So you want to start a digital marketing agency …
For all creative people – digital media designers, web designers etc. – setting up their own digital marketing agency is the culmination of their career. Probably you’ve been working in an agency for several years and don’t want to be just a small cog in the creative process any longer. You finally want to decide for yourself, take responsibility for important projects and realise your own visions.
Have you spent sleepless nights with questions such as, “How do I start an agency? What do I have to consider in order to be successful? How do I find clients quickly before my reserves are used up?” Even though your questions may not be as dramatic, we’ve come up with some essential factors for successfully establishing a digital marketing agency.
It does not take much to succeed as an agency founder as long as you have the right skills. After all, once you have a few satisfied customers who place regular orders, your position will be secured.
However, the path from founding an agency to full capacity utilisation with profitable projects is sometimes long and rocky.
Rest assured that you are not alone with your idea. There is already a whole army of freelancers from large and small agencies, all waiting for you. It’s time to roll up your sleeves and put your own stamp on this industry.
What will you learn?
On this page you will find out what you can bring to the digital marketing agency and the first steps you must take in order to succeed. Here are some of the most essential points to take into account:
The most important part of creating your business plans is yourself. What sets you apart is the absolute willingness to work through days, nights and weekends – perhaps for months or years – until your business achieves its goal.
Are you ready to start a digital marketing agency? Excellent, read on!
What do you need to be aware of when you start a digital marketing agency?
If you want to start an ad agency, preparation is crucial. Before you can turn your vision into reality, various administrative tasks must be completed and strategic decisions have to be made.
Registering your business
Business registration is mandatory – regardless of whether you are going to be a sole trader or partnering in your digital marketing agency with other like-minded people. Depending on your business location, different authorities are responsible for this. You must first register the company name at the Companies House before informing HMRC. The fees for the business registration are small – usually just £12. Additional permits, such as those for the catering or gambling industry, are not needed for a digital marketing agency.
The business plan
A business plan is essential, especially if you want to apply for bank loans, start-up grants, or other subsidies. On the one hand you will prove your competence and expertise and, on the other, it must be plausibly guaranteed that your business is financially viable. A financial plan in which you estimate the surplus of your first fiscal years and create a sales and profitability forecast must be included in your business plan.
A clear structure and comprehensible language without the unnecessary technical jargon are important to make your plan understandable to outsiders. Outline your departments and their benefits for your customers. Define the value of your services and explain your pricing model.
In addition, the business plan of your digital marketing agency must make it clear that you are well versed in your industry and detail what will make your business stand out from the competition.
There are trade associations in every region offering support and advice on how to prepare your business plan. In addition to various startup grants provided by the government, exploring local funding bodies is also recommended.
National insurance contributions for the self-employed
In the UK, the self-employed must also make National Insurance Contributions (NIC) just like the contractually employed. There are two different classes of NIC for the self-employed: Class 2 and Class 4. Class 2 NIC are a fixed weekly amount and Class 4 NIC are based on your self-employed profits.
Young freelancers with low start-up capital would quickly face ruin if HMRC didn’t have a Small Profit Threshold (SPT), i.e. if you’ve earned less than £6,365 a year, you don’t have to pay NIC. Once you hit that threshold, however, you will need to pay Class 2 NIC which was set at £3 for the tax year 2019/20. Class 4 NIC starts at 9 per cent for profits of between £8,632 and £50,00, and 2 per cent is applied to profits over £50,00.
NIC count towards your state pension and state benefits. Those who earn less than the SPT can choose to pay NIC to ensure full pension and benefit eligibility.
In order to start contributing, you must have a national insurance number and let HMRC know whether you are a sole trader or partnership. More detailed information can be found on the official HMRC website.
Learn from your competitors
Know your direct competitors and study their procedures. There is no harm in getting inspiration from the success of your competitors. At the same time you will find out how you can differentiate yourself from other advertising agencies.
Find your niche
The creative industry consists of countless agencies that offer a vast array of services. Identify the most unique selling points that make you stand out from the competition in order to find your niche so you can specialise in a particular industry or service area. If your core competency lies in web design, for example, you should initially only expand on this area.
Pay attention to where new niches are opening up that no competitor has yet filled. Ideally, you should be among the first to pick up on new trends and integrate them into your service portfolio.
You can develop your offerings further by offering, for example, web design to online shops, layouts for corporate brochures, or production and editing services. Unique services lead to a strong USP (Unique Selling Proposition) and set you apart from your competitors.
Once your ad agency is up and running, you’ll probably find out quickly what kind of work suits you best. The word of mouth from satisfied customers can also help you gain a foothold in a particular industry.
Define your style
Define your visual style, create a brand or corporate identity using colour and images that evoke positive emotions in potential clients. Your logo, your website and your business documents should follow a consistent style and complement your range of services.
Of course, the design of a corporate identity for advertising agencies is a particularly demanding task. Images play an important role, since they allow you to show what kind of agency you are managing in a universal language.
What are the biggest challenges?
One of the biggest challenges facing you when setting up your digital marketing agency is customer acquisition and project management in the creative industry.
In project management, it is all about good timing. Keep a record of your orders and all the important deadlines using a calendar. Make detailed notes on each project to make sure you understand your client correctly and plan your steps methodically. Multitasking and good organisational skills can take you far.
If you have several employees working for you, it is important to use their skills and strengths to your advantage. The bigger your digital marketing agency becomes, the more you will need to rely on your employees to do their jobs as independently as possible. Practice the art of delegating and create the right work structures for your staff to follow.
Customer acquisition mainly consists of pitching. You simply have to approach potential customers and offer your services in a targeted manner. Search the Internet and industry newspapers for customer projects. Further down on this page you will find detailed information on how to participate in Agency Pitches and find interesting projects.
But you can do even more by developing content strategies for your inbound marketing and producing high-quality content in text, image or video formats for your target audience. Inbound marketing is the art of winning customers without aggressively promoting your services. By helping users solve problems or providing insight into industry processes, you show that you care about your customers’ well-being. In this way, you will build a good reputation, which contributes to winning new customers without active acquisition.
Make sure that the content you publish is optimised according to the latest SEO criteria so that users who google your keywords can find your pages. To get access to particularly interesting content, many users are willing to sign up or subscribe to newsletters. With this, you can gain new leads and drive traffic to your pages.
What are the first steps to starting an agency?
You must first define what kind of agency you want to start up. Here are some examples:
Which legal structure is most suitable for your agency?
The legal structure that’s best suited for setting up your digital marketing agency depends, among other things, on whether you want to work on your own or in a team. The available seed capital also plays an important role. Advertising agencies are usually given the following structure: Inc. (incorporated) Ltd, (limited company), or LLC, (limited liability company).
For LLC or Ltd. (limited liability company) a share capital of just £1 is required. This legal structure is highly regarded and is often chosen when several partners jointly set up a digital marketing agency. Any debts incurred by the company are the liability of the company and not the shareholders. In simpler terms, the directors of the company cannot be held responsible for paying the company’s debts.
The limited liability company (Ltd) is ideal for solo traders with small seed capital. You do not need more than £1 to start the company. In the case of liability, in most cases, only the assets of the company are charged.
You can also start a digital marketing agency as a sole trader. No investment is necessary for this. Remember, however, that you are liable to pay any debts using your personal assets.
For Inc. companies, all the shareholders are also managing directors. You could choose this if you start with several partners and you want to remain equally responsible for overseeing the business. There is no capital investment needed. The shareholders are also liable to pay the company debts using their own assets.
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As a sole trader, how do youavoid bogus clients?
As a sole trader, you should be particularly careful not to fall into the realm of bogus self-employment. In this case, the client would retroactively pay your national insurance contributions. This can be very expensive and cost you your status as a self-employed trader. You would fall back into the rank of an employee and you would have to de-register your company.
Audits of potentially bogus self-employment can be ordered at any time by HMRC. Contracts between service providers and clients, as well as the way you cooperate professionally, are all examined. Sole traders without employees are particularly easy targets.
The following points will determine whether you’re working under the auspices of bogus self-employment:
If most of the above conditions do not apply to you, then you do not need to worry about such clients. However, we advise you to obtain as much information as possible about the possible pitfalls of such arrangements. Further guidance can be found at Simply Business.
How do you calculate and justify your rates?
To calculate the hourly rate of your agency, you should first calculate your own costs. It is certainly tempting to enter the market with low prices in order to attract new customers as quickly as possible. However, this strategy is bound to fail.
Soon, you will realise that you’re working for very little or no profit. Even seemingly simple jobs can suffer pitfalls that end up causing delays and other problems. The less you earn on a project, the more you have to work to cover your costs. There is only so much a sole trader can endure, after all. Remember that you should take a time off to recharge your batteries whenever possible. Permanent money worries will cause psychological pressure, which will only make your creative work more difficult to accomplish.
But there is also another reason why you should calculate your rates carefully: Extremely low prices will make customers dubious. Most people know that a quality service comes at a price. Clients won’t trust a service provider who has massively undercut its direct competitors.
Hourly or fixed rates?
The tasks that are to be carried out by you must be clearly defined, so that you can calculate your rate as precisely as possible. In reality, customer change requests, technical issues or other factors often cause a project to take longer than planned.
Whether you prefer to bill your services by the hour or charge a fixed price for a project should be decided between you and your customers. For long-term projects over weeks and months, hourly rates are a good option. If a project is to be clearly defined in terms of time – for example, a brochure’s design according to existing guidelines – it might be better to charge a fixed rate.
In recent years, the notion of performance-related pay has become increasingly acceptable. However, opinions on how exactly good performance is measured can vary greatly. This is why you should agree in advance with your client about how to measure the success of your services.
Never undersell yourself!
Never undersell yourself. There are only a handful of reputable service providers that can charge less than professional agencies. Make your customers aware of the great service they will get for their money. Make sure your pricing structure is transparent and your customers know what they’re paying for.
As a guideline to calculate your costs you can refer to portals, which are also used by customers who are in search of advertising agencies. For example, the following website lists the anticipated hourly rates for small, medium and large agencies. You can align your project prices to these market standards, but rates should vary depending on how much work has gone into the project. For example, a global campaign across multiple media channels may require a dedicated staff to spend hundreds of hours working on the project. The design of an advertising brochure, however, can usually be done by just one employee.
Many customers highly appreciate personal support and direct contacts. Anyone who feels well looked after and respected by an agency is often happy to pay higher prices for this service.
After completing an order, you can grant a grace period by completing any change requests and corrections without additional charges. It is up to you to clearly communicate with your client in advance at which point you charge for extra work.
Your Portfolio: How to present your services
For every type of digital marketing agency, its own website is the most important consideration. This is your chance to present your services in the best light.
Without social media, almost nothing works in marketing. Use all the social media channels to publicly present your services. Define the identity of your agency and prove your competence with a professional content strategy.
The main thing is to underline your professional competence with informative and useful contributions. You could blog, create graphic tutorials or keep video diaries. A certain extravagance is expected from an advertising agency, so there are no limits to your imagination in content marketing. Inspire the visitors to your websites or social media channels. Without advertising directly, in this way you can create an excellent image for your agency.
Most customers prefer not to use different service providers for different parts of their business projects. If your digital marketing agency can offer “turnkey solutions” – i.e. all the necessary services from text to graphics from a single source – you will be able to tap into a wider network of clients, so take this into consideration when presenting your services.
How to find clients and interesting projects?
In order to find projects, you can either use search engines like Google or refer to the following online portals.
Adobe’s Behance is an online platform used by artists to present their work and review the other artists’ work. All the data is stored in Adobe’s Creative Cloud and can be accessed by subscribers or directly through the platform.
On Behance, you can provide geographic information about your location. In this way, your agency can be found by potential customers within your area. Behance even gives you the opportunity to set up your own “custom creative network”. Other users can also join these creative groups.
Pitches: How can you participate?
Larger and more valuable orders are usually only available through participation in client pitches.
When companies want to raise high budgets for their advertising efforts, they usually create a longlist. This list contains up to ten ad agencies that are eligible for the upcoming project. From this list, two to three agencies will be shortlisted and as a result, they will receive a briefing and create a pitch.
To appear on such a longlist, you should know how the customers in your target group think and how they select their service providers. Companies that have high advertising budgets are often supported by consulting agencies that create agency pitch checklists. In this way, the selection of eligible advertising agencies will be limited to only a few. The following processes might be part of an agency pitch checklist with your potential clients:
Where to find client pitch opportunities
To find potential pitch calls or benefit from networking opportunities, you can use websites like Campaign. Here, you will find project announcements, market analysis and registered members can participate in the talent-seeking process.
What is the most essential factor in a pitch?
When pitching, you have the upper hand, as you are spending time and money to sell your idea. Some agencies even invest five-digit amounts or more in their pitches. Of course, this effort always depends on the size of the project and the amount of budget allocated. In some cases, the client pays a pitch fee.
When the time comes to create your pitch and make a convincing presentation, remember that you are presenting yourself or agency as well as the current project. Always remain authentic – this is the best way to determine whether you are in harmony with the client and can relate to them. Make sure that the main points of the pitch are at the forefront. Don’t get bogged down with the insignificant details, which can be discussed after your bid is successful. Use clearly understandable language so that your vision can take shape in the mind of the client.
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The briefing – what do your customers want?
The more information you get in advance from your clients, the faster and more accurately you can meet their requirements. But not all entrepreneurs are trained to express their wishes and ideas in a comprehensible way.
If necessary, help your client to create a meaningful briefing. It’s best to ask lots of questions and cover all the important points. The company Proposify has provided an agency pitch template that is customisable. This useful template shows clients how agencies should be briefed.
Beware of copycats
Get to know your clients before investing time and money in a pitch. Not all clients are serious about the agency pitch announcements. There have already been cases in which companies have chosen the cheapest agency with the same pitch as another provider. Dubious pitch announcements are the reason that more and more agencies are rejecting pitch invitations, as per the study from Campaign.
Decide well in advance whether participating in a pitch is going to be worth your while. If you have a very high budget, at least part of your costs should be covered by a client’s pitch fee. Some industry experts even advise against accepting unpaid pitches.
You definitely need a website!
Hardly any other type of business is as dependent on highly professional and original websites as the digital marketing agency. This is especially true when web design, screen design or other similar services are part of the portfolio. Smaller agencies often tend to lag behind, because there is not enough time to design their own homepage. In this case, website builders like Jimdo and Wix or content management systems like WordPress and Joomla can help you build engaging business pages in no time.
Your website is vital for your inbound marketing. With good content, you can differentiate yourself from your competitors and increase your search engine ranking. This means that customers can also become aware of your offer independently through more direct acquisition measures. If the quality of your posts is high, you can offer special content for registered users. By signing up for newsletters, landing pages or live videos on the Internet, you can gain leads and expand your network.
Of course, a professional website also needs high-quality written content which is designed for an optimal user experience and a high search engine ranking. If you earn your money as a copywriter or editor, you should be able to easily write your own. For graphic designers, web designers and programmers who struggle with the content writing, however, the author services of Textbroker provides the best solution.
On Textbroker, you can get access to a comprehensive pool of copywriters who can create professional web content for practically every topic you can think of.
Before you start …
The success of your agency ultimately depends on you. If you have the necessary skills, self-confidence and an unwavering perseverance, you will surely succeed.
But nothing comes from nothing. There are months of hard work waiting for you, where you always have to be on the ball when it comes to trends and developments. Do not be put off by the first disappointments in customer acquisition. The market is huge and you will soon find customers who suit you. Quality always prevails, so put your heart and soul into every small order you receive.
We believe in your success and are happy to assist you at any time with our author service.
And now: Go out there and start your digital marketing agency!
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