One of the best industries to start a business in is the tech industry. We’re going to walk you through the process of starting an advertising agency so that it can be easier for you to begin your path to a successful digital marketing business.
Globally, the largest marketing/advertising agencies make over $ 460 million in revenue.
Companies are now spending more of their marketing budgets on digital advertising than ever before.
What you need to know before starting an ad business
#1. Develop the right skills
Every field requires skills and experience. Do not expect to get to the top within the first few months. It may take you years to build the necessary skills therefore I would advise you to hold down a real job for some time before you venture out on your own.
Before mastering your digital marketing skills, you should experience what it’s like to work where your clients may work. This will help you become a more understanding and well-rounded professional. When a client is stressed out and possibly projects that on you will be more understanding.
It is important to understand that soft skills are only half of the final product that is you.
You need to get good at what you will be offering as “professional” services. If you start by managing clients for larger agencies, I would encourage you to start by working on a marketing team or pick small clients to learn the channels and skills you’ll execute.
- Building landing pages
- Designing ads
- Constructing messaging and positioning
- Learning systems like HubSpot
- Implementing tracking
The benefit of managing clients is that many of these aspects are taken care of before they get to you. However, the experience of working on these things helps you serve your clients better since you can tell when something they give you isn’t working.
#2. Be a Contractor Before Becoming a Founder
Before deciding to work on your own which is starting your advertising agency business, it is always better to first work under people who understand the industry better first. This will help equip you with the right knowledge for your advertising agency business.
Working as a contractor at first will help you have a better transition into a one-person agency.
#3. Develop the Right Business Model
There are many different ways to set up a digital marketing agency. The services you provide and the billing 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:
Most consultants prefer billing their clients on an hourly basis. The reason is that a lot of their time is one-on-one with the clients, either over the phone or directly in person. This billing model might become muddy over longer and more complex service offerings. Therefore, unless you are offering one-on-one consulting as a part of your service offering, I would advise you to stay away from the hourly billing model.
This is the simplest of all the pricing models. You assess how much work and time you spend on a client’s work then you both agree on a flat monthly fee.
It also reduces any friction when it’s time to send out the invoice since the client already knows how much it’s going to cost them. If you meet their expectations they will have no problem paying for it.
Percentage of Spend
This 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 start turning down clients with little or no pre-existing spending. When you are starting this is not the best option since you will want to grow your network.
This is mostly used by agencies in an attempt to gain a competitive advantage over others. They only get paid when the client makes money off of a sale. Agencies use this as a way of building trust with a client by showing them that you will do anything in your power to help them be successful.
#4. Define Your Niche
When you are starting out it’s easy to be carried by the idea of working with any business. The thought of turning down any client might make you want to work with just any client. There are many digital marketing agencies among which some of them specialize.
There are countless advantages to focusing on a clearly defined niche.
- It makes onboarding easier
- It strengthens your skillset exponentially
- You gain a competitive advantage
You may start a marketing company focused on a specific niche, such as Business to Business (B2B) or Business to Customer (B2C), a general marketing company, or you may start a digital marketing firm focused primarily on a specific social media network like Instagram.
You aren’t limited to just one type, but this decision will impact how to start a media company and drive every move going forward.
Some of the common types of marketing companies include:
- Social Media Marketing – Focuses on marketing through social media
- Email Marketing – is an Email-based marketing
- Brand Management – Focuses on Building a brand through a variety of techniques
- Content Management – it’s all about Managing the flow of content
- Copywriting – Focuses on Writing about products, services, tutorials, or website wording
- Product Marketing – Focuses on analyzing interest in a product and then selling the product
- Marketing Analysis – involves analyzing how to improve through meeting market demand
- Growth Marketing – Focuses on increasing the market share through marketing
- PR/Communications – it’s all about Communicating with external stakeholders
- Event Marketing – Focuses on Marketing events like concerts or business conferences
- SEO/SEM – Involves improving organic search results or paid search results
- E-Commerce – Focuses on marketing products sold online
#5. Decide How You Want to Scale
When you hear of running an agency or consultancy, you might think it is all about renting a space and hiring people. That is the worst decision to make when starting your agency business.
You need to get started on your own first and make sure you can personally survive first before having anybody else onboard.
Managing the accounts personally for a while allows you to not only refine your skills but it makes finding talented help easier because you understand the skills and knowledge necessary for the job.
You need to make sure the amount you are making can sustain your business, pay yourself and also pay your employee. If you can’t do all that then you are not yet ready for an extra hand in your business.
How To Go About Starting An Advertising Business
Now that you have all the necessary information about advertising agencies let’s get into how you can get started.
#1. Name Your Company
The name you choose will communicate what your company is all about. Including words like Marketing, Advertising, or something to identify what your company does makes it easier for people to think of it when they are looking for help.
Your business name should be easy to remember when using a search engine. People tend to type fast and a crazy name will make it difficult for people to spell or even search.
Find a name for which the .com domain is available they are most recognizable.
The best places to buy a domain include:
- Google domains
- Your web builder
Once you’re satisfied with the name, register your business name with the government to protect it.
#2. Write a Business Plan for Your Ad Agency
A business plan will help you define the advertising agency’s objectives and strategy.
It guides your decision-making, helps financiers consider whether to provide startup costs and gives you something to present to businesses who could be potential partners or clients.
Your business plan should be able to answer the following:
(a. What was your inspiration for starting an advertising agency business?
(b. What problem are you solving for your clients?
(c. What is the market opportunity? Who are your clients? What types of businesses need your services?
(d. What is different/unique about your advertising agency? Why should other businesses believe you will be a successful agency?
(e. What progress has your agency made so far?
(f. What startup costs have your agency already incurred by starting an agency?
(g. What do you require funding for? What are the costs associated with incremental sales?
A great business plan needs to be inspiring, informative, and factual. There are many businesses in constantly changing environments, so you have to stand out to potential clients.
A business plan that is constantly evolving will help keep your business plan in line with where your business is and where you want it to go.
#3. Legally Establish the Advertisement Agency
After successfully creating a name for your advertising agency and developing a plan, it is now time to create the legal structure.
I would advise you to hire legal representation that has experience in starting advertising agencies. This will simplify the process so you can get clients, build a team and run creative campaigns.
There are five basic types of legal structures :
- sole proprietorships
- Limited Liability Corporations (LLC)
Each of them has its pros and cons. You’ll have to decide which is best for your agency.
#4. Obtain necessary licenses and tax requirements
Each country or state has different licenses, permits, or tax forms required. Talk to people who work in the licensing and tax offices for advice on which licenses you need.
#5. Obtain Funding
A startup Ad Agency can be achieved for under $1,000. All you need is a space in your home, a website, social media, and time.
Renting an office space or running a ton of paid ad campaigns is not necessary for a startup unless you are starting a franchise.
If you might need external funding some options include:
- A loan from family and friends
- The business partner(s)
- Government programs
#6. Establish a Location
Most small advertising agency businesses are home-based. Once profitability is reached, they will meet a client at a local coffee shop.
However, if you need a more professional location, I would advise you to look into office-sharing services. This will reduce the expenses of having an office.
#7. Create a Website
A website is critical when it comes to marketing companies. It’s the first thing people notice, and if it doesn’t look good then it will be hard for them to trust you to do advertising for them.
Building a good website is very important and many things make it even easier. You can use web builders such as WordPress, Wix, and OLITT among others.
You can also hire a web developer to do the work for you but be ready to pay them for the same setup you can do by yourself. The only difference is that they can do it faster since they are experienced.
#8. Create Social Media Profiles
You will need all possible social media profiles because you never know where your clients spend most of their time.
- Linkedin is best for B2B marketing
- Youtube is best for video
- Instagram is best for products and marketing that use pictures
- Facebook is best for B2C marketing
- Twitter is best for financial markets, politics, and crypto.
- Tiktok is best for short fun videos primarily targeted to ages 30 and below.
#9. Have a Tech Stack
Having a tech stack makes running your advertising agency easier.
I hope the information we have provided above will guide you while starting your Ad business.