How to Start A Digital Marketing Agency by Ramit Sethi

How to start a Digital Marketing Agency in 2024 (7 easy steps)

Businesses of all sizes are constantly seeking to expand their online presence, creating the ideal environment for your skills to shine. To make your mark in this booming market, you’ll need a mix of know-how and people skills.

In this guide, I’m going to break down the steps for setting up and expanding your digital marketing agency, making it straightforward and easy to follow. Let’s get to it. 

 
 
 
How to Start A Digital Marketing Agency by Ramit Sethi
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Table of Contents

Digital Marketing Business Models

Fir starters, you need to know the core of your agency. This means getting familiar with various business and pricing models that set the foundation for how your agency will operate and profit. You basically need to learn different business and pricing models used by digital marketing agencies.

 
 
 
 

Hourly

The hourly model allows digital marketing agencies to bill clients based on actual hours worked, with pre-negotiated rates reflecting the team’s expertise and the project’s complexity. This model offers flexibility, enabling agencies to manage multiple projects efficiently while allowing clients to adjust their marketing efforts and budget as their needs evolve.

 
 

Retainer

The retainer model resembles a full-time commitment, with clients paying a set fee regularly, usually monthly, to secure the agency’s continuous services. This way clients get priority support and resources from the agency, while the agency benefits from stable, predictable revenue streams, so it’s a win-win.

Consulting

The consulting model is a combo of retainer and hourly arrangements, where agencies provide expert advice on digital marketing strategies and specific projects. Clients compensate the agency based on various structures—hourly rates, retainer agreements, or project-based fees.

 

Performance-based

The Performance-based model operates as its name implies. It aligns the digital marketing agency’s earnings with their results. Agencies are compensated based on achieving specific Key Performance Indicators (KPIs) like leads, conversions, or sales, making their income contingent on meeting or surpassing these set goals.

 
 

Project-based/flat fee

In the project-based or flat fee model, agencies charge a set rate for specific services or entire projects. This approach is commonly used for defined tasks like website development or campaign-specific social media management, where the scope is clear from the start. The agreed-upon fee doesn’t change, obligating the agency to cover any extra costs that exceed the initial estimate.

 

The 7 steps to starting a digital marketing agency

Ok, so now that you know the diverse business models, let’s talk more about HOW to build your digital marketing agency. The following seven steps are your North Star through the foundational stages; from conceptualization to launch, ensuring your agency is on its way to growth and success in this competitive industry. Let’s check out to 7 steps:

Pick a service to offer

Selecting a specific digital marketing service like content marketing, SEO, SMM, email marketing, or paid advertising allows your agency to excel and be recognized for expertise in a particular area. Specializing not only helps in standing out from competitors but also aligns with clients’ preferences for agencies with focused, top-notch services in the specific area they require assistance.

 

Choose a niche

Many companies have realized the importance of having a strong online presence. With this increase in demand, the landscape is expected to be saturated with thousands of agencies clawing for every last client.  To stand out, you need to carve out a niche you are well-versed in. 

Some examples are software as a service (SaaS), e-commerce, technology, healthcare and wellness and education (to mention a few).  Concentrating on a single market niche can help you achieve traction at the very start. Your expertise will grow over time, and you may be in a better position to expand the target market.

 

Pick a good pricing model

Picking a pricing model is usually the challenging part because there is a lot to consider. You want to be careful not to overprice or underprice. At the same time, you want a model that suits your client’s needs while covering yours as well. Whether you settle for hourly, retailer, performance-based, consulting, or project-based, ensure it can help you deliver results without compromising your financial situation. 

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Market yourself

The irony about digital marketing is you’ll have to outcompete a mammoth of other agencies before earning your first dollar.  Some of the ways you can market yourself include creating a website, creating a portfolio, cold calling, building social media accounts, and content marketing. Time is your greatest asset when you’re just starting, and you don’t want to spend a lot of time building a website unless it is your primary lead generation platform. 

 

Find your first client

It might take longer than expected to land your first client, but don’t let this discourage you. Use platforms like Upwork to find entry-level roles or short-term projects to get your feet wet. Later, you can build a website and expand to social to scale your visibility. With time, you’ll get experience and attract more inbound leads.

Deliver great services

Unlike a freelance role, where you’ll be spending lots of time billing hours and delivering work, being an agency owner will have you training people and finding more clients.  This only comes when you build a good reputation around your brand. And, of course, a good reputation only comes when you set realistic expectations and over-deliver

 

Refine the entire process

You’ll probably wear multiple hats at first, but as your agency scales, it will make sense to handle only some of what comes your way. On top of training a team and delegating some tasks, you want to build systems, automate processes, and build foolproof workflows. 

What do you need to start a digital marketing agency?

If you enjoy working for yourself, being a leader and are comfortable wearing multiple hats and learning new skills fast, starting a digital marketing agency may be for you. 

But this also comes with occasionally working on weekends, having late nights, and dealing with hard clients. 

A pack of other capabilities that you’ll need include:

  • Grit – a combination of passion, perseverance and patience even when things are not working as you want.
  • Consistency – You need to show up every day, even when you don’t feel like it. 
  • Ability to build a team – You will need a reliable team to help you execute most tasks.

Essential tools for a digital marketing agency

In a digital marketing agency, having the right tools streamlines operations and enhances productivity. 

  1. Google apps like Docs, AdWords, and Analytics are essential for collaboration and data analysis. 
  2. Automation tools like Zapier and email parsers automate repetitive tasks, while platforms like Loom enhance communication. 
  3. Analytical tools such as Google Analytics and SEMRush provide deep insights
  4. Hootsuite and Buffer manage social media effectively. 
  5. WordPress and Canva aid in content creation, with SEO tools like Ahrefs ensuring visibility. 
  6. Slack and Skype are indispensable for seamless team collaboration.

FAQs

Is digital marketing worth it?

Yes! It requires a lot of dedication but comes with a lot of satisfaction in the end. 

Which business model is the best for digital marketing?

No model can be labeled as the best because different agencies work from different angles. However, hourly, retainer, and consulting have more benefits for agencies.

How much does it cost to start a digital marketing agency?

Getting set up with tools, a website, and resources will cost anywhere between $700 and $2,000.

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