If you wanted to create a marketing agency 25+ years ago, the barrier to entry was colossal. With a primitive digital 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.
Times have changed.
It’s not impossible to think that a skilled individual or small team could create a fully operational marketing agency from scratch within a few months (with a little help, of course).
Companies are spending more of their marketing budgets on digital advertising than ever before, and everyone wants a piece of the action. In this guide, I will walk you through the five steps you need to follow if you want to build an online marketing agency from the ground up (trust me, I’ve been there).
#1: Develop the Necessary Skills
If you’re a narcissistic Gen Z’er 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, 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
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.
I was fortunate to start my career on the marketing team at WordStream, where I was able to develop my paid acquisition skills. What might be unclear to those who have never been on a marketing team specifically is how much actually goes into it. Aside from the pressure to produce, you have to learn complex systems, and if the team is small you have to develop a variety of skills to get even the simplest campaigns off the ground.
This involves but is not limited to:
Building landing pages
Constructing messaging and positioning
Properly implementing tracking
Spending hours on a promotion just to watch it fail
Substantial pressure to produce
The benefit of managing clients is that a lot of these aspects are taken care of before they get to you. However, having the experience of working on these things allows you the added value of actually knowing what you’re talking about when something they give you isn’t working. It also helps you deal with the pressure to deliver quality results because you have been there before...many times.
TLDR: Put in the work at a 9-5 before striking out on your own. You can’t sell yourself as a digital marketing expert without being a digital marketing expert.
#2: Be a Contractor Before Becoming a Founder
Having a job that pays and allows you to have brain surgery without a lifetime of debt is a luxury many of us take for granted. Taking the leap of working for yourself has a list of risks so long that it could make for separate blog post. What mitigates a lot of that risk is actually developing the foundation for a business before making the decision to do it full time. I suggest doing some contracting work on the side for a period while holding down a full-time job for a variety of reasons, chief among them...
It allows you strike out on your own without assuming much risk
You get a taste of the entrepreneurial life when you begin to do side work. From invoicing to having to put aside extra cash for taxes, the small but very important elements of running your own business come into play.
You also have to manage your time wisely if you are going to still have a full-time job. This means working nights and weekends when you would rather be watching Netflix.
Building relationships as a contractor is also valuable in that it may bring you referrals down the line. If you are able to pay your bills as a contractor then making the transition into a one-person agency is going to be a lot easier than starting from scratch.
Another aspect to managing clients as a side gig is that it allows you to become experienced in building contracts. You’ll have to become accustomed to the process of putting a proposal together, then a contract, and then sign the necessary documentation (NDA’s etc). It’s a part of the game that you’ll want to streamline so that the time spent on onboarding new clients is reducedwww.superfunkyzone.com.
It allows you to build valuable relationships
If you are able to get some side work through mutual connections, former coworkers, or by simply networking yourself, it will give you the experience necessary when it comes to building and maintaining client relationships.
Having to negotiate the cost of your services is another skill that many overlook early on.
Your time and expertise are worth something regardless of how well you know the person on the other end. Building the skill of ascertaining how much you should charge for a specific project or service will become extremely valuable down the line.
#3: Develop the Right Business Model
There are a lot of different ways to set up a digital marketing agency. The services you provide and how you bill for your work become a critical part of how efficiently your business is managed over time.
The most common ways to bill your clients are as follows:
Many consultants will opt to bill their clients on an hourly basis. This is because a lot of their time is one-on-one with the clients, whether over the phone or directly in person. This billing model becomes muddy over longer and more complex service offerings.
Fluctuations in hours spent on digital marketing for a particular client are common; it is going to vary widely over time. There are a variety of factors in play: Setting up and launching entirely new campaigns or promotions, restructuring accounts, time spent on calls, and maintaining something that is working well for them.
It becomes difficult to say I spent “X” amount of hours on this per week so that’s how I will bill you. It also might make the client wary if they start to question how long certain actions take per week. Unless you are offering one-on-one consulting as a part of your service offering, I would stay away from the hourly billing model.
The flat retainer is the simplest of all the pricing models. You assess how much the work and time for a specific client is worth and you both agree on a flat monthly fee.
Aside from the simplicity, it allows you to reduce any friction when it comes time to send out the invoice. The client knows exactly how much it’s going to cost them and if you meet their expectations, they will have no problem paying it.
The downside to it is if you have a client who scales exponentially over time.
I suggest having an agreement in your contract that guarantees that price for a period of time (on a quarterly basis, perhaps); then you can renegotiate once that time is up. The biggest upside of a retainer-based model is that it allows you to forecast your earnings and hypothetically see how much you will earn if your current clients stay on for a full 12 months. This is essential to growing the business because you can set goals and prepare for set-backs.
This also plays a huge factor when hiring or outsourcing work becomes necessary (Step 5).
Percentage of Spend
This pricing model is very popular with agencies because it factors in the growth potential and scalability of the client. After agencies reach a certain maturity they are going to turn down clients with little or no pre-existing spend.
When you’re just starting out this may not be the best option as you will want to grow your network, but over time you will realize that having larger clients is far more beneficial to you for a number of reasons. The downside is if you decide to conduct business fully on a percentage of spend model because there are many internal factors within businesses that are going to dictate budget. Some of these factors are within your control (results) but many others are not (internal decisions, seasonality, other costs). You don’t want to get into a situation where your client is spending a very small amount per month and you are only getting 10% of that with the expectation of being on calls and putting the time into it.
My suggestion is to start out with a flat retainer fee as mentioned above and then, as your agency grows, implement a percentage of spend model on top of the retainer. This makes it clear to the client that if they want to scale and spend more, it’s going to require more work on your end to make it happen.
This is one that is often used by agencies in an attempt to gain a competitive advantage over others.
Essentially, they only get paid when the client makes money off of a sale.
This sounds enticing early on because you want to build trust with a client that you are doing everything in your power to help them be successful. Folks who have failed experiences with agencies often bring up the fact that they were paying all kind of money only to have no results or ROI. A gun-for-hire approach like this can appear truly tantalizing for a client who’s been burned before.