How To Start a Digital Marketing Agency
A digital marketing agency provides its clients with online marketing services intended to increase the client’s reach and conversion rates. Digital marketing is essential for success in today’s business landscape. With the right multi-platform strategy, digital marketing can help businesses target new audiences while creating more rewarding and profitable customer relationships.
Digital marketing is cost-effective for building brand awareness, generating more leads, and growing sales. Additionally, it’s a great way to keep up with the latest trends and stay ahead of the competition.
Services offered by a digital marketing agency might include:
- Website design
- Search engine optimization (SEO)
- Web development
- Email marketing
- Social media marketing
- Email marketing
- Content marketing
- Pay-per-click (PPC) management
Starting a digital marketing agency can be a great way to make a living while helping other businesses achieve their marketing goals. Digital marketing agencies can help businesses of all sizes create and maintain their online presence and grow their customer base.
In this article, we provide a step-by-step guide for starting your own digital marketing agency.
- Do market research
- Develop a service offering
- Create a business plan
- Establish a brand and online presence
- Build a strong team
- Launch and grow your business
1. Do market research
Identifying target clients and their needs is a critical first step for any startup agency. By understanding the needs of prospective clients, you can focus on more profitable, in-demand services and maximize opportunities with your desired customer base.
Once you’ve identified your target audience, you can better advertise your services and develop marketing offerings tailored to their needs.
To identify your target audience, you can:
- Analyze your existing customer base. If you have much experience in the industry, consider those clients you feel were the best overall fit for your new venture, and take note of demographic similarities like age, location, and common interests.
- Research the competition. Are there other agencies providing similar services in your area? Who’s at the top of the search results page when you look into the services you plan to provide? Once you identify your competition, research their ad strategy and messaging to help structure your own and set yourself apart.
- Look for industry trends. Online data and research from various sources can help you identify trends to hone in on the right market. Example resources are Moz (tools for SEO services), Semrush (tools for PPC and SEO services), and Google Ads Keyword Planner (good for keyword research).
- Leverage social media platforms to identify your target audience. Look at the social feeds of competitors or similar lateral markets for the content people are engaging with to identify your target audience. You can also use a tool like SparkToro or Google Trends to find more useful data about audiences and trends.
- Conduct surveys and polls. If you’ve collected or acquired a list of potential customers, use a survey or poll to help you understand more about your audience. If you already have a social media presence, most have built-in polling features. Email campaigns and phone calls are also good options. Or, you could engage the services of a professional survey maker to help ensure you ask the right people the right questions.
- Develop buyer personas. With research data, you can craft specific buyer personas to target. Buyer personas can help you focus your messaging and marketing strategies for each target customer.
Understanding the competitive landscape is also important for startup agencies. Knowing your competitors and their strengths and weaknesses can give you an edge. Many tools can help you better understand competitors’ services, prices, and customer satisfaction ratings.
2. Develop a service offering
Certain digital marketing services and skills are in high demand in 2023. These include content planning and creation, marketing automation, community building, and SEO.
Additionally, some services still need to be improved in the digital marketing landscape, including customer service automation, influencer marketing, and website optimization.
Some examples of services offerings you might provide include:
- Web design and development
- PPC for Google Ads (formerly Google AdWords), Facebook Ads, Bing, LinkedIn, etc.
- Content strategy for SEO and conversion
- Email marketing and marketing automation
- Social media content and strategy
- Content creation for SEO and conversion optimization
Business owners are usually looking to get a return on their investment quickly, so PPC and social media content strategies are good services to get the ball rolling. In contrast, SEO with content can take longer to show a return. That said, leverage any marketing skills you have had previous success with.
Market service gaps are opportunities. In your target market, there might be gaps between what customers need and what current providers offer. These gaps may help you find opportunities to establish yourself quickly. A tool like Semrush can help you find areas in online keyword-based advertising that can help you identify potential gaps.
You can also tailor your pricing structure to be more attractive to target customers. Pricing structures typically follow one of three business models: percentage of advertising spend, billable hourly a-la-carte services, and a flat fee or retainer model.
- Percentage of ad spend. For PPC marketing campaigns or advertising, you can charge a percentage of ad dollars spent as a part of your management fee. Depending on the number or complexity of campaigns, that amount may range from 10% to 30% of the client’s overall spend.
- Billable hourly. You charge an hourly fee for your services. Service costs depend on the type of service and the complexity involved in the project. For example, you may charge $125 per hour for development services, $100 an hour for design with illustration, $80 for no original illustration graphic design services, and $50 per hour for social media management.
- Flat fee or retainer. A retainer or flat fee is a per-project cost or monthly fee. You might make estimations for a project and agree to do it for a predetermined cost. As an example, you may charge $5,000 for a website build. You might have a flat fee for a set of hours or specific monthly deliverables, like charging $500 a month for managing social media content and strategy. Getting your time estimations right is critical, so you don’t lose time or money in the agreement.
To attract new clients, you may offer hourly billing services. However, the most profitable model for most agencies is a monthly fee or retainer model. If you’re looking to manage large-budget advertising campaigns, you may also have success with the percentage of spend model.
3. Create a business plan
A business plan is an integral part of the success of any service-based business. It provides a road map for realizing short- and long-term goals and helps ensure all components of your new business work together to achieve those business goals.
Research from Palo Alto Software shows business plans can help lead to greater success. In fact, studies show companies with a business plan grow 30% faster than those without, on average.
A detailed service business plan can help ensure all areas of your business work toward the same goals and provide a strong foundation for success.
Creating a business plan is important in getting your business up and running. Your plan should include details about your goals and objectives and a strategy for achieving those goals.
Some key elements to include when crafting a business plan are the:
- Executive summary. This summary outlines the main points, including your business concept, target market, and competitive advantages.
- Company description. This includes a more detailed overview of your business, products and services, and industry.
- Services overview. This outlines the services you’ll provide and any you plan to expand.
- Competitive analysis. This is an analysis of your target market, competitors, and trends in the industry.
- Marketing plan. This outlines your strategies to market and promote your business and its products and services.
- Organizational chart. This is an outline of the principal contributors to your business and a chance to highlight the strength and skills of your team.
- Financial plan. This includes a budget, financial projections, and funding sources.
Read our guide on how to write an outstanding business plan to get started on a plan for your business.
4. Establish a brand and online presence
Choosing the right business name, logo, and branding elements are vital in launching a successful business. This is particularly true in digital marketing, as it reflects the quality of work you can provide others.
Select a name and logo that are memorable, unique, and reflect the values and vision of your business. You might consider hiring freelance creative professionals to help design these elements, as they can generate creative ideas, offer marketing insights, and provide design expertise.
Your company name should be clear and easy to remember. It’ll be the primary identifier for your business. Your logo should be aesthetically pleasing and include colors, symbols, and fonts representing your brand and industry. It’s also important that all branding elements are consistent across all platforms, including on your website, social media, and offline advertising.
You may have heard the saying, “The cobbler’s wife has no shoes,” meaning a professional spends so much time on their clients’ projects that they neglect their own. However, building a great website and a strong social media presence is essential for your digital marketing agency. Your website will serve as one of the most important projects in your portfolio and should reflect your best possible work.
Any site built in 2023 should be optimized for desktop and mobile devices and follow best practices for the services you plan to provide. Your social media presence should also follow the latest best practices and illustrate your ability to reach a wider audience and engage with potential clients.
If you plan to build websites for others using a specific platform (like WordPress or Squarespace), building your site on the same platform might make the most sense.
5. Build a strong team
Building a successful digital marketing business requires a strong team with passion and expertise. When searching for potential talent, don’t forget online work marketplaces like Upwork.
On Upwork, you can find and hire experienced digital marketing freelancers. Search for specific skill sets and market experience, view work samples, and read reviews from previous clients. However you manage your talent search, look for individuals with the right skills, experience, attitude, and fit for your team.
Some roles you may need to fill for your digital marketing business include marketing strategists, content writers and editors, SEO specialists, social media managers, and website developers. Each role requires specialized skills and experience, so hiring people with the right qualifications and experience is important.
Building a network of partners and vendors is helpful in several ways. Your network can help you get better pricing and new opportunities and help you navigate challenges.
You might consider teaming up with a digital marketing agency to fill out your own offerings temporarily—or even long-term. Agencies with complimentary services might be a source of mutually beneficial referrals and lead generation.
6. Launch and grow your business
Small businesses can benefit from networking and building relationships with potential clients. Local networking organizations are frequently looking for marketing skill sets. Once you join, you’ll have access to business owners from all industries who may turn into leads.
If you’ve identified a specific niche, look into attending trade shows and industry events where you can network with potential customers. These events also allow you to assess how well your offerings meet the needs of your desired customers—and keep you updated on industry trends that might offer opportunities.
Social media—particularly LinkedIn—is another way to reach potential clients. You can join groups to share content and interact with colleagues and clients online.
Once you’ve established relationships with potential clients in your niche, remember to maintain and foster those relationships. Regularly communicating with your clients can help you stay in touch with their needs and preferences.
You can invite them to receive a periodic newsletter where you provide value-added content. You should also illustrate great customer service and respond promptly to their inquiries.
Finally, you’ll need to continuously evaluate and improve your agency’s offerings and processes based on new information as the business grows. Stay updated on industry trends, solicit regular customer feedback, and invest in new technologies to ensure you’re offering the best products and services.
This can help you stay ahead of the competition and demonstrate to clients that you’re an expert in the field.
Digital marketing agency FAQs
What are the different kinds of digital marketing agencies? How much does it cost to get started building a digital marketing business? Do you need experience to open an agency?
Below, we answer some frequently asked questions about digital marketing agencies.
What are the types of digital marketing agencies?
One benefit of being an agency owner is that you get to determine what your service offerings will be and which clients you most want to work with. When it’s time to define your agency, you’ll fall into one of these three categories:
- Full service. A full-service digital agency addresses all or most of clients’ needs, including web development, SEO, social media management, content creation, and paid ad campaigns. They offer a team of professionals with digital marketing skills and expertise to provide comprehensive services.
- Single channel. Single-channel agencies specialize in a specific area of digital marketing, such as e-commerce development, SEO, web design, social media management, or content strategy. This allows the agency to offer specialized services and achieve better results for their clients in their channel.
- Multichannel. Multichannel agencies offer services in more than one complementary digital marketing channel. They provide an option between full-service and single-channel agencies, so their clients can benefit from multiple marketing channels while not having the expense of services they don’t require.
How much does it cost to start a digital marketing agency?
The cost of starting a digital marketing agency largely depends on the size and scope of the agency you want to create. It also depends on the services you want to provide.
If you’re an independent contractor considering going this route, you may have invested in much of the software and hardware you need to serve your first client.
Primary costs include the legal costs of creating your business, as well as marketing. You’ll need to pay for website development (if you’re not a developer), monthly hosting, graphic design for your logo and business card (if you’re not a graphic designer), domain name registration, and an upgraded software subscription to manage new client levels.
The design and build of your website will likely be your highest upfront cost—with continued software subscriptions being your next most costly expense.
However, if you’re looking to start a brick-and-mortar agency, you’ll have added costs of paying rent, buying hardware and furnishings, and acquiring full-time or freelance talent. Starting with freelance talent may cost less in the short term, as you may not have to provide hardware or a workspace.
Business owners will also have costs for website development, monthly site hosting, marketing, and software. You’ll likely need to invest in tools like social media scheduling, keyword research, content management, analytics software, and email and automation tools.
Software costs are frequently monthly subscriptions with discounts offered for longer-term commitments.
Is a digital marketing agency profitable?
While the initial costs of starting a digital marketing agency may appear high, a digital marketing agency has a large income potential. Even in the most competitive markets, there are opportunities to carve out industry niches or specialties that can be wildly profitable.
According to research by Agency Analytics, “Social media marketing agencies make between $1,500 and $25,000 for a single client per month.” The revenue generated by digital marketing agencies has grown year over year and reached $30.6 billion in 2022.
Digital marketing is a growing and potentially profitable business.
Can you start a digital marketing agency with no experience?
Starting a digital marketing agency with no experience is certainly possible but will require significant training and dedication. To be successful, you’ll need to understand the various digital marketing channels and the strategies that work for each. You’ll also have to learn how to use various online tools.
Many universities and colleges offer digital marketing classes or courses—as do many reputable online learning platforms. You can also explore our freelance digital marketing career guide for more direction.
Google offers resources for small business owners and online training and certifications for its services. Udemy offers online digital marketing courses, and Facebook (aka Meta) also offers training and certifications.
Get started building your digital marketing agency with help from Upwork
Starting your own digital agency is a challenging undertaking. But with the right preparation and planning you can create a rewarding and profitable business. Now that you know which steps to take to build a profitable digital marketing business, it’s time to put your knowledge, focus, and dedication to work.
Whether you need full-time, part-time, or project based help for your new agency, your best resource for hiring professional digital marketers is via the Upwork Talent Marketplace™. Business owners around the world use Upwork to fill in needs for specific skillsets like SEO, content development, PPC managers, project managers, or any resource needed to build strong teams.
If you’re a freelance digital marketer who is looking to connect with new potential clients, or to find long term work, you can find the new opportunities you’re looking for by searching the Upwork network.