How to Start a Digital Marketing Agency from Scratch

So you’re ready to take the leap and start building a digital marketing agency. Terrific!

But if you want to succeed, you’ll need to do it right. Plenty of aspiring digital marketing agency owners start with big dreams only to have them fizzle out in a few months.

If you want to be sure you’re the type of person who can launch and run a digital agency, see if you have any of these experiences, skills, and qualities:

• You have both agency-side and client-side experience.

This is not essential for starting a digital marketing agency (you can start an agency with no online marketing experience), but let’s not kid ourselves: Experience helps.

• You have strong sales skills.

There’s more to agency sales than “always be closing.” So if you don’t already have sales skills, start reading books or at least the book summaries and attending seminars and soaking up all the Sales wisdom you can find.

• You have great a personal network.

Ever heard of how “your network is your net worth”? This could not be more true for digital marketing agency owners. Referrals are the single best source of new business for agencies, and you get referrals from your network.

• You have some savings and a good credit score.

As a new agency owner, your cash flow is going to vary a lot. At one time or another, you’re going to need enough credit or enough savings (or both) to get through a few dry months. So save up all you can, and protect your credit score like your business depends on it… because it does.

So if money is going to be such a stress point as you start a digital marketing agency, how much money are you going to need, anyway?

It’s worth a detailed answer.

How much does it cost to start a digital marketing agency?

How much it costs to start an agency depends, of course, on the agency. It depends on what type of clients you want to work with and how high your overhead costs are. If you’re going after Fortune 500 firms, you’ll need more of a budget than if you’re courting small businesses in a small town.

But for the sake of a benchmark, here’s the minimum of what you’ll need to be in business, including essential reporting tools.

• A website. $30 a month to $3,000 a month.

Hosting can be had for $200 or less per year. And there are plenty of free WordPress themes that can help you create a nice site. There are also enough free website development tools like Google Analytics to get your website built and optimized.

• Email marketing software. $20 per month.

You can get by with a free MailChimp account… but sophisticated marketers will know. So budget at least $20 per month. You want an email service provider so you can offer lead magnets and nurture email sequences. This helps you take cold leads and turn them into clients.

• Social media marketing/scheduling software. $30 per month.

There are free tools for this, sure. But paid tools offer features that can save you a lot of time. Depending on your audience, it can be social media scheduling or LinkedIn automation tools. But they’re definitely worth the money. They’re worth the money. So invest at least $30 per month and take that free time to make your agency more visible.

• Content creation software. $60 per month.

This is a generous budget, but it will give you access to a paid image editor like Canva, Flipsnack or Adobe Photoshop for $30 per month. Invest another $30 in one of the many video creation tools available.

• Reporting software. $99 per month.

This one is important. Clients expect results, and one of the best ways to demonstrate results is to show them regular reports documenting… results. So any money you spend on reporting is a direct investment in retaining clients.

Ideally, you also want reporting software that lets you automate reports. This can save you hours of work every week.

• Conferencing and calendar software. $55 per month.

You’re going to be talking a lot of people as a digital agency owner. Make it easy for them by investing in tools like Zoom and Calendly.

• Business cards and print collateral. $60.

This can be a one-time cost, but you should have nice digital business cards for your networking events.

• A workspace. Free to $300 to $3000 per month.

You may not have to pay for office space at first. Many agencies have been launched in kitchens, spare bedrooms, and home offices. But if you do need office space, it’s going to add a lot to your overhead.

• Internet access and a phone.

You probably already have access to these, so adding them on as a separate business cost is optional.

• A business checking account and business licensing.

Depending on where you live, licensing costs may vary. So will the cost of a business checking account. Usually, you can get one for $20 or less a month.

Minimum monthly total: $314

One-time costs: $60

So there: You can run a digital marketing agency on as little as $300 a month.

Now that we’ve got the money issue out of the way, let’s talk about the other thing you’ll need: Experience. Though it helps to have digital marketing experience, it’s possible to work around this.

How to start a digital marketing agency with no experience

Yes, it can be done. Just use your abilities in Sales, organization, and people skills to pull your agency together while you hire others to do digital marketing. Invest in a good digital marketing course to learn the basics fast and get a general understand on how digital marketing works.

All you have to do is to just find people who have the digital marketing skills you lack.

As you probably know already, there are tens of thousands of freelancers available on the major job boards. Guru, Fiverr, and similar sites have talented people who are willing to work at competitive rates. You just need to find out who’s good, versus who says they’re good.

To do this, put together a few test projects. Test out 2-3 different freelancers for each type of digital marketing task you need done. This does require some investment, but finding good people is worth it.

As you build your team out, your marketing capabilities will grow. Just keep asking lots of questions, and start educating yourself about digital marketing as fast as you can. If you’re going to talk to sophisticated in-house marketers, you need to know at least the basics of digital marketing. Unless, of course, you can find someone who does know digital marketing, and you pay them to talk to clients.

Now let’s shift into the final phase of planning your agency: Structuring it.

How to structure your agency for success

There are a few critical decisions you need to make before you start a digital marketing agency. Get these core, structural decisions right and all your other work will be easier.

1. Pick a target market.

“Do not try to be all things to all people.” It’s classic advice that applies to anyone wondering about how to start a digital marketing agency in 2020.

Picking a very specific niche or target market will immediately help you with some of the biggest challenges agencies face:

• It will give you expertise about a certain section of a market. This makes you more valuable to potential clients and gives you an edge over other agencies that are generalists.
• It makes it much easier to build your network and be known in that small niche.
• It helps you achieve economies of scale with your offerings.

If your clients have similar needs, you can fulfill those needs more efficiently than if you were dealing with completely different companies.

2. Pick a specialty.

“Digital marketing” is a very broad field. In includes:

• Social media marketing
• Email marketing
• Pay per click marketing
• Search engine optimization
• Content marketing
• UX and Web design
• Local marketing

And that’s just the shortlist. So while it might be tempting to offer all these services, avoid that. The most successful agencies (especially the most successful small agencies) pick one specialty and get good at it.

3. Pick the right billing structure.

Ah, the age-old question: Bill by the job, or bill by the hour? This can have a huge impact on how profitable your agency is.

But don’t get stuck in the old “by the job” or “by the hour” dichotomy. Nearly half of the agencies in a recent survey revealed that their digital marketing plans are subscription-based.

4. Pick the right business generation channels for your agency.

How are you going to get new business in the door? How are you going to market your marketing agency?

With public speaking? Have a great blog? Facebook ads and webinars? It may require some testing to figure out what works, so make sure you give yourself enough budget and time to figure this out.

Conclusion

Those are the basic things you need to know about starting a digital marketing agency. Figure out who you want to serve and how, but don’t get too bogged down in endless planning. The most essential thing to do when you launch a digital marketing agency is to just take action. Check out these best tips on how to promote your agency to get a clear picture of what to do.