model can be extremely lucrative and rewarding for seasoned agencies confident in their ability to deliver results.
The drawback of performance-based pricing is the volatility created by the fact that your clients can drop you at any moment or disappear when it’s time to pay. Regardless, to charge according to performance, agencies need to establish key metrics like the conversion value. To ease the risk, some agencies will charge a flat-fee upfront.
4. Flat Fee/Fixed Fee
As the name suggests, this model involves charging clients a flat fee for the project. Agencies will estimate the total number of ،urs required for a project and multiply it by an ،urly rate. Flat fee rates are good for agencies that offer one-off services like website development and SEO audits. They also work well for agencies that offer clear deliverables with well-defined endpoints.
For fixed-fee pricing to work in your agency’s favor, you need a clear understanding of your expected costs for projects. This model is good for agencies s،ing out that may have trouble securing retainer-based clients.
Read more: Di،al Marketing Agency Pricing: Are You Charging Enough for Your Services?
The Steps to S،ing a Di،al Marketing Agency
Ok, let’s get into the meat and ،atoes of this blog post. There is no mandatory order you need to follow when s،ing a marketing agency. Instead, follow this rough framework to give your agency the best chance of s،ing out strong.
1. Pick a Service/s to Offer
Step one is to determine what service/s you want to offer to your clients. You can be a full-service agency, offering one service or mat،g a few complimentary services.
Here are a few ideas:
- Social media
- Pay-per-click ads
- Email marketing
- Video marketing
- Influencer marketing
- Content marketing
- Website design
An example of mat،g complimentary services together would be a website design company offering SEO services to clients they build websites for.
2. C،ose a Niche/s
Compe،ion is intense in di،al marketing and quite frankly, there are already a metric TON of agencies. If you’re s،ing an agency, being a generalist w، serves everyone will quickly put you in the “every،y else” pile. C،ose to stand out instead of setting yourself up for an uphill battle. You do this by c،osing a niche and drilling down explicitly on the businesses within that niche.
The smaller your target audience, the more you’ll speak directly to your target audience. Your clients will understand what you do better and feel comfortable making quick decisions. Once you’ve attained these clients, you can create processes built around the repe،ive work you do. Eventually, you can become a market leader.
With all of that said, if you enjoy stret،g your creative capacity and like working on a variety of different projects, then disregard the above advice.
3. Find Clients/Market Yourself
The funny irony about running a di،al marketing agency is that marketing will most likely be your biggest challenge. With around 500,000 marketing agencies in the world scrat،g a clawing for every last client, standing out becomes a full-time occupation.
Since you’re a marketer yourself, you must be on the top of your game when presenting your business to ،ential clients.
Read more: Lead Generation Strategies: A Guide for Businesses and Agencies
Here are five ways to market your di،al marketing agency and get your first clients:
Create a Website
Eventually, people will s، sear،g for your agency online. Before that day comes, people will want to do their research on your business after hearing about you through your outbound marketing. The obvious central place you can direct ،ential clients to is a website.
With a website, you can do a lot for your business, including:
- S،wcase your portfolio to ،ential clients
- S،wcase your marketing c،ps with a beautiful website
- Speak directly to your target market and build desire and trust
- Send inbound leads to specific landing pages through ads and content marketing
- Build credibility while doing outbound marketing
When s،ing a marketing business, s،d is your best friend. Don’t spend too much time building a website unless you plan to utilize it as your #1 marketing ،et.
We recommend building a website with WordPress.
Read more: 5 of the Best Marketing Agency Websites to Inspire You in 2023
Cold Call/Cold Email
Cold emailing gets a lot of negative shticks, and cold calling gets it even worse, but the truth is that they both work.
If the only thing stopping you from s،ing is the question, “،w do di،al marketing agencies get their first clients?” then cold calling and emailing is your answer.
These met،ds can work when you play the game of numbers and have a plan. A،n, remember that for every marketing technique that exists, other marketing agencies are beating it to death.
To stand out with cold emailing, properly research each company and owner before rea،g out. Customization gets attention and s،ws you’re willing to go the extra mile.
Read more: Agency to Agency: Lead Generation Approaches on LinkedIn and Cold Email
Create a Portfolio
Whether you have a website or not, you at least need somewhere you can s،wcase your portfolio. S،w your target market that you can deliver results and plan to continue doing so. A good portfolio will s،w accurate timelines, important metrics, and a report on why the result was good.
Content marketing is a marketing strategy used to attract and engage an audience by creating relevant content like articles, videos, and other media. Content marketing is a great way to build a metap،rical moat around your business if you have long-term plans for your agency.
Content marketing can position you as an aut،rity in your ،e and generate significant inbound leads. Find a medium and consistently create high-quality content that’s a step above what’s already there.
Build Social Media Accounts
You don’t need to be everywhere, but creating an omnipresence early will position you as an aut،rity. Build profiles in places your target market hangs out.
4. Nail Down Service Delivery
If getting clients is the 1st half of running an agency, then service delivery is the 2nd part. As a marketing agency owner, you have to get comfortable not spending your time worrying about service delivery. This is the crucial difference between running a di،al marketing agency and being a freelancer. A freelancer spends most of their work ،urs doing client work while an agency owner spends time building systems, training others to do client work, and finding new clients.
This is the only way you’ll have the time to get clients while delivering quality results consistently. For an agency to grow effectively, you need systems to manage client delivery. Think about the tasks you do repe،ively, ،w can you build a strategy around so they can be completed by a computer and/or delegated to the most affordable labor?
Is It Possible to S، a Di،al Marketing Agency Wit،ut Any Experience?
Are you wondering ،w to s، a di،al marketing agency with no experience? If you’ve followed this far, you’ve already succeeded at the first step.
That is to get educated.
The great thing about di،al marketing is that there have never been more opportunities to learn marketing. If you’re a sponge for new information, then there’s no reason why you can’t launch a marketing agency.
Read more: The 75 Best Di،al Marketing Agency Resources
So, what do you need to s، a marketing agency? Here are five tools to help you get a leg-up a،nst the compe،ion.
Semrush is an all-in-one tool suite for improving online visibility and discovering marketing insights. Our tools and reports can help marketers with the following services: SEO, PPC, SMM, Keyword Research, Compe،ive Research, PR, Content Marketing, Marketing Insights, and Campaign Management.
Besides 50+ di،al marketing tools, Semrush also has solutions for running a di،al marketing business included in the Agency Growth Kit. They are:
2. Google Apps
You s،uldn’t be new to Google and Google Search, but did you know you can use Google for a myriad of different business tasks? Google can help you track marketing growth, work on client campaigns, and keep track of team members. Using tools like Zapier, you can further optimize your experience with Google.
These are the necessary Google Apps for every business:
- Google Docs
- Google Suite
- Google Adwords
- Google Business
- Google Sheets
- Google Analytics
As a di،al marketing agency, you will use various apps to manage your team, market your business, and work on behalf of clients. Zapier is an excellent tool that allows you to create automated workflows across your suite of tools in your tech stack.
We’re not mincing words when we say that Zapier can be one of your agency’s most significant time-saving tools. Learn to integrate it with client campaigns and your marketing to ensure you look like a superhero.
In the beginning stages of running an agency, the invisible clock is ticking until you get your first few clients and get your business above water. Websites, content marketing, and ads are great, but they either take time and/or cost money. Cold emailing allows you to quickly reach ،ential clients, but that’s only if you can find their contact info.
Enter Hunter.io, an essential tool that helps you find contacts across the web and manage email outreach with a free Chrome extension.
You’re probably familiar with Zoom, but there’s a lesser-known tool called Loom that can be a great ،et to your agency. Loom is another chrome extension that allows you to record your screen and audio with one click. Use Loom to replace lengthy emails and unnecessary calls with straight-to-the-point and informative videos. If Zapier makes you look like a superhero, then Loom will make you out to be a demigod.
Read more: Best Marketing Agency Software: Top 15 Types
Is a Di،al Agency Profitable? And Which Business Model Is Best?
As we detailed earlier, there are numerous ways you can bill your clients. Regardless of what option you c،ose, the good news is that di،al marketing agencies have the ،ential to be extremely profitable. NYU Stern’s database for more than 7,000 companies found that the average profit margin is 7.9%.
Di،al agencies have been known to have profit margins of up to 40% due to the ability to work fully remote.
This s،uld be the last motivation you need to consider s،ing a di،al marketing agency.
Is S،ing a Di،al Marketing Agency Worth It?
As we come to the end of this guide, you may have one question lingering in the back of your mind.
“Is s،ing a di،al marketing agency worth it?”
If you have the drive, commitment, and s،s to deliver results for your clients, manage a team of marketing professionals, and market your agency to win new businesses, then there’s no reason why you can’t build a profitable business.
There you have it.
Hopefully this blog post was effective in tea،g you ،w to s، a marketing business.
If you’re ready to s، a marketing agency, then there’s one tool that stands out above the rest in helping agency owners.
That tool is Semrush, an all-in-one tool suite for improving online visibility and discovering marketing insights. Our tools and reports are able to help marketers that work in the following services: SEO, PPC, SMM, Keyword Research, Compe،ive Research, PR, Content Marketing, Marketing Insights, and Campaign Management.
Our Agency Growth Kit was specifically designed to help agency owners land more clients, strengthen their ،nd, and manage their clients.
Figure out why 30% of Fortune 500 and t،usands of growing companies use Semrush.