With the massive advances made in tech in the past year, it can be tempting to entrust all your digital marketing to artificial intelligence with the hope to save on costs. Sure, you can use a tool like ChatGPT for tasks like customer support, content creation, and email marketing, for example. Though, there are limitations. Plus, if you want to leverage all its capabilities, you’ll have potential costs. So, it’s not necessarily a way to avoid digital marketing costs.
The future of digital marketing might be a bit blurry, but the pricing models and costs involved don’t need to be. Most digital marketing agencies prioritize transparency when it comes to how they price their services.
This guide serves as an explanation to the cost involved in digital marketing, helping you to make a more informed choice before you make a long-term, financial commitment. Our Digital Marketing Benchmark 2024 Report revealed that for about one in every four companies, budget constraints are the major roadblock to adopting new marketing tech.
Ignorance about the true cost involved doesn’t have to stand in your way. We might not be able to do much about budget constraints, but we can help you to budget better. Prepare to broaden your understanding about digital marketing costs and which other factors to consider to ensure you get the best bang for your buck.
Your Pricing Guide to Understanding the Cost of Digital Marketing:
What’s Included in Digital Marketing?
Asking what falls under the realm of digital marketing is pretty much like asking how long a piece of string is. Basically, digital marketing refers to any strategy that aims to grow your business using online marketing or ads.
This includes, but isn’t limited to:
- Social media marketing (SMM)
- Email marketing
- Content marketing
- Paid search ads like Google Ads
- Paid social
- Video marketing
- Affiliate marketing
- Link building
- Blog writing
- Search engine optimization (SEO)
- Voice search optimization
Even website design can be classified as digital marketing.
Also, some agencies go the full-service route and offer basically all these services. Straight North, Digital Silk, and Jives Media are three of the leading digital marketing agencies in New York that offer a full suite of services.
Others, on the other hand, choose to niche down and offer only a few related services. For example, The Goat Agency, rated as one of the top UK-based digital marketing agencies, prefers to concentrate on the social side of digital marketing. As a “social-first marketing agency”, they stick to paid social, social media management, and influencer marketing.
So, depending on the agency that you hire, you might not get access to all these services. Just because they fall into the category of digital marketing, doesn’t necessarily mean they offer every single possible service (or execute all the possible services equally well).
Common Pricing Models Used by Digital Marketing Agencies
To understand the cost involved, you’ll need to understand how teams typically charge clients. Here are the three most common approaches:
1. Digital marketing packages
A digital marketing package combines numerous related services and sells them together as a bundle. It typically offers more value for money, making it especially useful for small businesses looking to invest in digital marketing and add continuity to their online marketing efforts.
The packages are usually created in such a way that they concentrate on specific social media platforms or strategies like content marketing, email marketing, or search engine optimization (SEO). Depending on the agency, you can also customize the package a bit by including optional extra services for an additional charge. This means, it’s not only transparent in terms of pricing, but you also have a much better idea beforehand about what will be included and excluded.
While you’ll know exactly what you’ll be paying before you sign up, the pricing can range significantly. You can expect to pay anything from $1,000 to $10,000, if not more.
You might also be charged a setup fee. In fact, in some instances, the setup fee might be more than the monthly cost.
2. An hourly rate
Hourly rates are more commonly used by freelance marketing professionals or consultants. If an agency uses an hourly rate, it will often be for additional services.
Hourly rates tend to count against small businesses with limited budgets. It can be difficult for a service provider to quote how many hours they’ll need to execute marketing campaigns.
There’s also a risk that an agency that charges a lower hourly rate will charge more hours to complete the same work. So, you might not always “save” by hiring a more “affordable” agency.
That being said, using an hourly rate as a benchmark is still useful. You’ll find that digital marketing requires continuous attention.
Each month, you’ll spend money on digital marketing and it can be useful to compare two agencies’ hourly rates to get a better idea of affordability. If you don’t use a digital marketing package, you’ll have to compare flat rates per project which can be like comparing apples to oranges.
If you need the agency to do market research too, you can expect to pay more per hour. A full-service digital strategy agency charges between $100 and $149 per hour. On the other hand, the average hourly rate of a digital marketing agency can be as low as $49 per hour, but being charged closer to $140 is also considered in range.
Also, if you work with a consultant instead of an agency, you can expect to pay about 5% more.
3. Flat rates per project
Agencies typically prefer to charge project-based fees for one-off projects. For example, if you want to launch a new product or bounce back from Google penalties, it’s common practice to be charged a flat rate.
One factor to keep in mind, though, is that the agency might also have its own minimum fee per project. This means that if you have a small project, you could end up paying more.
According to Credo, only 10.47% of agencies don’t have a minimum. Based on their numbers, you’ll have a good chance of finding an agency to help you for less than $2,000 per project.
About a third of agencies have a single project for less than $2,000. Just over 20% of agencies start their minimum spend per project at $5,000.
Which Factors Can Impact the Cost?
You’ll notice that there can be quite a significant difference in pricing. There’s some logic behind this. You can relax — you aren’t necessarily being taken for a ride.
The following factors can be the reason why you’re being charged more (or maybe less):
1. Your location
Let’s take the United States, for example. It’s not uncommon to end up paying over a third more, depending on where the digital marketing agency is located.
For example, cities like California, San Diego, and San Francisco are breeding grounds for digital marketing agencies. Businesses are spoilt for choice here, but that means that agencies can afford to charge a lot more too. In these three cities, the average hourly rate ranges between $97 and $104, with the top digital marketing agencies in California at the upper end of the pricing range.
On the other hand, the top advertising agencies in Chicago, the biggest Midwestern US city by population, charge only $80 per hour on average. The average minimum campaign size is also a lot less and comes in at below $3,000.
Over on the East Coast, there are a few major states and cities like New Jersey and Miami that charge cheaper. For example, leading growth agencies in New Jersey charge “only” $68 per hour on average.
That said, in all these regions you’ll also find that some agencies charge more than the average rate. So, you can’t even narrow it down to regions. Just because you want to work with an agency based on the West Coast, it doesn’t necessarily mean that you’ll pay more.
2. Your industry
If you operate in a highly competitive niche, expect to be charged more. It requires more time, skill, and effort to deliver results if there’s a lot of competition.
Aside from the digital marketing agency’s own rate, you can also expect to pay more for pay-per-click ads. WordStream’s search advertising benchmarks for 2023 reveal that businesses delivering home improvement, legal, or dental services pay a lot more on average per click.
For example, the average cost per click (CPC) for attorneys is $9.21. On the other hand, brands that operate in the beauty and personal care space, pay only $2.89 on average.
3. Your website
While many agencies include website building and development in their list of services, for your digital marketing efforts to pay off, your website needs to perform well. If there are issues that impact conversion like missing call-action buttons, you’ll first need to sort out these issues. This means that in addition to paying for marketing activities like running paid ads or social media marketing, you’ll also be charged for website design.
4. Timeline
As you would expect, if you’re in a hurry to see results, it will cost you more. Strategies like PPC advertising can be effective for generating results faster, which would mean that you’ll have to pay per click or thousand impressions.
On the other hand, if you’re fine with waiting for organic traffic to do its thing, you can skip the paid ads component. In this case, you can focus on posting high-quality content consistently and restrict your costs to content creation.
What Can You Expect to Pay?
A better way perhaps to look at it is to ask yourself how much of your budget should you dedicate to digital marketing.
WebFX, one of the leading digital marketing agencies in the US, suggests that small businesses should spend between 7% and 8% of their revenue on marketing. Mid-sized businesses should cap it at 10%, while enterprise businesses can afford to dedicate 15%.
With that said, here’s what you can expect to pay:
Service | Price Range |
Email marketing | $300 - $5,000 per month |
Social media marketing | $1,000 - $20,000 per month |
SEO | $1,500 - $5,000 per month |
Content marketing | $2,000 - $10,000 per month |
Website design | Starting at about $2,500 per website |
What Should You Look for in a Digital Marketing Agency?
It’s important to understand the cost of digital marketing and the factors that can impact the price. However, cost shouldn’t be the only metric you use.
There are many other factors that also play a weighted role in the shortlisting process. These three stand out in the case of signing up for digital marketing services:
1. Customized strategies
Some digital marketing agencies keep the cost down by using the same strategy for all their clients. This approach will end up costing you more.
You want to work with an agency that will create a strategy based on your unique business goals and intended target audience. This includes adapting the message, timing, and platform, among other things, to improve the results.
Having a customized strategy also sets you apart from competitors. If you get a cut-and-paste strategy, you risk sounding like your similar companies in your field. It also doesn’t give you the opportunity really to zoom in on the unique value proposition of your business.
2. Recent projects, results, and reviews
Not only should agencies be comfortable to give you a detailed breakdown of the cost involved, but also be willing to share a few examples of their work. Cost and case studies shouldn’t be treated as classified information.
Looking at some of their latest projects and analyzing the results that these campaigns generated will give you an idea of the type of quality that you can expect. It will also give you insight into the effectiveness of their (hopefully customized) strategies.
A thin portfolio can also be a sign of a lack of experience. Don’t mistake the number of years in business for experience.
Then, a final check is to read client reviews. Aside from giving you a glimpse into the quality of their work and overall working experience, reviews can also be useful for understanding the cost involved. If an agency charges hidden fees, it will often be mentioned in a review.
WebFX is an example of a digital marketing agency that ticks all these boxes. For example, if you’re interested in social media marketing, you can expect to pay anything between $3,000 and $5,000 (right in range with the average rate per project/digital marketing package). Not only do they list the services included, but also the difference between their packages.
They tackle social proof with the same level of detail. On their website, they share over 1,000 client testimonials which you can filter by service. They also share several video testimonials, which are even more authentic and reliable.
Source: webfx.com
If you’re more interested in the results than the working experience, you can refer to their case studies section. Each case study includes details about the challenge, the services implemented, and the results.
3. Reporting and analysis
Somewhere they need to mention reporting or analysis. The only way that you can really monitor the success of marketing campaigns is with detailed analysis and clear reporting. Armed with these numbers, agencies are equipped to improve other key numbers like your ad spend and ROI.
Basically, your ROI refers to the profit that you make from every dollar that you spend on marketing. A positive number means that you generated enough to cover the expenses.
According to Adobe, a good marketing ROI is 5:1. In other words, for every $1 you speed, you generate $5.
That said, keep your industry in mind. If you operate in a competitive niche, you’ll need to spend more on your marketing efforts to stand out.
Cost and return on investment (ROI) go hand in hand. If you know that the agency can deliver an impressive ROI, you’ll feel more comfortable spending more on digital marketing services.
Reporting also gives you an idea of how they spend the money. For example, if you opted for a digital marketing package that includes community management, regular reporting will be one of the measures to see that you received what you paid for.
Key Takeaways
Basically, each year prices go up. Before you jump to conclusions and assume that it’s just some money-making scheme, ensure that you understand the costs involved and, in the case of digital marketing services, the several factors that can increase it.
If a company charges you more for the same service than another company, it’s not necessarily a sign of dishonest practices. With digital marketing, location and industry have a direct impact on what you’ll be charged.
If you’re in a competitive niche, you’ll pay more. If the average CPC for your industry is higher than other sectors, you’ll need to invest more into your paid ad strategies.
There’s a very good chance that you’ll be charged a flat fee per project. Depending on the agency, there might also be the chance to bundle several services together and pay a fixed monthly fee. Aside from managing expectations and helping you to budget accordingly, it can also be more cost-effective in the end.
Hourly fees are tricky. It makes it more difficult to budget and can sour the relationship. More often than not, you’ll end up feeling that an agency charged you too many hours for the deliverable. Writing that short Instagram post takes longer than you think…
Whether you settle on a package, agree on a fixed fee, or you’re comfortable paying per hour, don’t settle on the cheapest service. It will likely end up costing you more. Not only do you risk not generating a respectable ROI, but you might have to pay another agency for fixing someone else’s mistakes.
