If you wanted to create a marketing agency 25+ years ago, the barrier to entry was colossal. With a primitive digital marketing landscape, the overhead to create such an operation was daunting and nearly impossible without initial investment. On top of the startup costs, you were limited to physical and traditional media and the headaches associated with all but fabricating something that resembled ROI for your clients. Being “in the red” for a very, very long time was inevitable.
Companies are spending more of their online marketing budgets on digital advertising and performance marketing than ever before, and everyone wants a piece of the action. In this guide, I will walk you through the five ways you can build an online marketing agency from the ground up (trust me, I’ve been there).
DEVELOP THE NECESSARY SKILLS
If you’re a narcissistic Gen Z with grandiose visions of becoming Neil Patel right after you accept your diploma, chances are you’re going to fail miserably.
You can be as creative and intelligent as anyone in the game, but if you’re not prepared and experienced enough to deal with the many nuances of managing accounts and client relationships, you’ll be looking for another gig real quick. It may take years for some to build the skills necessary to handle operations in a digital marketing company, it may take others less. Regardless, I believe you need to actually hold down a real job for some time before you venture out on your own.
Work environments are a lot more complex than we realize while we’re grinding within them. Above the actual work, you produce there’s a multitude of expectations, verbal and nonverbal communication gymnastics, and politics. Everything from how the organization is structured to its culture, product, and leadership play a part in how your day-to-day (and career) unfolds.
Prior to mastering your digital marketing skills, you need to experience what it’s like to work where your clients may work. This will inevitably make you a more understanding and well-rounded professional. When your clients are stressed out and possibly projecting that on you, you aren’t going to take it personally.
That being said, it’s important to understand that soft skills are only 50% of the final product that is you. You need to get good at what you’re going to be offering as “professional” services. No matter how slick your sales game is, a client will discover sooner or later that they’ve been sold snake oil. You have to be able to drive results. If you begin your career managing clients for larger agencies, I would encourage you to actually start working on a marketing team or pick up a handful of small clients to learn the channels and skills you’ll execute on.
PRODUCTIZE YOUR SERVICES
Small companies selling digital marketing services/products have a clear advantage over those who sell physical goods. It’s much easier to scale your output without having to invest massively. There’s nothing to produce after all.
That being said, some companies have already productized their services, some without knowing it. Let’s look at the book publishing industry as an example. It has spawned a variety of professionals who no longer work for publishers. Instead, they have established their own business ventures. In the publishing industry, you can mainly find these three:
- Book designers: they specialize in covers, interior designs, and sometimes typography. Some of them might be able to create social media graphics and book trailers.
- Editors: they will make sure that your book flows well, hooks the reader, and that it is error-free.
3. Marketers: they will try to get your book in the hands of those who might be interested in it.
SWITCH TO A RECURRING SERVICE MODEL
Small and medium-sized companies might hit a snag at some point when it seems like they can’t grow any further. In many cases, the growth is impacted by a moderate cash flow. It is indeed hard to plan ahead when you are selling simple one-time services. One month might be great revenue-wise, but the next not so much.
One way to make the future more predictable is to switch to a recurring service model, or at least offer it in addition to one-time services. A recurring service model combined with modern payment solutions have two advantages:
- They improve the customer journey, and
- They reduce manual workload for businesses.
Next, let’s look at a few examples of service types that work well on a recurring basis. Here are a few ideas that some digital companies are already making use of:
- Designers offer monthly, quarterly, or yearly recurring design packages for small companies who have a constant need for graphics. These can be used in social media campaigns, blog posts, or infographics.
- Content writers bundle their one-time writing services into bundles. Their clients can subscribe to a recurring service that allows them to request up to a certain number of blog posts each month.
- Social media experts often manage the entire social media presence of their clients for a monthly recurring fee. Each monthly package includes a limited number of profiles.
Among the recurring service providers, Design Pickle is especially famous. They provide so-called unlimited options for a fixed monthly/annual fee. It’s an interesting business model that does need to be calculated thoroughly though. Each service should have a fixed scope and some sort of limitation that doesn’t create financial trouble. For instance, some providers only work on one graphic project at a time.
DEFINE YOUR NICHE
When you’re starting out it’s easy to be seduced by the prospect of working with any business.
The thought of having to turn down anyone can cause anyone a fair amount of cognitive dissonance when their livelihood is on the line. With that being said, there are thousands of digital marketing agencies and consultants out there. Some of them specialize in online marketing and internet marketing, but many of them don’t.
Unless referrals are flowing like the salmon of Capistrano, you are going to need to stand out and create a unique selling proposition when approaching new prospects.
Aside from the added value of being specialized within an industry or client type, there are countless advantages to focusing your services towards a clearly defined niche. Here are a few of the most notable:
It makes onboarding easier
When you take on anyone as a client there are so many variables that you need to become aware of before deciding whether it’s a good decision to do business with them or not. When your ideal customer is clearly defined, this process becomes streamlined because you know what types of questions and information you need to attain from them. You also have a perspective on how these businesses run internally as well as how much you would charge them on average.
It strengthens your skillset exponentially
If you have become skilled in digital marketing (paid specifically) you can essentially run ads for most businesses. However, you need to learn the target market and how to formulate effective messaging. This can take a lot of time when the business is unfamiliar or abstract to what you are used to working with, which inevitably causes issues early on if things aren’t going so well.
If your ideal client is already defined, you are going to build a plethora of experience working with that type of client. This builds the muscle memory and intuition necessary to know what decisions to make and when to make them. You can work more efficiently because you’ve seen the problems before and you know how to handle them. It also makes you adept at recognizing clients you don’t want to do business with.
It gives you a competitive advantage
As I’ve mentioned before, there are so many people out there slingin’ ads and takin’ names.
The internet has allowed for the hackiest of hacks to experience success. Due to the fact that there are so many low-quality agencies out there, it provides the client with far more peace of mind when your business caters to those who are just like them. Being the “insert niche here” Agency gives you the social proof and expertise to confidently speak to the needs of these individuals and their organizations. It gives you an added layer of trust and relatability that is so often lost in this industry.
DECIDE HOW YOU WANT TO SCALE
When you tell people that you’re going to run your own agency or consultancy, it carves into their mind that you are going to rent out an office space and hire a bunch of employees. More often than not, that is the worst decision you can make. If you’re like 99% of the population, chances are you have bills that need to be paid. If you want to get started and grow, you are going to have to make sure you can personally survive first.
When building a successful agency, it’s key to be highly skilled at what the agency does first. Managing the accounts yourself for a period of time allows you to not only refine these skills but it makes finding talented help a lot easier because you understand the skills and knowledge necessary for the job.
You also have to understand what the cost of that help means to you financially. What’s your client churn rate? Average customer lifetime value? How do you acquire new clients? Hiring an employee is going to throw in an additional layer of complexity to all of that.
Convincing someone to come work for you is another matter altogether. Employees are employees because they want security. So unless you are at the point where you can offer them benefits and pay them well, they aren’t going to be interested in taking on the gig. The cost-effective antidote for this issue is simple: Find contractors.
There are so many talented people out there who are willing and able to help you out on a contractual basis. You don’t have to provide these people with benefits, and they are an easy write-off on your taxes. Being able to delegate monotonous or time-consuming tasks to a trusted contractor is a huge load off of your shoulders when you’re focused on taking on the business. This method allows you to scale to a point where having full-time employees makes more sense. The contractors may decide to join you full time if things go well and they have already proven their competence to you.
All of this advice stems from starting an agency by yourself. If you have a partner or two that wants to do it with you, then it changes things quite a bit. With that being said, the profits are going to be split and you’re going to have to either charge higher rates or take on more clients to make it mutually beneficial to the point where it’s better than having a normal day job. Just something to keep in mind.
There’s a culture in today’s age of startups that extreme growth is the only marker of a successful business. There’s a lot of pressure when it comes to taking on more clients and you may discover that you can be financially satisfied with a certain number of great clients. You may ultimately decide that rapid expansion is not what’s best for you. Unless you have outside investors breathing down your neck, the ability to live a financially stable (if not better) life on your own terms may be more enticing to you.
Running a sustainable agency by yourself also allows you the freedom of ending the business simply and on your terms if you need to (no layoffs, no office to sublet, no 45-pound bag of coffee beans). You may also find that running an agency isn’t something that you want to do forever. You can use it as a form of investment for other business models you may be more passionate about but take time to develop.
Having run your own business for a period of time is going to give you a priceless amount of business experience, building valuable relationships that you can rely on in the future.
Make a Decision
If you’re reading this post, you have probably already ventured out on your own or you’re thinking about it. My overarching advice is to make a decision and stick to it.
Managing your own business has many ups and downs to it and you’ll have to be able to weather the storm to enjoy the benefits. It’s a dramatic life event and you have to treat it as such. If you feel early on that you aren’t cut out for it, then don’t drag yourself along for any longer than you have to. If you make a decision but don’t believe in it, you’re going to fail. You have to commit. Once you do that you may discover how extremely fulfilling running your own digital marketing agency.