A couple of decades ago, digital marketing was unheard of. But today, the industry is as prolific as ever. With the consistent demand for online services, many marketing agencies are considering the “digital” shift. While it’s true that starting a digital marketing agency is a realistic goal these days, running a successful one requires a bit more work. Even if you have already assembled a team of skilled individuals and have the necessary capital, there are still some best practices to consider ensuring that the agency you’ve built carves a formidable reputation in the industry, or at least in your locality.
Here’s an insider’s take and tips on what you need to do if you’re planning to start breaking into the profitable digital marketing industry.
The basics of building a digital marketing agency
One of the most critical questions to ask before opening a marketing agency is whether it’s best to choose a specific niche or offer broad and general services. And, the answer here is crucial because, like any business, the target market determines the company’s direction, focus, and goals.
Yes, if you look at a Minnesota Digital Marketing Agency list, several successful agencies offer full services to clients. But, for a start-up, it makes more sense to begin small and hone skills in a particular area before branching out in other niches. Why is this crucial? Because a new agency can’t be an expert in all services at once. If you want to attract loyal clients, it’s better to show expertise in a few key skills first.
Consider the benefits of subcontracting
Although having the independence of running a business does have many perks, it also comes with plenty of risks. Some successful agencies, in fact, carved out their niche by subcontracting services to bigger companies. What are the benefits of becoming a subcontractor first?
- Reduce the risks of running a start-up. There are many aspects of running a business that could go out of hand if you aren’t experienced. If you subcontract your services first, you get a taste of what it’s like to be an entrepreneur but with reduced risks. As a contractor, you can also focus on building a relationship with potential clients who may choose your services should you eventually open an independent digital marketing agency.
- Subcontracting is also a networking strategy. Connections are critical in running a successful marketing agency. Subcontracting will open doors and help network with industry experts and leaders. Another skill developed with subcontracting is the ability to negotiate service cost well, which can be quite helpful down the line when dealing with clients.
Of course, choosing to subcontract your expertise depends on your goals. It works for some, but may not be the right fit for all. Think about the benefits mentioned above before deciding to become a digital marketing subcontractor.
Developing a suitable business model
Digital marketing agencies can operate using different business models. It has a significant impact on management efficiency, especially in billing and getting paid by clients. Over time, the right business model will prove to be a crucial element in running the business. The following are examples of the most common business models used by marketing agencies.
- Flat retainer fee. The simplest model when it comes to billing clients is by charging a retainer fee. After assessing the amount and complexity of work, as well as the timeframe, the client and the agency can agree on a flat charge. A Minnesota Digital Marketing Agency that uses this model benefits from the ease and convenience of invoicing and collection. Since the client already knows how much they need to pay, there’s a little worry when it comes to adjustments or unexpected charges.
- Charging an hourly rate. An hourly billing model works best for agencies that have one-on-one projects. But as the services become more complex, this model may no longer be the best option. Usually, consultants prefer this model for short-term jobs. But, for a digital marketing agency, it may be a better choice to consider other models.
Most new agencies today prefer a flat retainer billing model as it’s simpler, which is perhaps the most sensible choice for any start-up. As the business becomes more established, you can start implementing a different model.
How to scale-up the business in the long run?
Running a successful digital marketing agency doesn’t mean you have to spend all your capital on non-essential expenses. Instead of paying for office space, or hiring employees that will handle every aspect of the operation, it’s best to consider which functions you can handle in-house. Will you be able to monitor the books until such time you can afford a full-time accountant? If not, why not consider outsourcing which is cheaper than a full-time employee?
The first thing you need to focus on when running a digital marketing agency is honing the necessary skills to become known in the industry. How will the business attract new clients? What strategies will the company employ to edge out the competition? It’s necessary to pay attention to establishing the brand first and retaining loyal clients before considering expansion. Although many think that fast growth is the indicator of success, it’s dangerous for a new agency to expand too early in the game.
Technology should provide an optimum advantage
These days, marketing agencies can rely on a suite of tools that help enhance productivity and efficiency. Every new agency should work smart and take advantage of available technology. After all, even the biggest agencies are using them. Examples of these tools include CRM, project management software, accounting software, and many more.
Starting a digital marketing agency in this day and age may be easier, but still involves some complexity. The market is indeed massive, and there’s always room for more, but there are unavoidable risks. For anyone who wants to break into the industry, it’s critical to look into the best practices of some of the best agencies and learn from their successes, as well as their mistakes.
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