How to Start a Digital Marketing Agency: 13 Proven Steps

Starting a digital marketing agency from scratch can be tough, but it’s not impossible. If you’re looking to enter the exciting world of digital marketing as a service provider, you’ll need to follow a long process to establish your business, get clients, and hire employees.

I know it’s not easy, but trust me, it’s worth it. I started my own digital marketing company in 2012 after ten years as a part-time SEO freelancer. The transition wasn’t easy, but it was full of opportunities. I made a lot of mistakes along the way, but I also learned some valuable lessons that helped me improve my business and turn it into a successful agency.

So, if you’re ready to start your own digital marketing agency, I’ve got you covered. In this guide, I’ll share my experiences and tips to help you avoid the mistakes I made, minimize your risks, and maximize your chances of success.

What is a Digital Marketing Agency?

A digital marketing agency is a specialized company that focuses on promoting brands and products through various digital channels. These agencies are tasked with creating and managing online marketing campaigns that utilize a range of platforms such as websites, social media, search engines, and email.

The services offered by digital marketing agencies typically include

• Website design and development
• Search engine optimization (SEO)
• Pay-per-click (PPC) advertising
• Social media marketing
• Email marketing.

Here’re some of the most common types of digital marketing agencies:

• Full Service: These agencies can handle all or most of a client’s needs, with a team of experts in web development, SEO, social media, and ad campaigns.
• Single-Channel: These agencies specialize in one area of digital marketing, delivering unique results in that channel.
• Multi-Channel: These agencies offer a few complementary marketing channels, like SEO and web design or social media management and ads.

The primary goal of these agencies is to reach potential customers through the digital channels they frequent, thereby promoting the client’s brand and products effectively.

Why Start A Digital Marketing Agency? 

• High Demand for Digital Marketing Services: The growth in the number of businesses looking to establish an online presence means there’s a huge opportunity for digital marketing agencies to thrive.
• Work from Home with Remote Teams: You don’t need a physical business presence to operate a digital marketing agency, as all operations can be performed remotely using email and Skype. As a business owner, you can minimize costs by working from home and hiring remote teams to assist you.
• No Prior Experience Required: You can gradually build your digital marketing skills using online courses and practice on your own websites before offering services to clients.
• Be Your Own Boss: You’ll have the freedom to work on your own terms and build a business that aligns with your goals and values.
• Scalable Business: A digital marketing agency is a scalable business, allowing you to start small and grow as you acquire more clients. You can start by providing services yourself and then hire more people as the business grows.
• Low Start-up Cost: Starting a digital marketing agency doesn’t require a big investment. All you need is an internet connection, subscriptions to a few tools, and a website. Office space, employees, and other expenses can come later as the business grows.

Digital Marketing Agency Business Model

It’s hard to find the right pricing model for your digital marketing agency. In order to make a profit, you need to offer a compelling deal your target market can’t resist, but at the same time, you need to cover your expenses. Here’s a rundown of how digital agencies make money:

1. Retainer

The retainer model is the most popular among digital agencies because it offers predictability. When you secure a retainer from a client, you have a guaranteed upfront payment that allows you to plan ahead and deliver better results. This model can help you better predict revenue, manage cash flow, and make informed hiring decisions, which is essential for growth.

2. Hourly

The hourly model is straightforward and simple. You charge clients for every hour spent on a project, based on your hourly rate. The only catch is that you need to make sure you charge enough to compensate for non-billable hours. When managed properly, the hourly model makes it easier to track profitability, team-hour management, and project schedules.

3. Commission/Performance-Based

The performance-based/commission model is suitable for agencies that can tie their work to a measurable outcome for clients, such as leads generated that turn into customers. This model can be highly lucrative, but it comes with some risk as clients can drop you at any moment. To ease the risk, some agencies charge a flat fee upfront.

4. Flat Fee/Fixed Fee

The flat fee/fixed fee model involves charging clients a fixed amount for the project. You estimate the total number of hours required and multiply it by your hourly rate. This model works well for agencies that offer one-off services like website development and SEO audits or have clear deliverables with well-defined endpoints. To make fixed-fee pricing work in your favor, you need to have a clear understanding of your expected costs for projects.

How to Start a Digital Marketing Agency

1. Gain confidence and skills in digital marketing

Starting a digital marketing agency can be a great business idea, but it requires more than just digital marketing know-how. You also need to have strong business management skills and confidence in your abilities. Here’s a breakdown of the three main areas you need to focus on to get your agency off the ground.

Digital Marketing Skills

To run a successful digital marketing agency, you need to have a good understanding of the different components of digital marketing, including SEO, Google Advertising, Facebook Marketing, Social Media Marketing, Content Marketing, and Email Marketing. 

While you don’t need to be an expert in all of these areas from the start, it’s important to have hands-on experience with these processes so you can figure out what works best for you and your clients.

The best way to master digital marketing is to learn from established experts and get plenty of practice. There are plenty of online resources available to help you build your skills, so make use of them.

Business Management Skills

As a business owner, you’ll need to have a basic understanding of running a business, including project management, time management, invoicing and billing, contracts, and HR management. While you don’t need a degree in business management, you should gradually build these skills as you grow your agency.

Self-Confidence Skills

Confidence is key when starting a business, especially in the digital marketing industry where you’ll need to take risks and have faith in your abilities. 

Before serving clients, make sure you have working experience by either working in an established agency or on your own websites. This will help you achieve real, measurable results and know that you’re ready to become a service provider.

2. Decide what kind of services you’ll offer

Hey there, starting a digital marketing agency can be exciting but also overwhelming with all the services you can offer. But don’t worry, it’s all about taking it one step at a time.

A full-service agency usually offers:

• Web design and development
• SEO
• PPC (Google Ads, Bing Ads, Facebook Ads, etc)
• Content marketing (including content writing)
• Social media marketing
• Email marketing
• Conversion optimization

As a startup, it’s better to stick with the services that align with your skills. If you’re an SEO pro, start with that and expand as you grow your client base and cash flow. The goal is to keep costs low and rely on your strengths.

From experience, the services that bring in the most revenue are the ones that provide real value to clients: SEO and PPC.

3. Plan your business operation

Time to decide how you want to run your digital marketing business. You’ve got three options: 

virtual from home with remote workers, traditional office with local employees, or a combo of both. Each has its pros and cons, so consider costs and where your clients are located.

If you’re serving a specific city, having a physical presence there can help build your brand and snag local clients. But if you’re serving clients globally, having a physical office just means more monthly costs.

One perk of starting a digital marketing agency is you can run it from home with remote workers. Lots of online and SaaS companies do this and it’s the future of biz. As you grow, you can hire local employees who can work from home too, avoiding office expenses for now.

Just make sure you have a designated home office space and the best internet connection.

4. Register your business

Alright, it’s time to make things official. Here’s what you need to do:

• Pick a business name
• Register a domain name
• Design a logo you love
• Register your business with the proper authorities
• Get a fancy toll-free number
• Find an accountant & auditor
• Line up a trusty lawyer
• Make some business cards

Do all these steps now, even if you don’t need all of them right away.

5. Create a website

Start your online journey with a bang by creating a website for your digital marketing business. This is your agency’s “front door”, so make sure it’s on point and reps your brand well.

Your website should look pro and give potential clients all the info they need to decide if they want to hire you. Make it about them, not you. Explain what they’ll get out of working with you, and create specific landing pages for each of your services. Make it easy for people to contact you, no complicated forms necessary.

The goal is to get leads, filter ’em, and focus on the ones that are most likely to become clients.

Don’t forget to claim your brand name on all the big platforms (FB, LinkedIn, Twitter, Insta, etc.) and create biz pages. People will check you out, so make sure everything looks good and professional.

Finally, register your biz with websites like Crunchbase and any local or government orgs that can prove your legal status.

6. Demonstrate your expertise and experience

Finding new clients is a tough challenge for any digital marketing agency. But, once you’ve got their attention, it’s crucial to convince them to choose you over the competition. Here’s how:

• Share your story and milestones on an “About Us” page.
• Highlight success stories and case studies.
• Show off your academic credentials and past work with known companies.
• Include customer testimonials and partnership agreements.
• Display certifications and mention from other websites.

If you’re just starting out and don’t have all these elements yet, don’t worry. Start with what you can and work towards the rest. Offer to work on a friend’s website and ask for a testimonial. Get certifications from reputable companies. Use your own website as a case study. Do some guest posting on well-known websites and mention it on your homepage. 

And most importantly, be honest about your experience and only share real reviews and case studies. A business built on fake reviews is not a recipe for success.

7. Pick the right tools

As a digital agency, having the right tools can make all the difference in efficiency and success. From optimizing digital marketing campaigns to invoicing, it’s important to choose tools that offer features you’ll actually use and not just nice-to-haves. Keep in mind to choose tools that can be used on both your own website and your clients’ sites when comparing pricing.

First on your list should be a digital marketing platform like SEMRUSH, Ahrefs, Hubspot, or Moz. These all-in-one platforms have tools for SEO, content marketing, social media, and PPC management. The author recommends SEMRUSH for its great features and reasonable pricing.

Other paid tools to consider include lead generation software like Optinmonster and an email marketing solution like MailChimp. Grammarly is a must-have for avoiding spelling and grammar mistakes in online writing. Canva is a great option for creating graphics and presentations.

There are also several essential free tools, including Google Analytics, Tag Manager, Search Console, Data Studio, Keyword Planner, Docs, Slides, Forms, and Skype.

Take the time to learn and familiarize yourself with these tools before taking on clients as your time will be limited once you start working. Make sure to choose the tools that best fit your agency’s needs and budget.

8. Define your business model

Your next step is to define your business model, that is, how you will charge.

The most common models are charging per hour, per project, or monthly.

• Per hour means you charge based on the time you spend on a project. This rate can range from $30 to $120 per hour, depending on factors like your experience, client location, and the type of work.
• Per project means you agree on a fixed amount with the client for the whole project. Just be careful with your estimations, or you could end up losing money.
• Monthly fee is when the client pays you a monthly retainer for agreed-upon services, like SEO, PPC, or social media management. This is typically the most profitable model, but it’s also the hardest to get started with.

As a new agency, my advice would be to start with either the per hour or per project model. While it’s not the most profitable, it’ll help you quickly get new clients and build your portfolio. You can also adjust your hourly rate to attract clients.

9. Get your first client

To turn your idea into a business, you need clients. Here’s what worked for me in the early days:

• Tap your network: Reach out to friends and family who own businesses or work for one. Offer to help with their digital marketing and present a detailed plan with specific goals. Explain why investing in their online presence is crucial. Keep your pricing attractive, as your goal is to build your portfolio.
• Online job boards: Check out Upwork and PeoplePerHour for digital marketing job postings. To stand out, reply quickly and answer all questions in the posting, be honest, and keep your prices low.

Don’t forget, the lessons you’ll learn from your first client will be invaluable.

10. Make a blog about digital marketing

Want to grow your agency and get more clients without spending a fortune on advertising? Then you need to start your own blog, ASAP. Trust me, a well-written blog with valuable content is the best way to attract new clients and show off your skills.

Think about it: when potential clients find you through a Google search, they already know you’re good at ranking websites. That makes their decision to sign up with you a lot easier. To make the most of your blog, aim to target keywords related to the services you offer.

Blogging has been the main source of leads for my agency for the past decade, and we’ve worked with hundreds of clients worldwide without spending a dime on ads. In fact, growing your blog should be a top priority for your business. 

As your blog grows, so will your agency. And the best part? You’ll be on your way to turning your company into a profitable business faster, without relying on advertising.

11. Build your portfolio and reputation

If you’re in the digital marketing game, your ultimate goal should be to keep growing your portfolio and collecting those customer testimonials. It’s a no-brainer that a strong portfolio and positive reviews will help you attract bigger and better clients.

Now, I know you may be tempted to offer low-cost services to quickly build your portfolio, but trust me, it’s worth taking your time to focus on quality over quantity. Having a solid portfolio and happy customer reviews will make it easier to land those high-budget clients that can really boost your profits.

Just remember, building a strong reputation takes time. Don’t get discouraged, just keep working with each client and before you know it, you’ll have a portfolio to be proud of.

12. Develop your team-building processes

So you’re growing your agency and getting more clients, which is awesome! But eventually, you’ll reach a point where you just can’t handle everything on your own. That’s when it’s time to think about hiring some help.

Before you start bringing on new team members, make sure you’ve got your processes in place. We’re talking about having a set of standard operating procedures (SOPs) that document all the steps you take for each task. This includes client onboarding and all the services you offer. Trust us, it’s way easier to do this now before you’ve got a full team, otherwise, you’ll waste a ton of time explaining everything to everyone.

Use your current experience with clients to create email templates, proposal templates, custom reports, and checklists that anyone can follow. Keep it simple and don’t overthink things. You can use Google Docs and Gmail to organize everything in folders.

13. Recruit the right people for your agency

So you’re ready to expand your digital marketing agency and bring in some fresh talent? That’s a big step and means your business is doing well. But if you’re not quite there yet, hold off on hiring unless you’ve got the funds to take a risk.

I know from personal experience that finding the right people to take over your tasks can be a challenge, but don’t worry, I’ve got some tips to help make it easier.

• Start small – delegate tasks that are easy to execute and make sure to clearly explain what you expect from your new hires. Document the steps and keep your processes up-to-date.
• Hire freelancers first – this will keep costs low and give you more flexibility. Plus, you can bring in extra help on a project-by-project basis.
• Give a pilot project – it can be tough to know if a freelancer is a good fit for your team, so try them out on a pilot project before making a full-time hire. Trust me, it’ll save you time and money in the long run!

Is a Digital Agency Still Profitable?

Starting a digital marketing agency can be highly profitable. In fact, the average profit margin is 7.9%, according to a database of over 7,000 companies by NYU Stern.

And with the ability to work fully remote, some digital agencies have been known to have profit margins of up to 40%. Don’t miss out on this lucrative opportunity.

Is Starting a Digital Marketing Agency Worth It?

The answer is a resounding yes! The global digital marketing market is expected to see significant expansion, with spending projected to reach USD 1,310.0 billion by 2033. That’s a 13.6% annual growth rate (CAGR).

With consumers spending more time online, businesses are turning to digital marketing services to reach them better. A digital marketing agency can help businesses improve their online presence, reach their target audience more effectively, and get a better return on investment.

If you’ve got the drive, skills, and commitment to deliver results, manage a team, there’s no reason why you can’t build a profitable agency business.

However, if you need some quick cash, you might explore other side hustle ideas. 

Final Words

Starting a digital marketing business is a great idea. You can work from home, be your own boss, and grow the biz without a ton of cash. Before you dive in, there are a few things to keep in mind.

First and foremost, know your stuff. If you’re new to the digital marketing game, take time to build your skills and gain experience. Start by doing some marketing on your own sites and testing different techniques until you know what’s working and what’s not.

Once you’ve got results under your belt, you’ll have the confidence to offer your services to others. Start small, don’t try to do everything at once, and grow gradually. One client at a time, add to your portfolio.

When it’s time to bring on new people, make sure your processes are in place and build your team gradually. Hiring remote employees is tricky, so be prepared to try out a few candidates until you find the right fit.

Anthony Smith

Anthony Smith is an internet entrepreneur. He created the Side Hustle Ideas Database to help people find side hustles for making extra money, with the potential of turning into a full-time income.

After graduating from the University of Pennsylvania with a business degree, he gained business experience at a consulting firm. At the same time, he tried various side hustles including freelance writing, blogging, and eCommerce. He managed to turn his side hustles into a full-time business, earning over $3 million. Now, he enjoys financial freedom and travels around the world as a digital nomad.