How to Start a Marketing Agency

Part 1 - How to start a Marketing Agency business - Background

Technology has expanded our reach, enabling businesses to develop targeted advertising campaigns to consumers across the globe. Successful campaigns pinpoint the needs of a company’s target audience(s) and identify specific strategies that said targets identify with. Marketing agencies help clients identify, implement, and manage these strategies, with the organization’s business goals in mind. Once implemented, the agency monitors their efforts, using collected data to revise their strategy.

Our guide is in 3 parts:

• Part 1 - How to start a Marketing Agency business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a marketing agency?

Since you are providing a service rather than a product, initial start-up costs for a marketing agency can be kept at a minimum. To get started, all you  need is your talent, a computer, a marketing strategy, a website, and some printed materials. Once your business starts to pick up, you will want to start rent an office space and begin building your dream team.

What are the ongoing expenses for a marketing agency?

Your biggest expense as a marketing agency owner is payroll. A marketing representative with one to three years of experience will set you back almost $50,000 annually, not including payroll taxes, fees, and benefits. An employee with more specific skills, such as a copywriter or web designer, will expect upwards of $60,000 per year. 

Additional ongoing expenses include rent/mortgage, utilities, staff healthcare benefits, technology/software maintenance and upgrades, marketing, occasional travel, and insurance.

Who is the target market?

In a broad sense, your new marketing agency’s target market is any business, small or big, that requires assistance in identifying who their target market is and how best to reach them. If you tried to reach everyone, however, it will prove difficult to reach anyone. 

Sit down and take a moment to  consider who your ideal client is. What is their business model? Do they offer a service or product? Do you want to work with local companies or organizations across the United States? What industries can you confidently represent? Do you prefer to work with small companies or pitch to Fortune 500s? Define your niche and perfect your skills. You can always broaden your target market as your talent team and portfolio grows.

How does a marketing agency make money?

A marketing firm makes money by charging clients for developing and managing their marketing campaigns. Typically, the agency will pitch their ideas to a potential client, often with several agencies vying for the contract. The client then enters into a contract with the agency whose pitch they most relate to. 

How much can you charge customers?

Your contract with each client will vary, depending upon their specific needs and the services you provide to them. For example, social media management costs anywhere from $400 to $1000 per month, depending upon the number of posts and which platforms are used. Email marketing ranges from $300-$500 and SEO costs $750 to $2,000. Before setting your price list, research other marketing agencies, and their fee schedules. While it may be tempting to set your prices lower than the average, business owners are cautioned against doing so. Selling yourself short may gain a few extra clients in the beginning, but you will spend the rest of your days trying to catch up.

How much profit can a marketing agency make?

Marketing contracts that cover multiple services yield between $4,000 and $30,000 per month. If you started with just two contracts at $5,000 per month, with you as the only employee, you would bring in $120,000 in your first year. Investing your profits back into the company would allow you to add team members and expand the scope of the services you offer. 

How can you make your business more profitable?

The quickest, most effective way to increase your agency’s profits is through the services you offer. Create a well-rounded team of talent, and the sky is the limit. Additionally, many agencies now offer their clients financing options. This not only helps them sign additional contracts, but they also earn a commission off of each financed proposal.

Day-to-Day and Growth

What happens during a typical day at a marketing agency?

A marketing agency owner is responsible for managing the agency, ensuring their staff stays on schedule, bringing in new clients, and producing client marketing campaigns. A typical day includes the following: 

• Checking emails – following up with clients, answering questions, and identifying potential issues

• Brainstorming, individually and as a team, to develop creative concepts and marketing campaigns

• Collaborating with various departments

• Present pitches 

• Conduct market research and analyze data to identify weaknesses in current marketing strategies 

• Search for new client leads and follow up with prospective clients

• Administrative duties

What are some skills and experiences that will help you build a successful marketing agency?

Managing a successful marketing agency requires marketing knowledge and real-world experience. Many entrepreneurs have a degree in marketing or a related field. Strong business acumen would also prove beneficial. Start-up business owners who lack the necessary degree and/or experience are encouraged to consider taking classes at their local community college. The American Marketing Association (AMA) is also an excellent resource, helping its members remain abreast of current and emerging trends, offering training and certification programs, as well as sponsorship opportunities.

What is the growth potential for a marketing agency?

With global digital marketing spending reaching a staggering $306 billion and overall marketing spending hitting $1.3 trillion, the marketing industry shows no signs of slowing down. Increased marketing spending and improved technology offer agencies a unique opportunity to break through barriers and expand their reach internationally. 

What are some insider tips for jump starting a marketing agency?

When first starting out, many new marketing agency owners are tempted to take on every new project that crosses their desks. It’s important to keep in mind, however, that the results you produce directly affect your brand. If you take on a client that doesn’t align with your vision and mission, your work will show this, doing both you and your client a disservice. 

How and when to build a team

Many new marketing entrepreneurs start as a one-man team. As you start to build a name for yourself, however, you will want to start making calculated decisions regarding your staff. Consider your strengths and weaknesses, what services would prove a most valuable addition, and hire accordingly. Remember, successful businessmen make the most money when others are making it for them.

Part 2 - Is a Marketing Agency business the right fit for you?

Part 3 - Action plan to launch your Marketing Agency business in 90 days