How to Start a Digital Marketing Agency

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In the past decade, digital marketing quickly became one of the hippest and most rewarding career paths out there. Most industry experts agree that the craft’s best days are yet to come as more people gain internet access worldwide, allowing them to participate in the digital economy. This means that more products and services will enter the online market, creating more work opportunities for online marketers.

With digital marketing salaries at an all-time high and continuing to rise annually, it’s no wonder why more people are getting into the craft. Having a high-paying job in the industry is well and good, but if you want to maximize your earning power in the digital marketing field, having your own agency is the way to go.

Running your own business allows you to remove the cap on your earnings that come with being paid a fixed salary. With agency work, the only limit to your earning potential is your ability to scale and your appetite for challenges. If you’ve always wondered what it would take to get your own startup marketing agency up and running, this post is for you. Here are six tips on how to start a digital marketing agency:

  1. Determine What You’re Really Good At. Digital marketing is a very broad field with lots of small sub-disciplines under it. Most of these are their own unique bodies of knowledge and it will be hard for you to find people who have 5-star expertise levels on more than just one of them. If you’re serious about forming a digital marketing agency, you’ll want to initially zero in on a few areas where you can be among the best in your field. These can include:
  2. Search engine optimization
  3. Paid search advertising
  4. Social media marketing
  5. Banner advertising
  6. Channel partners
  7. Affiliate marketing
  8. Web design
  9. User experience optimization
  10. Conversion rate optimization
  11. And more

Most potential clients will inquire about popular digital marketing disciplines such as SEO, paid search, social media marketing and web design. Make sure to have one of those as your core offerings to attract a steady stream of potential clients.

  1. Determine Your Lead Generation Model. Cashflow is the lifeblood of any business. Digital marketing agencies are no exception to that rule. If you want to survive and grow, your agency needs a steady stream of paying customers who’ll help cover your bills. To do that, you need to receive leads from one of the following channels:
  2. Organic search traffic
  3. Paid search traffic
  4. Social media accounts
  5. Email marketing
  6. Referrals
  7. Affiliates
  8. Service resellers 

Of these potential lead sources, organic traffic is still the preferred channel due to the fact that Google doesn’t charge for traffic and the leads driven by search are usually easier to convert than those from other channels. Paid search and social media marketing are good secondary lead sources.

If you have a large network of associates and friends in the industry, referrals can be a gold mine as referred leads tend to be easier to close deals for than complete strangers. Working with SEO service resellers where you act as the white label provider of services can also be lucrative but it won’t get you much in the realm of brand recognition.

  1. Prepare Some Initial Operating Funds. Skills and hard work are the primary assets of any service business. However, that doesn’t mean that you can set up a digital marketing agency without significant financial resources. Even if you set up shop in your home office, you’ll still need cash to pay electric and internet bills, purchase computer equipment, subscribe to software tools, etc. You’ll also need some revolving funds to cover employee salaries while you wait for your initial set of clients to pay.

Many digital marketing agency owners come up with their initial set of operating funds through the following sources:

  • Personal savings
  • Bank loans
  • Private investors
  • Clients who pre-pay

In our experience, you’ll need at least $5,000 to survive your first 2-3 months of operation depending on where you’re located.

  1. Get Your Business Registered. While it’s entirely possible to make good money doing digital marketing as an underground business, it’s not the correct setup if you value growth and sustainability. Staying unregistered may help you avoid taxes, but it also prevents you from doing business with bigger and legitimate companies.

Sooner or later, you’ll start getting turned down because you don’t have the right credentials and you don’t have the ability to issue official receipts. For most companies, that’s a deal breaker because it goes directly against normal accounting processes mandated by law.

You’ll also have a hard time convincing talented people to work for you if you don’t have the right paperwork in place. If you’re unregistered with the government, employees will feel that there’s nothing to protect them if you ever start shortchanging and abusing them.

Other than that, being registered keeps you motivated to stick with the business when you start facing a little adversity. In contrast, unregistered and fly-by-night digital marketing agencies tend to fall apart when things start going awry due to the fact that there’s no legal framework involved.

  1. Identify Recruitment Channels. Speaking of hiring people, you’ll want to identify channels where you can find people who might be good fits to join your team. Web designers, graphic artists, SEOs, web analysts, writers and more are all vital to the success of most digital marketing agencies.

The following are the usual means by which digital marketing agencies find qualified applicants for open positions:

  • Linkedin
  • Digital marketing forums
  • Facebook groups
  • Local digital marketing associations
  • ZipRecruiter and other paid job portals
  • Online outsourcing hubs

As your digital marketing agency grows, you’ll find yourself being less involved with production activities and more involved with management and decision-making tasks. It’s very important that you find people who have both the skills and the passion to take over what you do so you can move on to bigger opportunities.

  1. Do Basic Accounting. Your agency may be really good at digital marketing but if you don’t have common business sense, you’ll have a hard time stabilizing your company. Make sure to account for every expense that you have along with all the income you’re generating. Hire a certified accountant to do basic bookkeeping and tax filing functions for you. This will help you stay away from trouble with the IRS while keeping your company’s profitability at decent levels.

Good accounting should enable you to see where you stand financially at any given time. This will help you make smarter decisions that spans every facet of your business from spending to hiring and right down to how aggressive you should be in acquiring new clients.

There’s obviously plenty more that goes into starting your own digital marketing agency, but these six tips should be enough to help you survive the first year. The core of what you do i.e. the services should be excellent, but keep in mind that support functions and other best practices are almost equally crucial.