How Do You Start a Digital Marketing Company? Here Are the Expert Insights and Practical Steps

Are you planning to launch a digital marketing company this year and unsure whether you will be able to crack the market or how to take the first step? I know how difficult it is to start a company from scratch. But fear not when we are here. I will tell you exactly how you can start your marketing business. Our team interviewed some business experts to understand the inside details. So, gear up, as I’m going to provide you with all the crucial guidelines.

According to the statistics, by 2027, the global digital market is predicted to reach $1 trillion. The different services have significant importance in the building of the brand and the eventual attainment of customer loyalty. These work in such a way that they align all their marketing efforts according to the brand’s ideologies.

So, Here Are Some Important Steps to Start a Digital Marketing Company

Anybody can create a digital marketing agency, but the question is, should you? Before you plan on starting this venture, all you need to assess is if you can find potential clients and provide them with the best quality services. Let’s look at the key steps to start your own digital marketing agency:

1. Choose What Services Will You Offer

First thing first: Make a clear identification and listing of what services you will be providing. It does not necessarily have to be a big spread at the beginning. You can choose a few to start with, like content marketing, website building, or SEO, based on your choice and strengths.

You can offer a single service or a combination of digital marketing services; for example, a website design company could also provide SEO services.

2. Select a Niche

Stand out by choosing a specific niche rather than trying to serve everyone. Focus on a smaller target audience to communicate directly with potential clients. This approach helps clients understand your services better and allows you to become a market leader in your chosen niche.

3. Market Yourself

Establish an online presence of your digital agency with a website showcasing your portfolio, demonstrating the expertise of your digital marketing professionals, and building trust with potential clients. Utilize cold calling and cold emailing to reach out to prospects. Customize your messages to stand out and show your dedication.

4. Make a Website

Having a website can benefit your business in several ways: Firstly, it displays your work to potential clients and highlights your marketing skills with a well-designed website. Then it helps in communicating directly with your target audience, creating trust and interest. The leads can be directed by using landing pages, which can be facilitated by ads and other types of content marketing. It establishes credibility while reaching out to potential clients.

5. Build a Portfolio

Whether through a website or another platform, create a portfolio that highlights your past successes. Make sure that your portfolio is one document that can clearly focus on your plus points, explained by metrics for better understanding, along with the reasoning of how you achieved the requisite results.

6. Content Marketing

Creating relevant articles, videos, and other media to implement a content marketing strategy that helps attract and engage your target audience, positioning your agency as a pioneer in the digital marketing world.

7. Social Media Presence

Establish a presence on social media platforms where your target audience is active. I am saying this because building an early omnipresence will help position your digital marketing agency as an authority in the industry and showcase your company’s digital marketing skills.

8. Service Delivery

For a successful business, focus on efficient service delivery by building systems and processes. As digital marketing agency owners, your role is to manage these systems, train your team, and find new clients.

Geoff Cudd, Founder of Don’t Do It Yourself, has advised executives at Fortune 500 companies, and benefiting from such experience, we asked him for some insider tips on starting a digital marketing agency. Here is what he had to say:

“Choosing the right business model for a digital marketing agency involves a careful balance between client needs, market conditions, and the agency’s operational strengths. The decision between retainer, hourly, commission-based, and flat fee structures hinges on several factors:

• Client Relationship and Scope: For long-term projects with consistent demands, a retainer model is often preferable. This structure ensures a steady income stream and allows for deeper client relationships. For projects with a well-defined scope and duration, a flat fee model can often be more attractive to clients as it provides them with predictable costs.
• Nature of Services: Complex services that require ongoing adjustments or have high unpredictability in workload often align well with hourly billing. This allows the agency to charge fairly for the time invested, which can fluctuate significantly from month to month.
• Market Positioning and Competition: Understanding the competitive landscape is crucial. In markets where clients are cost-sensitive, a commission-based model tied to performance can be compelling. This aligns the agency’s incentives with client success, potentially making it easier to sign new clients.
• Financial Health and Cash Flow: The financial stability of the agency must also be considered. Retainer and flat fee models can provide predictable cash flows, essential for new or growing agencies. Hourly or commission-based models might offer higher potential returns but with more variability and financial risk.
• Legal and Compliance Factors: Each model carries its legal implications, especially around contract terms, service level agreements, and termination conditions. Ensuring that all engagements are legally sound and mutually beneficial is paramount.

At DDIY, we analyze these factors in conjunction with direct feedback from clients about their preferences and needs. This approach helps us choose the most appropriate billing model for each client segment, enhancing both profitability and client satisfaction.

Continuous reassessment and flexibility allow us to adjust our business model in response to changing market conditions and client feedback, ensuring that our services remain competitive and aligned with our clients’ evolving needs.”

I’ll Explain to You the Business Model in the Digital Marketing Industry

There are four main types of business models in the digital marketing business, and based on these, you can make and decide a profitable business plan for your agency.

• Retainer: Many agencies go for the retainer model. Clients pay a fixed amount regularly, providing stability for both the agency and the client, and predictable payments help agencies plan and deliver better results.
• Hourly: The hourly model is straightforward; all you have to do is set an hourly rate for each service and charge clients for the time spent on their project. Just be sure to charge enough to cover all the time you spend, even the non-billable hours.
• Commission/Performance-Based: This model ties payment to measurable outcomes. If your work directly leads to results, like generating leads that become customers, you get paid based on performance. It can be lucrative, but there’s a risk since clients might drop you without warning.
• Flat Fee/Fixed Fee: Charge a set amount for the entire project. This can be done based on previous project costs or on an hourly basis. If you have an estimate for similar previous work, then that is best. If not, you can go for the hourly cost rule and ask for payment accordingly.

This works well for one-time services or projects with clear goals. It’s good for agencies starting out, especially if retainer clients are hard to find.

We interviewed Thomas Niemczewski, Founder and SEO Specialist at Dream Chasers, and asked him about choosing a business model for any digital marketing agency. Here is what he said:

“It’s essential to consider market trends, target audience behavior, and competition. These factors are important in determining the most appropriate structure for your agency.

Navigating between retainer, hourly, commission-based, and flat fee structures requires a thorough understanding of your client’s needs and the profitability of each model. By analyzing market trends, you can align your business model with the current demands of the industry.

Understanding your target audience’s behavior allows you to tailor your pricing structure to their preferences, ensuring client satisfaction.

Additionally, evaluating your competition’s strategies can provide valuable insights into which model will set your agency apart while maintaining profitability.”

You Should Know the 3 Types of Digital Marketing Agencies

Below, I have enlisted the most common types of marketing agencies:

• Full Service: These agencies can handle all or most of a client’s needs. Such agencies have professionals who can handle all types of marketing tasks like SEO, social media, or website development. It’s like a one-stop shop for all things in digital marketing.
• Single-Channel: Single-channel agencies specialize in one specific area of digital marketing. By focusing on one channel, they can deliver unique and outstanding results. They become experts in that specific marketing area.
• Multi-Channel: A kind of overlap between the full-service and the single-channel agencies is known as the multi-channel agencies of marketing. They operate in a fashion in which complementary services are aligned. For example, we can say that these agencies work on the principle that tasks under one marketing channel plus their complementary counterparts can be delivered by them, implying social media content and social media ads.

In an interview with the Icy Whiz team, Jonathan Rosenfeld, founder and managing attorney at Rosenfeld Injury Lawyers discussed the legal aspects of this issue. Since he works with various businesses, he has a clear picture. Here is what he had to say:

“As a legal advisor, my perspective on choosing a business model for your digital marketing agency revolves around ensuring ethical practices, compliance with regulations, and risk mitigation.

Firstly, it’s crucial to consider the ethical implications of the business model. For a firm like yours, which focuses on representing vulnerable individuals, maintaining integrity and transparency is paramount.

Any business model chosen should align with these principles and avoid any practices that could exploit or harm clients.

From a legal standpoint, each business model—whether it’s retainer, hourly, commission-based, or flat fee—comes with its own set of legal considerations.

For instance, when entering into retainer agreements, it’s essential to clearly outline the scope of services, payment terms, and termination clauses to avoid any misunderstandings or disputes down the line.

Hourly billing requires accurate timekeeping and billing practices to ensure compliance with legal requirements and client expectations.

Commission-based models may introduce conflicts of interest if not managed carefully. Legal agreements must clearly define commission structures, disclosure requirements, and potential conflicts to protect both the agency and the client.

Flat fee structures can offer predictability for clients but require careful drafting of contracts to ensure that all services are adequately covered within the agreed-upon fee.

It’s important to avoid scope creep and clearly outline any additional charges for services outside the initial agreement.

Furthermore, as a legal advisor, I would also emphasize the importance of compliance with relevant laws and regulations governing the digital marketing industry.

This includes data protection laws, advertising standards, and consumer protection regulations. Ensuring compliance not only protects your agency from legal risks but also builds trust with clients by demonstrating a commitment to ethical conduct.”

Now Get Ready to Start a Digital Marketing Company

You’ve read through what digital marketing agencies are, what the business models and what the steps are to create a digital marketing company. There are different types of agencies, like social media marketing agencies and different digital marketing channels. You need to choose your target market and decide what you need to do. 

I hope all these details will help you out. So good luck!

Guest Author: Saket Kumar

Last Updated on May 25, 2024 by Pragya