A recent report by Marketing Dive and research firm Forrester claims that spending on digital marketing will hit $146 billion by 2023. This anticipated year-on-year average growth rate of nine percent suggests there are huge opportunities available for digital marketing agencies.
The growth of the industry isn’t the only reason why starting an agency is an attractive prospect. The internet has hugely lowered the barrier to entry. It’s now possible to start with a limited team and practically zero startup funds using tools that are available online.
While starting a digital marketing agency is easy, being successful isn’t. You’ll need the required skills, dedication, and an effective plan to grow your business.
While AppInstitute can’t help with your dedication, we can provide you with a step-by-step plan for how to start a digital marketing agency. Here are 11 steps you should take to start and grow your business.
Table of Contents
- 1 Step One: Do a Skills Audit
- 2 Step Two: Pick a Service to Offer
- 3 Step Three: Create Marketing Collateral
- 4 Step Four: Get Some Case Studies
- 5 Step Five: Use Your Network
- 6 Step Six: Use Freelancing Sites at the Start
- 7 Step Seven: Value Your Time
- 8 Step Eight: Find the Right Partners
- 9 Step Nine: Choose the Right Business Model
- 10 Step Ten: Land and Expand
- 11 Step Eleven: Go Upstream
- 12 Wrapping Up
Step One: Do a Skills Audit
There are many different types of digital marketing, from PPC to SEO, to social media, and more. Each type of marketing requires different skills. The first step to starting a digital marketing agency, therefore, is to have a clear idea about what you’re good at and how to fill any skill gaps.
If you have experience in managing PPC campaigns, it makes sense to offer this service. However, running PPC campaigns has many subsets of skills that you need to consider. For example, you may have to take care of things like writing the copy for the ads, building landing pages or designing images.
In addition to this, you may also want to specialize in a service that allows you to stand out from the crowd. Google or Facebook ad management is highly competitive and is a difficult market to penetrate. In such cases, you may consider offering ad management in emerging platforms like TikTok where it is easier to establish yourself.
If you aren’t skilled in these areas, how will you fill in the gaps? Is there a way you can learn these skills, for example, by taking a course? Or can you hire freelancers to take care of tasks for you? Knowing this in advance can help you define the specific service you offer clients.
There is also the problem of what happens if a client asks you to provide a service you don’t currently offer. Turning the client down may lead to them looking elsewhere. Using white label services or freelancers can help here. There is more detail on these two points in sections six and eight of this article.
The final point is that you’ll also need skills related to running a business. Do you know anything about sales, for example? Or how to take care of payroll and taxes? If not, you’ll either have to learn on the job or hire someone from outside.
Step Two: Pick a Service to Offer
Once you know where your skills lie, you can decide on the specific service you offer. While it may be tempting to cast a wide net and provide as many services as possible in an attempt to gain clients. Many small agencies find success by choosing a specific service or niche that directly relates to their skills and experience.
If you can do this successfully, you can gain the trust of those in your industry and become the go-to agency for brands that need your service.
When picking a niche, a good idea is to specify both a service and an industry. For example, if you’re a social media whizz, and you have experience working in hospitality. Your agency could initially focus on social media for hotels, restaurants, and bars.
An alternative to picking an industry you have experience in is to choose an industry where you have contacts.
When starting, a common way to get clients is through your contacts (more on this later). If you are a website designer and you have a friend of a friend who owns a law firm, inquire about creating a website for the firm and using this as a launchpad.
If you think your niche is too narrow, it’s possible to choose one that is still relevant to the work you are doing but allows for more growth. In the example above, you could decide to offer your service as (in order of how narrow the niche is):
- Website design for law firms
- Website design for professional services
- Website design for small business in your area
- Website design for small business
What About Messaging?
Now you have your service and niche, it’s critical you can convey the benefit of your service. To do that, you’ll need effective messaging.
Your agency’s messaging will convey your values and the benefits of your service to clients. It should be simple to understand. Attractive to your target market. Accurately reflect the service you offer, and differentiate yourself from the competition.
Your messaging will come through in your agency’s tagline, slogan, description, value statement, and marketing. For more information, Myk Pono created an excellent in-depth article about brand positioning that you can read on Medium.
Here are some agencies with effective, targeted messaging:
- Infratech Digital’s messaging explains what they do, the benefits of using their service, and who their ideal client is.
- Dusted mentions their services, the types of business they work with, and the results they deliver.
Step Three: Create Marketing Collateral
The next step is to put your research into practice by building some marketing collateral you can use to help attract customers.
When deciding what collateral to create, you should think about who your customers are and where they are most likely to see you. For most agencies getting started, there are two main pieces of marketing collateral they will benefit from: a website and social media.
A website is a place where an agency must convince people interested in their service that they can produce results for their business. A business’s homepage will usually contain a headline, tagline, a call-to-action, and then further down the page more information about the services offered and why they are useful.
If you created effective messaging in the previous step, writing your website copy should be relatively easy as you’ll already have a good idea about your values, target customers, and the benefit of your service. Both the websites in the section above are good examples of this.
At the top of the page, you can focus on the overall value of your agency. Further down, you can go into the value of the specific services you offer. For example, a content marketing agency aimed at SaaS could focus on how the service brings in leads for the business, then further down the page mention how:
- SEO, optimized blog posts bring customers to the website.
- White papers and eBooks generate contact details.
- Email marketing campaigns push these leads closer to becoming customers.
The other type of marketing collateral many agencies will gain value from is social media.
LinkedIn, for example, is an excellent place to network and get in touch with businesses that may require your service. Instagram is a great place for visual agencies to display their content, while Twitter can be a good place to get in touch with B2C companies. Finally, you should be on Facebook because… well, everyone’s on Facebook.
LinkedIn is likely to be where most agencies focus most of their social media efforts. It provides ample space to talk about your company and as well as a section for your company description and tagline. Other things you should think about on LinkedIn include getting endorsements from clients and publishing blog content straight to the platform.
Below you can see how Neil Patel’s agency Neil Patel Digital uses LinkedIn. The first screenshot contains the site’s ‘about’ section, while the second shows how it uses LinkedIn to publish authoritative content.
Step Four: Get Some Case Studies
An effective way to explain the benefits of your service is to use a case study. Not only do they show potential clients the type of result they could achieve, but they also act as social proof that you can do what you say you can.
A good case study will have several features. The first is the title, which will clearly explain the exact results your agency achieved. In the title, you can use figures and statistics to verify your claims.
In the main section of the case study, you should first explain the problem the client was having and why the way they were doing things was ineffective. Then, you can talk about how you were able to solve the problem for the customer. In the final section, you can go into more detail about the results you achieved. Be specific and use figures to illustrate your points.
This blog post from OptinMonster is an excellent example of a simple (it’s only 400 words) yet useful case study.
The headline “How Yoast Added 10,000+ Email Subscribers in a Month Using OptinMonster” uses statistics to detail the exact results the client achieved.
The article then goes on to explain what the client wanted to achieve, as well as the specific steps they took. Finally, OptinMonster has a short section where it lists the exact results Yoast achieved using its service.
Case studies don’t need to be blog posts. They can be PDFs, slideshows, or pretty much any format you want them to be. It just needs to be displayed in a way that is easy to share with potential clients.
Perhaps the biggest stumbling block for new agencies is that they don’t have any clients and therefore may find it hard to create a case study. However, there are ways around this.
For example, do you know any business owners who would let you test out your service? Or is there a way you can use your service to help your own business (you are a marketing agency, after all)? A landing page agency could create a landing page to get people to sign up for its newsletter, and then detail the results in a case study.
Step Five: Use Your Network
Now you’re up and running, and it’s time to find clients. Unfortunately, while up until now the process of starting an agency has been straightforward, getting clients is where things become difficult.
The main issue is: how can you convince business owners to trust you — a new business without much/any experience — enough to hand over their cash?
Well, having case studies as per the step above will help, as will effective messaging. However, for many businesses just starting out the easiest way to find clients is to use their existing network.
Tell people you know that you are starting a marketing agency and let them know the services you offer. Be sure to tell everyone, not just other business owners or people in your industry. This is because even friends or connections who are unlikely ever to need your service may know other people that do.
Using your network to find your first clients removes one of the most significant barriers to working with someone: trust. When you know a client personally, they already trust you and know your credentials. They are unlikely to worry about you running off with their money or doing a bad job.
Once you have an initial client or set of clients, it becomes much easier to sell your service. This is because you’ll expand your network, build social proof, and you can showcase positive results from initial jobs in your marketing collateral.
Step Six: Use Freelancing Sites at the Start
While these sites have a bad reputation in some circles, they have one massive benefit over other methods of gaining clients: they have many people that need work done right now. This is crucial when you are just starting out and desperately need work. Use these sites effectively, and you could be working on projects within days or weeks.
The problem is finding suitable clients. It’s no secret that there are a lot of bad projects around that you should avoid. If you fail to spot bad clients, you’ll spend a lot of time creating applications for work that you don’t want.
There are several questions you can ask to avoid finding bad clients.
- Do they have a positive work history? On Upwork, clients have star ratings and reviews. These can be good clues about whether the client is worth working with. Also, check how much the client has paid for similar work in the past to see if it fits in with your expectations.
- Is the job posting convincing? You should avoid copy-pasted job adverts or ones that are littered with spelling mistakes. Job posts that don’t contain any specifics are also often a tell-sign that the client won’t be a good one.
- Who is hiring? Many agencies use freelancer sites to hire people to work on their projects. As an agency owner, you generally want to avoid these jobs (although subcontracting can be ok in some cases). Unfortunately, they can sometimes be hard to spot. One way is to look out for phrases like “one of our clients.” Another is to check their job history; if they have hired for multiple jobs in different industries, they are probably an agency working for various clients.
Step Seven: Value Your Time
In the book “E-Myth Revisited,” author Michael E. Gerber discusses a problem many business owners make. That is, they work in their business, not on developing their business. Business owners that make this mistake often get worn out as they do far too much work but never actually grow their company.
How does this relate to starting an agency? Well, as an agency owner, your role is to build your agency. Sure, you may spend some of your time working on projects for clients — especially at the start as you build up a client base — but your most important job is developing your business.
There are many places where you can waste time. If you aren’t skilled in web design, building your own website will likely both take longer than it should do and result in a poor outcome. Likewise, bookkeeping is another task that, if you don’t outsource, can be time-consuming.
Day-to-day tasks can also be delegated. Can you use a VA (virtual assistant) to perform research tasks, for example finding potential new clients? Or, would you be better-served outsourcing tasks like designing images, writing copy, making social media updates, or uploading articles?
Even if you end up doing these tasks yourself at the start, always be consciously recording and building processes so that when you do end up needing to outsource them, you can do so seamlessly.
Step Eight: Find the Right Partners
Having the right partners can help you grow your agency. By working with other people or companies that complement your business, you can strike up mutually beneficial relationships. Here is a look at some of the partners you could consider.
A co-founder is an obvious choice. If there is someone you already have a strong working relationship with and you have complementary skills, then going into business together can help take some of the pressure off you.
For example, a copywriter could go into business with a web designer. This would allow them to offer a full website creation service without having to rely on other employees.
It’s also possible for two people with similar skills to go into business with each other. Former Apple designer Jonny Ive, for example, has just started an agency with former Apple colleague and fellow designer Marc Newson.
The downside to going into a business with a partner is that you’ll have to find double the number of clients to earn the same amount of money. While this may not be a problem for Ive and Newson, it may be something worth considering.
White Label Partners
White label services are those that are performed by someone else (or a piece of software) yet are branded with your agency’s name.
Partnering with a white labeler can help take the pressure off during busy times or allow you to provide extra services that you don’t have expertise in.
White label partners come in many forms, from companies that create content or videos to those that perform tasks like keyword research.
AppInstitute has a white label option whereby agencies can provide apps for their clients using our white label app builder. Agencies pay a set monthly fee for access to the app-building software, and they can use it to create apps for clients.
You could even set up an agency solely dedicated to selling apps. Many of our existing resellers already make good recurring revenue-building apps for small businesses. You can find out more about how to use AppInstitute to provide your customers with apps here.
Step Nine: Choose the Right Business Model
Once you start getting clients, you’ll have to start thinking about the best way to charge them. There are two main options for this.
According to Digiday, the most common way agencies charge clients is to use a fee-based retainer. Agencies that use this payment structure receive money monthly to take care of a specific set of services. This is beneficial to agencies as they know they will have a set amount of money coming in each month, making it easier for them to budget and make income projections.
When pricing a retainer for brands, your agency will have to consider all the costs associated with the project. For example, will you need to hire extra help, or use a white label partner, or pay for specific software? You also need to consider your markup.
While a retainer is generally good for agencies, many businesses are likely to want to use a project-based payment structure.
This is especially the case if they don’t need ongoing work if they are at the beginning of their relationship with your agency and they want to test you out, or they simply can’t afford a monthly retainer.
With a project-based fee structure, the client will make a one-off payment for a specific service. For example, designing a website or writing an eBook.
While the downside to these arrangements is that they don’t bring in recurring revenue, they are a fact of life and can be especially useful when you are growing your agency. There is also the chance that if you produce good work, you can move the business onto a retainer payment structure at a later date.
Step Ten: Land and Expand
Now your agency is up and running, and you have some successful projects under your belt, you can begin to search out better and higher-paying clients. Be sure to get some recommendations and testimonials from happy clients that you can use as social proof. Also, make sure you’re continually creating new marketing material, such as case studies, to showcase your latest successes.
Don’t be afraid to adjust your business model as you learn more about your customers. For example, you may have started by focusing on a particular niche, only to notice that most of your clients come from a different one. If this is the case, consider adjusting your marketing to show these changes.
Likewise, you can make changes to the services you offer to ensure you cover what clients want. If you began as a web design agency, you may find that many of your clients also want you to take care of managing their site or creating mobile apps for their business. Think about updating your messaging to reflect this insight into what clients want.
Step Eleven: Go Upstream
For many agencies, the ultimate goal is to find enterprise clients. These larger companies often have bigger budgets, more work requirements, and greater exposure than working for SMEs or startups. While a smaller business will often be price-conscious, an enterprise client is more likely to be happy to pay more for a guaranteed result.
Finding these clients isn’t easy, especially if you aren’t established. The bigger wins associated with these deals mean you’ll be competing with many other well-respected agencies for this work.
Nonetheless, it is possible to get these clients. First, you should be aware of how these companies hire agencies. It will often be a long process so you should begin networking early on to get your foot in the door. Keep your contacts up-to-date with how your business is growing.
You never know – if you stay in touch with the right people, you may end up in a good position to take on their work.
Starting a digital marketing agency is easier than ever. There is also a lot of demand for these services. However, being successful requires a lot of work and talent. If you are planning to start an agency, the steps above provide some insight into how to develop your business during its early stages.