Do you have $2 in your bank account? That’s how much a failing digital marketing agency was worth when Eric Siu bought it.

Today, it makes more than $12 million per year.

He’s here to discuss how to start a digital marketing agency. We’ll share his insights about how to build a digital marketing agency, the strategies he uses, and the direction of the marketing industry. Eric explained:

Find out how to start a digital marketing company by reading through the whole blog or clicking one of the links below to jump straight to that section.

Let’s start by defining what a digital marketing agency does.

What is a digital marketing company?

A digital marketing company helps businesses reach consumers and other organizations. Digital marketing agencies provide clients with some or all of the following services:

• Content marketing
• Search engine optimization (SEO)
• Search engine marketing (SEM)
• Social media marketing (SMM)
• Email outreach
• Video content
• Blogs
• Chatbots
• Display ads

Digital marketing agencies help businesses improve their visibility, reach, and revenue using online channels. They create and launch campaigns for clients through social media, pay-per-click advertising, and other methods.

Case Study: Single Grain

Eric Siu is the co-host of the Marketing School podcast and the founder of Single Grain. He bought a failing digital marketing agency for just $2 and turned it into a business that now earns $1 million per month.

Eric started with SEO because it was the most effective marketing strategy, but today he thinks there are better alternatives. He suggests taking the following steps:

1. Choose a single service.
2. Create a podcast, and record video of it too.
3. Break the video down into 30-second clips to market it.
4. Keep improving what you do.
5. Don’t stop until you reach the point of diminishing returns.

Why should you listen to this strategy? Because clients like Amazon, Airbnb, and Uber know his digital marketing strategies work.

Check out the whole interview to learn how digital marketing agencies can exceed $10 million in revenue:

How much does it cost to start a digital marketing agency?

According to SurferSEO, starting a digital marketing agency can cost between $730 and $29,100. Eric says it doesn’t even cost that much to start providing digital marketing services:

How profitable are digital marketing agencies?

The average net profit margin for a digital marketing agency is 10% to 15%. Eric shared his profits:

That’s right! A successful digital marketing agency can make nearly $2.5 million for the business owner, but how do you do it?

How to Start a Digital Marketing Agency

Starting a digital marketing agency is pretty simple. The process for how to start a digital marketing agency from scratch includes the following steps:

1. Choose your digital marketing services.
2. Build your skill set.
3. Create a business plan.
4. Build a portfolio.
5. Register your business.
6. Establish your web presence.
7. Choose the right tools.
8. Build a digital marketing team.
9. Highlight your expertise.

Get ready to learn how to start a digital marketing business.

Step #1. Choose Your Digital Marketing Services

First, digital marketing agency owners should decide what services they want to offer. While a digital marketing business could be full service, digital marketing is a huge field with lots of nuances.

Learning every digital marketing skill would be nice, but it will take forever to become a master of everything. Eric warned:

Narrow the focus of your digital agency down to what you will do well for potential clients. Let’s look at how a successful business would do this.

Service Offerings

Some of the common digital marketing services include:

• SEO services: An SEO agency focuses on helping small businesses optimize their websites to show up in search engines. They do market research on keywords, competitor gaps, backlinks, user friendliness, and written content.
• Content marketing services: Content marketing is all about attracting, engaging, and retaining an audience by sharing relevant content. This could include a mix of blogs, infographics, podcasts, and other materials. The goal is to increase brand awareness and customer loyalty.
• Link building services: This subset of SEO focuses on getting other websites to link to your content.
• Advertising services: An online advertising agency focuses on creating paid advertising campaigns to generate leads. The most common services are for Google Ads or social media. You can also narrow online ad agencies to a specific network.
• Writing services: Digital marketing agencies might offer writing services to create blogs, scripts, or other materials.
• Social media management: Social media management focuses on developing a digital marketing strategy, creating content, and interacting with customers. This also involves monitoring the performance of a company’s social media accounts.
• Keyword research: A digital marketing agency performs keyword research to understand what users are looking for, their intent, and how to best satisfy their queries. This is another subset of SEO.
• Market research: Many agencies offer services like surveys, focus groups, and more. This area of marketing is focused on helping companies make more informed decisions.
• Email marketing: Email marketing campaigns help businesses interact with their current leads and customers.
• Marketing automation tools: Digital marketing agencies can help businesses automate redundant tasks in their marketing and advertising workflows.
• Graphic design: Digital marketing is becoming more and more visually based. That means graphic design is an important aspect in websites, social media posts, and other marketing materials.
• Influencer marketing: A digital marketing agency can help connect businesses with the right influencers for their products and brand.
• Web development: There is a large amount of SEO and other marketing that requires development skills. A digital marketing agency could focus on the technical aspects and sell software or a service.

Remember to consider the overall market as you research how to start a marketing agency. Eric told us:

He also explained that podcasts can be extremely powerful tools:

In addition, the type of customers you hope to reach will help you narrow your niche.

Target Audience

You can narrow your target market in a variety of ways. Your exact approach will be influenced by three key factors:

• B2B or B2C: A B2B digital marketing agency focuses on working with businesses that serve other businesses. Meanwhile, B2C marketers help other businesses reach consumers.
• Industry: A digital marketing business can focus on a specific industry like restaurants, eCommerce, or service businesses.
• Business size: You might create a digital marketing agency for small businesses or become a marketing consultant that works with large employers.

Selecting a niche or brand while creating your business plan will also help you hone in on your audience. Eric explained:

But he also warned against rushing into a new business with unrealistic expectations. In the beginning, it’s likely that you’ll face rejection more often than success. Getting used to rejection is a part of growing and expanding your business to reach the right market.

Step #2. Build Your Skill Set

You’ll need to build your digital marketing knowledge to land potential clients and become a profitable business. Fortunately, there’s plenty of resources for people who want to start a digital marketing company.

Here are some of the best digital marketing resources:

• HubSpot Academy’s marketing series
• Duke University’s Digital Marketing Specialist certificate
• Content Marketing Institute
• Hootsuite Academy’s Social Media Marketing Certification
• UpFlip Academy’s Google Ads for Beginners course
• LinkedIn Learning

There are numerous platforms such as Udemy and Coursera that offer free and paid digital marketing courses.

You can also subscribe to newsletters, watch YouTube videos, and build your own website to learn many of the skills you’ll need to run a digital marketing company.

Step #3. Create a Business Plan

A business plan should outline your business goals and strategies. It can also help you understand digital marketing trends and the state of the industry. If you intend to apply for a loan or seek out investors, having a business plan is essential.

Check out our blog about writing a business plan, or watch the video below to learn the key components. Don’t forget to include a marketing plan as well.

Step #4. Build a Portfolio

A portfolio can help you represent your company in a positive light and show what you’ve already accomplished with other customers. Your portfolio might include Google reviews, case studies, or even a badge on a website that shows it was built by your internet marketing company.

Potential clients will be more likely to hire your digital marketing firm when they can see clear results and examples of your work.

Step #5. Register Your Business

Registering your agency as an official business is a must, especially once you start gaining online visibility. Aside from avoiding legal or financial trouble, it can also help you win the trust of potential clients.

You’ll probably want to follow the process listed in the sections below.

Start a Limited Liability Company

A limited liability company (LLC) is a business structure that separates your personal and business assets to minimize your direct risk. You’ll need to choose a business name and apply for an LLC through your state.

Get a Business License

Some jurisdictions may require special business licenses to operate a digital marketing agency. You might also need permits for certain activities that marketing agencies manage.

Check with your local government to get more information about how to start a digital marketing agency.

Apply for an Employer Identification Number

You’ll need an employer identification number (EIN) from the IRS to complete tasks like filing employee payroll taxes. An EIN is like having a social security number for your business.

Applying for an EIN is free. You’ll need this number for business bank accounts, small business loans, and tax filings.

Open a Business Bank Account

You’ll want to keep your business earnings in a business bank account to maintain liability protection.You can go with traditional, local, or online banks.

Local banks are better for companies that need financing, while major banks are better for national brands and franchises. Meanwhile, online banks tend to have the best savings rates.

Learn more about business banking.

Get Business Insurance

Business insurance protects you from liability. A digital marketing agency will probably need:

• General liability insurance: This type of policy protects you if there’s property damage, an accident, or another unexpected event.
• Professional liability insurance: A professional liability plan covers your business if you do something that harms a client. For example, if you start a digital marketing campaign that hurts their reputation, they might try to hold you legally liable.
• Business owner plan: This form of insurance combines business property coverage, income protection, and general liability. Plus, you can get additional riders for more extensive coverage as needed.

Check out Simply Business to get quotes from top insurance companies.

Step #6. Establish Your Web Presence

When you own a digital marketing agency business, you need to use the same tactics for your own marketing efforts that you’d use for new clients. Showing up on the first page of Google or having lots of followers and engagement will help you get new clients.

Your web presence should include the following:

1. A professional website: Your website should help potential clients understand what your digital agency offers and teach them more about your business model.
2. Online directories: Your digital marketing agency should register on every reputable online directory that’s relevant.
3. Social media: Make sure to create social media pages and link between them and your website for the best results. Then share useful content across multiple platforms.
4. Online store: Providing a fully online buying option is crucial for your digital marketing agency. It shows customers that you value convenience and efficiency.
5. Blog: Blogs are a crucial part of helping prospective clients find your business. They showcase your knowledge of the digital marketing industry and potential challenges.
6. Online reviews: A digital agency with good reviews will be seen as more credible by potential new clients. Customers tend to read 10 reviews before trusting a new business.
7. Retargeting ads: As an agency owner, you’ll want to use retargeting ads to help your ideal client keep you in mind as they continue their research.

Eric explained more about his personal approach:

Step #7. Choose the Right Tools

A successful agency will need software to manage clients and digital marketing campaigns. You should look into the pricing models for the following types of software:

• Customer relationship management software: These platforms will help you keep track of your lead generation, communication, and marketing campaigns.
• Social media management tools: Software makes it easy for social media managers to run marketing campaigns for each client across multiple social media platforms.
• Financial software: An online marketing business will need software to manage finances and track financial performance.

Step #8. Build a Digital Marketing Team

Starting a digital marketing agency requires many different skills. It’s hard for a single person to manage everything you’ll need to do.

The positions you’ll need to fill will normally fall into a few categories:

• Leader: Whether you are the leader or you hire a marketing manager, someone has to lead the team.
• Graphic designer: Every successful business needs graphic design for both their own website and client assets.
• Writer: You’ll need someone to create content that communicates the brand’s message in words. This may involve writing a mix of scripts, blogs, social media posts, and other content.
• Editing: Your team should have someone to review products before they’re finalized. Whether it’s a video, image, or blog, you’ll need a fresh set of eyes to check for mistakes.
• Developer: There’s a good chance you’ll need a developer to connect applications, write schemas, and handle other tasks that help with marketing automation.
• Specialized skills: You might need a data analyst for marketing insights, a financial person to write a marketing budget, or other specialized staff depending on your work.

Eric explained his approach to hiring:

He warned that this isn’t a perfect method, but there are three things that help you build a great team:

• Ask your employees what you can help with.
• Be quick about establishing feedback loops.
• Be patient. It might take several years to hire a rockstar.

Step #9. Highlight Your Expertise

The digital marketing field is so broad, you can’t possibly start as a full-service marketing agency. Focus on doing one thing well, and talk about it. Share your experience in it, how your approach differs from other agencies, and how that will help your ideal client.

Focusing on a single subject allows you to quickly develop expertise in a niche area, then provide other services as you grow. Another way to get more clients is to answer common questions on digital marketing channels. The better you answer them, and the more reputable your site is, the higher you’ll rank on places like Google.

How to Grow a Digital Marketing Agency

Let’s explore some additional ways that digital marketing businesses can grow:

• Specialize: It’s much easier to rank for restaurant marketing than as a digital marketing agency. Likewise, single channel agencies that focus on an area like YouTube marketing will have less competition than a full-service social media marketing agency.
• Optimize for search engines: While I would hope anyone researching how to start a marketing business already knows about optimizing for search, you should learn if you don’t already have this skill set.
• Maintain a powerful online presence: The internet is constantly growing. You need to continue building your agency profile throughout the life of your company.
• Provide free consultations: Consultations are a great way for an internet marketing agency to ask questions about a business owner’s goals. Plus, you can use that time to help the business owner understand what your online marketing agency does.
• Prioritize communication: Clients appreciate open and honest communication. Set realistic expectations that you’re able to meet. Don’t guarantee results like getting a business to appear on the first page of Google.
• Encourage professional development: Setting aside time each day or week to learn new skills allows your team to get better at their jobs.
• Diversify your services: It’s less costly to provide new services to existing clients than it is to find more clients.
• Increase your average order: You can either raise your prices, offer additional services, or switch to business models that hide your price increases.
• Collaborate: Other digital marketing agencies often need help getting all their work done. Networking with other agencies can lead to subcontracting opportunities and referrals.

Are you ready to start your own digital marketing agency?

Starting a digital marketing agency requires a strategic approach and a commitment to continuous improvement. Eric Siu’s journey from acquiring a failing agency for $2 to turning it into a multi-million-dollar enterprise shows you exactly how to start an agency—by consistently providing value.

Once you build a skilled team, you’ll have the support you need to offer specialized services and cultivate a strong online presence. Along the way, you’ll need to build a network of successful entrepreneurs to pave the way for your agency’s growth and profitability.

Anyone can start a digital marketing business without money. You just need to plan carefully, adjust to industry trends, and deliver exceptional results for your clients.

You might need to take on some free work along the way to becoming a top digital marketing agency. But in the end, you’ll become successful with hard work, an improvement obsession, and a little luck.

What type of digital marketing will you offer?