Starting a digital marketing agency can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful digital marketing agency.
Importantly, a critical step in starting a digital marketing agency is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Digital Marketing Agency:
- Choose the Name for Your Digital Marketing Agency
- Develop Your Digital Marketing Business Plan
- Choose the Legal Structure for Your Digital Marketing Agency
- Secure Startup Funding for Your Digital Marketing Agency (If Needed)
- Secure a Location for Your Business
- Register Your Digital Marketing Agency with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Digital Marketing Agency
- Buy or Lease the Right Digital Marketing Agency Equipment
- Develop Your Digital Marketing Agency Marketing Materials
- Purchase and Setup the Software Needed to Run Your Digital Marketing Agency
- Open for Business
1. Choose the Name for Your Digital Marketing Agency
The first step to starting a digital marketing agency business plan is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your digital marketing agency:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your digita digital marketing agency.
2. Develop Your Digital Marketing Agency Plan
One of the most important steps in starting a digital marketing agency is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your digital marketing agency business.
- Company Overview – this section tells the reader about the history of your digital marketing agency and what type of digital marketing agency you operate. For example, are you a Search engine optimization (SEO) firm, Pay-per-click (PPC) advertising agencies, or Social media marketing (SMM) agencies. Each type of agency specializes in a different area of online marketing.
- Industry Analysis – here you will document key information about the digital marketing industry. Conduct market research and document how big the industry is and what market trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your digital marketing agency? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your digital marketing agency make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Digital Marketing Agency
Next you need to choose a legal structure for your digital marketing agency and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the digital marketing agency and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a digital marketing agency together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a digital marketing agency include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a digital marketing agency is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your digital marketing agency, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Digital Marketing Agency (If Needed)
In developing your digital marketing business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a digital marketing agency to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a digital marketing agency that they believe has high potential for growth.
5. Secure a Location for Your Business
Having the right space can be important for your digital marketing agency, particularly if you’d like to meet clients there.
To find the right space, consider:
- Driving around to find the right areas while looking for “for lease” signs
- Contacting a commercial real estate agent
- Doing commercial real estate searches online
- Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space
6. Register Your Digital Marketing Agency with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your digital marketing agency’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your digital marketing agency to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
To start a digital marketing agency, you’ll need to obtain the following licenses and permits:
- Business license: A business license is required to operate any type of business. Contact your local government office for more information.
- Sales tax permit: A sales tax permit is required to collect sales tax from customers. Contact your local government office for more information.
- Worker’s compensation insurance: Worker’s compensation insurance is required to protect employees in the event of an accident or injury on the job. Contact your local insurance agent for more information.
- Professional liability insurance: Professional liability insurance protects you in the event that a client sues you for professional negligence. Contact your local insurance agent for more information.
10. Get Business Insurance for Your Digital Marketing Agency
Other business insurance policies that you should consider for your digital marketing agency include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Digital Marketing Agency Equipment
A computer and an internet connection are essential for any digital marketing business. You’ll also need some software, such as word processing and spreadsheet software, to create marketing materials and track data. Graphic design software can also be helpful for creating website graphics or designing marketing emails.
12. Develop Your Digital Marketing Agency Marketing Materials
Marketing materials will be required to attract and retain customers to your digital marketing agency.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your digital marketing agency. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional digital marketing agency business website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media platforms will help customers and others find and interact with your digital marketing agency.
13. Purchase and Setup the Software Needed to Run Your Digital Marketing Agency
You need to have a computer with internet access and some digital marketing software. The most important software is a web browser, such as Firefox or Chrome, and an email client, such as Outlook or Gmail. You will also need some digital marketing tools, such as a search engine optimization tool, a social media management tool, and a website builder.
14. Open for Business
You are now ready to open your digital marketing agency. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Digital Marketing Agency FAQs
Is it hard to start a digital marketing agency?
No, it's not hard to start a digital marketing agency. However, there are some key steps you need to take to ensure your business is successful.
First, you need to decide what services you want to offer. There are many different types of digital marketing services, so you need to find a niche that you're interested in and knowledgeable about. Next, create a website and/or blog that promotes your services. Make sure your website is professional and easy to navigate. You should also include testimonials from clients on your website.
Once your website is up and running, start actively marketing your services online. reach out to prospective clients through social media, email campaigns, or telemarketing. You can also offer free consultations or white papers on digital marketing topics on your website or blog to attract attention from potential clients.
Finally, make sure you have a clear pricing structure for your services. You don't want to undercharge or overcharge for your services, so be sure to do your research on pricing before setting your rates.
How can I start a digital marketing agency with no experience?
There are a few key things you need to do in order to start a digital marketing business with no experience. First, you need to research the industry and learn about the different types of digital marketing. Then, you need to create a business plan and determine your target market. Next, you need to set up your marketing infrastructure, including a website and social media accounts. Finally, you need to market your business and create leads.
What type of digital marketing agency is most profitable?
There is no one-size-fits-all answer to this question, as the profitability of a digital marketing agency will vary depending on the services it offers and the markets it targets. However, some types of digital marketing agencies are more profitable than others.
For example, agencies that specialize in search engine optimization (SEO) and paid search advertising (PPC) tend to be more profitable than those that offer only web design and development services. This is because SEO and PPC are more complex and expensive to execute than other forms of online marketing, such as website design and development.
Another type of digital marketing agency that is typically more profitable is one that specializes in social media marketing. This is because social media is a rapidly growing channel, and businesses are increasingly turning to social media to reach new customers and grow their businesses.
How much does it cost to start a digital marketing agency?
That depends on a lot of factors, such as the size of your agency, the services you offer, and the location of your business. However, on average, you can expect to spend between $10,000 and $30,000 to get your business up and running.
There are a few things you'll need to get started:
- A website - This is where your customers will go to learn more about your business and services.
- A logo - This will help your customers remember who you are and what you do.
- Business cards - When meeting potential clients, you'll want to have something to hand out with your contact information.
- A marketing plan - This will outline your marketing strategy and how you plan to attract new customers.
What are the ongoing expenses for a digital marketing agency?
The ongoing expenses for a digital marketing agency can vary depending on the size of the company, the services offered, and the location. However, some of the most common expenses include:
- Web hosting: This is typically a monthly expense and is necessary to host a company's website.
- Domain name registration: A domain name is the web address of a company's website and needs to be registered annually.
- Marketing software: This can be a monthly or annual expense and includes software like Photoshop, InDesign, and Dreamweaver.
- Website design: A professional website design can cost several thousand dollars, but it's an important investment for any marketing agency.
- Employee salaries: Depending on the size of the agency, salaries for employees can range from a few hundred dollars per month to several thousand dollars per month.
How does a digital marketing agency make money?
Digital marketing agencies make money through a variety of services that they offer to their clients. These services can include things like website development, SEO, social media marketing, and PPC advertising. Many agencies also offer consulting services, which can help businesses with overall marketing strategy and planning. Additionally, many agencies partner with other companies to offer more comprehensive services that include both digital and traditional marketing strategies.
Is owning a digital marketing agency profitable?
There is no one definitive answer to this question. Whether or not a digital marketing agency is profitable depends on a number of factors, including the size and location of the agency, the services it provides, and the competition in the market. However, digital marketing is a growing industry, and there are opportunities for agencies that are well-managed and provide high-quality services.
Why do digital marketing agencies fail?
Digital marketing agencies can fail for a number of reasons, but the most common are a lack of experience, poor planning, and not having a niche. A lack of experience can be detrimental because it means the agency doesn't have the knowledge or skillset to carry out successful campaigns. Poor planning typically results in inefficient use of resources and can lead to missed opportunities. And finally, not having a niche can make it difficult for an agency to stand out from the competition.