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In 2023, an estimated 571.16 billion U.S. dollars will be spent on digital advertising worldwide. This is a 16.2 percent rise from the $491.70 billion spent in 2021. Companies of all kinds are spending money on digital marketing agencies to do the job for them. If you’re here, we’re willing to bet it’s because you see an opportunity for yourself to start a digital marketing agency.

It’s that true?

Then buckle in, because this blog post will show you exactly what you need to do to start a profitable digital marketing agency, step-by-step.

What Is a Digital Marketing Agency?

The growth in popularity of the internet, smartphones, and other internet connected devices has pushed digital marketing into the forefront as the focus of most business marketing. Studies have shown that we spend between 5 to 8 hours/day online. This creates an opportunity for businesses to meet their customers where they spend almost ⅓ of their day.

Companies understand that they need to market themselves online. However, they often cannot fully grasp the opportunity on their own. Not all businesses have the resources to handle all of their marketing in-house. Companies that lack the in-house resources may hire a digital marketing agency with wholistic expertise in all things digital marketing or expertise in specific niches they wish to target.

This is where digital marketing agencies come in.

A digital marketing agency reaches customers online through websites, blogs, social media, email, and television. A digital marketing agency can help businesses build their customer base, and increase sales and brand loyalty.

Some niches that fit under the digital marketing umbrella include SEO, social media, pay-per-click ads, email marketing, video marketing, influencer marketing, content marketing, and website design.

What Are You the Types of Digital Marketing Agencies?

One of the great things about running a digital marketing agency is that you basically have 100% freedom to do what you want. You can work with whatever type of client you wish, offer any service you like, charge clients however you’d like, and work as often as you’d like.

With that said, there are some types of agencies that are more popular than others because of their profitability and demand.

Here are the most common types of digital marketing agencies:

Is a Digital Marketing Agency a Good Business to Start?

The pandemic forced nearly every business to adapt its business strategies. One of those adaptations was how they market to potential customers. More people than ever are spending time at home and on internet-connected devices. It doesn’t seem like this will change coming out of the pandemic, either.

The result?

More potential customers using digital marketing strategies.

If you’re looking to capitalize on the digital marketing wave, starting a digital marketing agency is a good idea.

If you’ve had success as a marketing freelancer or are a seasoned marketer, starting a marketing agency may be a logical next step.

The appeal of running an online advertising business is of course, getting to work for yourself. It also becomes possible to win bigger clients who pay more, driving your revenue potential through the roof. However, the corresponding growth in revenue means more risk and moving pieces.

If you’re brand new to marketing or have a little less experience, we advise you to ask yourself a few questions before diving headfirst into the agency world. These questions will help take off the rose-colored glasses and understand the reality of what it takes to run a successful digital marketing agency.

So, the short answer is, “yes,” a digital marketing agency is still an excellent business to start.

But still, ask yourself these questions.

1. Is There Demand for Your Service?

Let’s assume your desire to start a digital marketing agency stems partly from your perceived marketing chops. If you genuinely do have the ability or believe you can learn along the way, then the next question is this…

“Are other agencies doing the work that I want to do?”

Furthermore, you can ask, “are other businesses looking for someone or an agency that does what I do?”

You should proceed if you answered yes to at least the 2nd question.

The best way to determine if there’s demand for your service is to begin outreach to potential clients.

2. Can You Produce Results?

If you have experience working as a marketer, then you should know the answer to this question to some degree. This is one reason why starting as a freelancer or getting a job in digital marketing is fantastic.

Working in marketing allows you to:

Being a results producer differentiates you from a large number of agencies that quite frankly do little for their clients and don’t use tools like Semrush to track results.

With even just basic sales skills, you can grow an agency if you know how to get results in the current marketing climate.

3. Can You Build a Team?

By definition, the difference between freelancing and running an agency is a team. Scaling up requires systems and people to manage those systems. Adding part-time and full-time employees means navigating different legal, recruiting, training, and management landscapes.

You will spend a lot less time marketing and more time running different business skillsets. Can you handle the pressure of managing a team and growing a team?

4. Are You Committed Enough?

Running a business is a long-term commitment. Once you get a book of clients and employees who rely on you for their salaries, the pressure is on every day.

Every day will NOT be rainbows and unicorns, meaning you’ll have to show up even when things are tough.

This means showing up when it takes longer than expected to get your first client, when you lose a client, or when you waste money on a tool, course, or employee that doesn’t work out. For these reasons, it’s good to have a real passion for marketing and the types of businesses you want to work with.

5. What Do You Want Out of Your Agency?

This question is less about whether you should start a marketing agency and more about what you wish to gain from your agency.

This means answering what you want your business to look like and determining your vision. Starting a digital marketing agency without a vision is like making dinner with a blindfold.

Here are a couple of ideas your welcome to mix and match into a vision:

There is no correct one-size-fits-all approach to determining your vision and by no means do you have to choose one.