Regardless of the business size, digital marketing and ad spending are becoming more prevalent than ever. In fact, ad spending in the digital space is expected to reach over $870 billion by 2027. Since businesses don't always have the resources or expertise to develop and implement a comprehensive digital marketing strategy, many tend to work with digital marketing agencies.
So, there's a huge scope for digital marketing agencies to thrive in the current market. However, how do you build a digital marketing agency from scratch? You also have to grow and scale your agency over time.
With competition getting tougher each day, how can you establish a profitable digital marketing agency? Our guide covers essential digital marketing agency tips to help you build and scale your agency.
- What Is a Digital Marketing Agency?
- How to Start a Digital Marketing Agency?
- Choose a Niche
- Create a Powerful Brand Presence
- Build An Online Presence
- Establish Your Services and Pricing
- Create a Suite of Resources
- Establish Effective Client Acquisition & Retention Strategies
- Focus on Attracting Clients
- Common Challenges For New Agencies And How To Overcome Them
- Conclusion
- Frequently Asked Questions
What Is a Digital Marketing Agency?
A digital marketing agency is a company that specializes in providing all services associated with digital marketing. Some of these services include:
- Social media management
- Search engine optimization (SEO)
- Content marketing
- Email marketing
- Pay-per-click (PPC) advertising
- Influencer marketing
- Web design
A digital marketing agency doesn't necessarily have to stick to one type of service. Most agencies offer all or a combination of these services.
That brings us to the types of digital marketing agencies:
- Full Service: A full-service agency handles all digital marketing services. Such agencies have an extensive team of social media managers, web developers, creatives, designers, ad specialists, and so on.
- Single-Channel: Some agencies only focus on one digital marketing channel. For example, a company may only offer SEO services. Another may only do influencer marketing.
- Multi-Channel: These agencies are somewhere between full-service and single-channel agencies. They offer a handful of services, but not all of them. For example, an agency may provide content marketing, social media, and PPC services.
How to Start a Digital Marketing Agency?
Here's a step-by-step process that explains how to start a digital marketing agency. If you're not starting entirely from scratch, you can skip the initial steps and jump to where your agency stands currently.
Choose a Niche
The first step is to figure out your niche, a specific area of expertise for your digital marketing agency. You might think you could get more clients being the jack of all trades, but the reality is different. Specializing in a specific niche isn't only more lucrative but also helps you build credibility.
That's exactly what Chris Kirksey, CEO at Direction.com, noticed at his agency. According to him,
''Differentiating in a crowded market is all about your niche. Once we dropped all of our digital marketing services other than SEO, our growth skyrocketed. Then, we narrowed down even further into SEO for the real estate industry and law firms. I’ve found that the more niched down we become, the more growth that follows.''
As Chris recommended, it's even better to narrow down your niche further to serve a specific industry or client type. Some industries that require comprehensive digital marketing solutions are eCommerce, healthcare, real estate, travel and hospitality, construction, SaaS, fashion and beauty, and technology.
You can further refine your niche by selecting specific services you'll provide. For example, if you plan to offer PPC services, decide if you'll do it for all channels or just Google Ads. Will you also offer Facebook Ads, Instagram Ads, TikTok Ads, Reddit Ads, etc.?
Similarly, with SEO, determine your expertise. You may do link-building and on-page optimization but not technical SEO. But what about international SEO and local SEO? Be very clear about your services. It will help you map your target client's persona.
Renee Miller, Founder/CEO at The Miller Group, suggests exactly that,
''Focus on a point of difference – whether it’s a specific category, specific skill set, etc.''
She further explains that the more specific you are in your services, the better because
''when you try to be everything to everyone, you accomplish being nothing to anyone.''
But what about full-service agencies that offer anything and everything to a wide range of clients? Disruptive Advertising is one such agency. If you plan to take this route, focus on building a strong team with diverse skill sets and experience.
As John Sampogna, CEO and Co-founder of Wondersauce, says,
''If you’re drawn to offering a broad range of services, it’s essential that you understand what you’re signing up for. You are building 3 to 5 different agencies that must work incredibly well together and apart.''
Only set on this path if you have a team and infrastructure to support it. Otherwise, follow Miller's advice and specialize in a specific area and niche.
Create a Powerful Brand Presence
Your digital marketing agency should have a strong brand presence that makes it instantly recognizable. Before you do that, define your clientele. What type of clients do you want to work with?
With an audience persona in mind, you can develop a brand message to which they feel connected. For example, if you want to target small businesses, your messaging should be friendly and approachable. For large-scale corporate clients or Fortune 500 companies, your branding should exude professionalism and expertise. Take notes from established enterprise SEO agencies.
Establish Your Brand Identity
John Morgan, a digital marketing consultant, explains the crux of branding by saying,
''Branding is not just about being seen as better than the competition. It’s about being seen as the only solution to your audience’s problem."
Your brand identity should work as an assurance that your agency is the best solution for their needs.
Start with creating a visual identity. It will include your agency's logo and the imagery, color schemes, typography, and design of your marketing materials. For consistency, use the same elements across all channels, be it your newsletter or business cards. Paul Rand, the renowned graphic designer, says,
''Design is the silent ambassador of your brand.''
So, it should be nothing short of perfect.
Also, develop a brand voice and tone to match your visual identity. For example, if you've gone all-in with a colorful and playful visual identity, your brand voice should also mirror that energy. It will help you build a consistent brand experience for your audience. Simon Mainwaring, CEO of We First Inc., recommends,
''Define what your brand stands for, its core values and tone of voice, and then communicate consistently in those terms."
Select Your Industry
We've already touched on it earlier. Choose the industry you'll serve based on your expertise and passion. You can also take a look at market trends to determine which industries are currently thriving. However, do an in-house skills audit before taking your pick.
For example, your market research may show that the crypto space is booming, and startups need help with their marketing. But, if you're not familiar with even the basics of blockchain, it's not the niche for you.
Some digital marketing agencies prefer working with local businesses because they understand the local market landscape. If you only plan to operate locally, the area you select will ultimately impact your industry. For example, in LA, you can expect to find most clients in the entertainment industry, while in NYC, you may focus on finance or fashion.
Build Your Team
Now, the digital marketing agency creation process has moved from the table to the next level.
You've done your research. It's time to put together a team.
As a beginner with zero clients, it's better to get independent contractors or remote teams on board. But if you're starting with a small clientele, you can consider hiring a few in-house members.
Alexander Kuznetsov, Co–Founder and Managing Partner at RCheckUP, shares his team selection process,
"Having a skilled and dedicated team is crucial. We focus on hiring professionals who are not only experts in their fields but also share our commitment to innovation and excellence."
When structuring your team, consider the typical marketing agency structures. The type of specialists in your team will depend on the services you offer. For example, if you specialize in SEO, your team should consist of:
- Content writers
- SEO experts
- Web developers
- Graphic designers
- Social media managers
A full-service agency will need a diverse team with expertise in all areas of digital marketing.
It also helps to have one or more project managers in your team. They will oversee the entire project, coordinate with different team members, and ensure timely service delivery.
For example, Intero Digital has a page on its website for its team, where you can find information about the company's employees and their roles.
If you're unsure which specialists to hire, look at a company in the same niche as you. Check their website to see the services they offer and the team members responsible for each.
Then, build your team accordingly.
Build An Online Presence
We live in a time where pretty much every business needs an online presence. And for a digital marketing agency, it's synonymous with your brand home. The two main pillars of your online presence are your website and social media.
Build and Expand Your Social Media Profiles
Social media is where you'll find almost every type of potential client. From small to big businesses and solopreneurs, everyone's on social media. So, it's not just about your brand presence but also a source of leads.
Start by selecting the platforms. Instagram, X, Facebook, and LinkedIn are the best options. However, if you plan to conduct webinars or create video testimonials, you can also create a YouTube channel.
The next step is posting on these platforms. Mandy Idol, Co-Founder and Chief Marketing Officer at Indigo Collective Group, provides the whole game plan. She says,
''Engage actively on social media platforms relevant to your target audience, sharing valuable content that highlights your expertise. Lastly, consider starting a blog, publishing thought leadership articles, participating in podcasts, or replying to media interviews to demonstrate your knowledge and attract potential clients. Networking in industry forums and attending events can also help build connections and increase your agency's visibility.''
You can also take inspiration from what successful digital marketing agencies are posting on their social media accounts. For example, Viral Nation shares its case studies, industry trends, talent-roundups, and helpful tips on its Instagram account.
SmartSites focuses on agency partnerships and client testimonials on its LinkedIn page. The agency also shares YouTube links to webinars and helpful videos for clients and solo marketers.
Build An Effective Agency Website
Couple your social media presence with an effective agency website. Right from the get-go, SEO should be your top priority. After all, you want to show up at the top when potential clients search for digital marketing services. Check out our guide to learn how to create an SEO strategy.
A website becomes even more important if you offer web development as one of your digital marketing services. Your website will serve as a portfolio of your work and a showcase of your team's skills. It should have a clean and intuitive layout that makes it easy for visitors to find what they're looking for. More importantly, optimize your website for mobile devices since over 4.3 billion people access the internet using their smartphones.
Your website should also include a list of your services, case studies, client testimonials, and team members' profiles. When writing case studies, don't merely list your services and the results. Instead, share your client's pain points and explain how you helped them.
Also, use compelling call-to-actions (CTAs) to encourage potential clients to contact you. For example, Directive Consulting shares its unique value proposition and then gives visitors the option to ''Meet Directive'' or ''Book Intro Call.'' The former leads to the team's page, while the latter takes visitors to a scheduling form.
In short, do what Chris Kirksey says,
''Your agency's online presence should be a showcase of your skills. Crush your SEO, nail your content marketing, and make your website a conversion machine. Once you can do it for yourself, your lead flow skyrockets, and along with it, growth.''
As a digital marketing agency, your online presence speaks volumes about your capabilities. Make sure it sings praises for your skills.
Establish Your Services and Pricing
Create a list of the services you'll provide based on your team's skills and experience. Then, select a pricing model. Irrespective of the pricing model, make sure your prices are competitive and justifiable. As a new agency, if you charge just as much as a decade-old agency, you might lose out on potential clients.
Your pricing model can be performance-based, project-based, or retainer-based. Each has its pros and cons.
Project-Based Pricing
In a project-based pricing model, you charge per project. For example, if a client approaches you for an influencer campaign for Black Friday, you quote a price for that specific project instead of the number of hours or days it will take to complete it.
Best For:
Project-based pricing is suitable for agencies that provide one-time or short-term services such as web design, graphic design, influencer campaigns, or content creation.
Retainer Pricing
A retainer pricing model charges a fixed amount per month for recurring services. Usually, this model offers tiers based on the level of service or number of services provided. For example, an agency that offers social media management may charge $500 per month for basic services and $1,000 per month for advanced services.
Best For:
Go for retainer pricing if you plan to offer ongoing services like SEO, social media management, email marketing, or PPC advertising.
Performance-Based Pricing
Performance-based pricing ties the cost of your services directly to the results you deliver. Instead of getting a set fee, you get a percentage of the client's sales or profits. For example, let's say a client hired you for an email marketing campaign. Your services result in the client generating a revenue of $10,000. If your performance-based pricing agreement is 10%, you will receive $1,000 as payment.
Best For:
If you offer services like advertising, lead generation, or conversion rate optimization, performance-based pricing can be a lucrative option. Only select it if you're confident in your ability to deliver results and are willing to take on the risk of not being paid for unsuccessful campaigns.
Check out our detailed guide to learn more about digital marketing agencies pricing models.
Create a Suite of Resources
Your team alone can't do much until you've created a set of resources to help them with their work.
These include:
- Software and tools
- Templates for proposals, contracts, invoices, and other documents
- Guidelines for branding, communication, and project management
- A knowledge base
- Hardware (computers, printers, etc.)
- Training materials for new team members
Only invest in tools your team will need. For example, if you're exclusively a social media marketing agency, you won't need email marketing or website design tools.
You can always expand your resources as you grow. But when you start, focus on the latest technologies that your team competitors are using. For example, process automation is the largest segment in the automation market.
Many digital marketing agencies have automated tasks like social media scheduling and email marketing. You should also have the basic tools to keep up with industry standards.
Establish Effective Client Acquisition & Retention Strategies
Acquiring clients and then retaining them is the fuel that keeps your digital marketing agency running. For acquisition, let your website, SEO, and social media marketing efforts do the heavy lifting.
Some other ways to get clients for digital marketing are:
- Networking and building relationships with potential clients through events and online communities.
- Offering free consultations or trials to build trust
- Using referral programs by incentivizing current clients to refer new ones
The next step is to retain these clients. Of course, a high-quality service offering is the main contributor to this, but some other strategies are also helpful. For one, be transparent and consistent in your communication with the client. Designate a team member for each client, if possible, so that the client never feels left in the dark.
Report regularly on campaign performance to show clients how you're bringing them value. More importantly, listen to your clients and act on their feedback. Even when client retention seems to be high, always be on the lookout for new opportunities.
As Daniel Wolchonok, the former Director of Growth & Analytics at HubSpot, says,
''Retention problems sneak up on you. You need to be actively monitoring retention cohorts even when retention is going up and to the right.''
Focus on Attracting Clients
Before you can successfully attract clients, you must know who they are and what they want. Here are some helpful questions to gauge this.
- Is your client a B2B or B2C business?
- What is their industry?
- Do they have an in-house marketing team, or do they rely completely on external agencies?
- What is their budget for digital marketing services?
- What are their specific goals (growth, brand awareness, product launches, lead generation, etc.)?
For example, Blaze Digital Solutions only offers digital marketing services to companies in the outdoor gear industry. Their clients are primarily B2C businesses that want to grow.
How does Blaze Digital Solutions use its client persona to tailor its marketing efforts? The agency's primary offering is called The Growth Plan. As expected, it hits the nail on the head for outdoor product industry clients whose main concern is growth.
Blaze growth accelerator plan
Additionally, you can use client testimonials and case studies. We all know social proof works wonders, so use your current clients as valuable resources to attract more.
Vikram Rajan, a business developer and investment banker, even recommends using the language from testimonials in your marketing material because their language is more natural than corporate. He says,
''Speaking naturally resonates with people. Part market research, part copy editing, use the language from testimonials in all of your marketing text. Featured customers will be honored.''
Select a social proof software from our guide to streamline the testimonial selection and display process.
Implement a Lead Generation Funnel
You need a well-crafted and well-maintained lead generation funnel to turn your website's visitors into leads. Use a blend of tactics to attract your audience and persuade them to take action.
For example, you can offer gated content like an industry report or e-book on your website. Request visitors to fill in a form to access the content, and voila, you have their email information and brief background. You can then follow up with personalized emails and targeted ads to nurture them towards conversion. Follow our email personalization best practices to see results.
Similarly, you may offer free consultations on your website. Many digital marketing agencies offer a free call to show the client what they can do for them. Networking events and industry conferences are also great places to generate leads. Even better, you can partner with opinion leaders in your niche and offer a discount or free trial to their audience.
Check out our guide on lead generation strategies to learn more.
Invest in Paid Advertising
As a small or new agency, you might need to supplement your organic efforts with paid ones to get your brand in front of more people. From PPC campaigns to social media ads and display advertising, there are quite a few avenues to try out.
Paid ads serve two purposes. One, they increase your reach, and two, they give prospects a glimpse into your digital marketing expertise. Sure enough, if you're doing a good job of advertising your own business, you can surely do the same for your clients.
Use AI websites for paid marketing to save time and amplify results.
Take Client Retention Measures
Sometimes, retaining clients is harder than getting them in the first place. However, a higher retention rate is key to maintaining a steady income for your digital marketing agency.
There are a few ways to boost client retention.
- Email Marketing: Once you get a few clients, you can build an email list. Use it to build a relationship with your customers. For example, you can share monthly newsletters or updates about your agency. If you're offering a discount during a festive season or you're hosting a webinar on digital marketing techniques, let them know via email.
- Send Surveys: You might think you're doing everything right on your end. But what if your clients don't share the sentiment? There's only one way to know: customer feedback. Send periodic surveys to gauge how satisfied your clients are.
- Personalize Services: Personalization has made its way into everything from online shopping to B2B client relationships. It's also a great way to retain clients. Assign a specific team member to each client and have them monitor the client's progress and needs. Personalize your communication and strategies based on what you learn about the client.
Also, use AI to personalize interactions with clients.
Create a Referral Program
Customer advocacy is a go-to way for business growth. If clients are happy with your services, they will likely recommend you to their business partners or friends.
Nudge them a little by offering an incentive in return.
For example, you can offer a discount on their next project or give them a certain percentage off on their retainer fee for every successful referral they bring in. Clicta Digital offers up to 10% in commission as a part of its referral program.
Clicta digital referral program
These incentives keep your existing clients happy. They also encourage them to spread the word about your agency. The end result? New clients.
Common Challenges For New Agencies And How To Overcome Them
You may know how to grow a digital marketing agency in theory, but on-ground execution can be quite challenging. Here are some common challenges digital marketing agencies face.
Standing Out in The Market
The digital marketing space already has a ton of trusted names. Breaking into the market as a newbie agency can be tough. Without any previous clients to showcase your work, it's harder to convince prospects of your capabilities.
You can overcome this by offering free or low-cost services initially and building a strong portfolio. Small businesses make excellent clients in these times. Since they're at the same starting point as you, they're more likely to give you a chance. Our guide on digital marketing agencies for small businesses provides some examples you can follow.
You should also focus on providing immense value for your clients. Build strong connections that you can sustain over time.
Megan Hughes, Founder & Managing Director at Thundr Digital, suggests,
"So for starting a digital marketing agency, I believe that by prioritizing your relationships and demonstrating your commitment to their success, you can differentiate yourselves in a meaningful way within the competitive landscape of digital marketing agencies."
Landing Your First Clients
The first few clients are the hardest to get since you're operating without a reputation and social proof to show for yourself. Build a strong online presence to be as visible in your niche as possible.
Networking can also help land clients, especially with businesses in the industry or niche you have selected. You can also attend local events and speak at conferences to gain visibility in your community. Once people start seeing you as an authority in the field, they’ll be likely to request your services.
After landing your first clients, keep them happy, too. You don’t want to lose previous clients before acquiring new ones.
As Kamel Ben Yacoub, Founder & CEO at Getuplead, says,
"What I think is key is to try to keep your first customers happy in order to have a guaranteed income when you are still small. Your priority is to pay the bills meanwhile you are building your online presence."
Limited Cash Flow
Cash flow isn't just an issue for digital marketing agencies but for every new business. What makes it a more significant challenge for agencies is that they often require funds to acquire necessary digital marketing tools and software.
One way to deal with this issue is to work with contractors rather than spend on hiring full-time employees.
As James Taylor, SEO Strategist at Embryo, says,
"Try to work with contractors prior to hiring for full-time positions if you're unsure of growth in the initial stages. This helps to alleviate any payroll concerns as ultimately; if a client leaves, you're not having to retain the contractor steadily like you would have to with a full-time member of staff."
You can also cut costs by using free or low-cost marketing tools and investing in paid tools only when necessary. We have a selection of free marketing tools for you to check out. You can also offer packages with upfront payment to improve cash flow.
Conclusion
Starting a digital marketing agency is just as challenging as any other business. An additional complexity is due to the dynamic nature of this field. The digital marketing agency tips in this guide should be a helpful starting point to navigate and succeed in this industry.
Digital marketing, although rule-based, leaves a lot of room for creativity and experimentation. Expert insights surrounding the future of digital marketing agencies suggest that agencies that keep adapting to new technologies and consumer trends will thrive. So, you can always put your spin on things. Just make sure you take industry trends and best practices into account.
Frequently Asked Questions
How do I choose a niche for my digital marketing agency?
Select a niche that you are passionate about and have prior experience in. Consider the competition, market demand, in-house skills, and potential for growth.
How can a digital marketing agency price its services?
Pricing is subjective and depends on factors such as your expertise, target audience, location, operating costs, industry standards, and value provided. Research your competitors' pricing strategies and base your rates on these factors.
What are the different types of digital marketing agencies?
Digital marketing agencies can be full-service, single-channel, or multi-channel. Full-service agencies handle all digital marketing services, single-channel agencies focus on one type of service, and multi-channel agencies offer a combination of services.
What are some common challenges for new digital marketing agencies?
New digital marketing agencies struggle to make a place for themselves in the market, land first clients, manage cash flows, and build a strong portfolio. They can overcome these challenges by networking, cutting costs, offering competitive pricing, and evolving with industry dynamics.
What is the best agency pricing model?
Digital marketing agencies can use project-based, retainer-based, or performance-based pricing models. There's no single best option. The best choice for you will depend on the type of services you offer, your industry, and client preferences.
