Neilhaiphong video 5 : How To Start a Digital Marketing Agency in 2023

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This video is about How To Start a Digital Marketing Agency in 2023.

Did you know that digital market spending is supposed to climb to $375 billion by 2023? If you’re looking to break into this promising field, you’ll want to learn how. This video contains information about what digital marketing is, and how to start and run a digital marketing agency. Starting a digital marketing agency is one of the most rewarding and exciting business ventures you can embark on. But it’s also highly competitive, There are over 16,000 digital agencies in the US alone. While it may sound like a crowded market there are actually great opportunities for new agencies focused on delivering new thinking within niche areas under the broad umbrella of “digital marketing“

1: Develop the Necessary Skills

If you’re a narcissistic Gen Z’er with grandiose visions of becoming Neil Patel right after you accept your diploma, chances are you’re going to fail miserably.

You can be as creative and intelligent as anyone in the game, but if you’re not prepared and experienced enough to deal with the many nuances of managing accounts and client relationships, you’ll be looking for another gig real quick. It may take years for some to build the skills necessary, it may take others less. Regardless, I believe you need to actually hold down a real job for some time before you venture out on your own.

Work environments are a lot more complex than we realize while we’re grinding within them. Above the actual work you produce there’s a multitude of expectations, verbal and nonverbal communication gymnastics, and politics. Everything from how the organization is structured to its culture, product, and leadership play a part in how your day to day (and career) unfolds.

Prior to mastering your digital marketing skills, you need to experience what it’s like to work where your clients may work. This will inevitably make you a more understanding and well-rounded professional. When your clients are stressed out and possibly projecting that on you, you aren’t going to take it personally.

The benefit of managing clients is that a lot of these aspects are taken care of before they get to you. However, having the experience of working on these things allows you the added value of actually knowing what you’re talking about when something they give you isn’t working. It also helps you deal with the pressure to deliver quality results because you have been there before…many times.

2: Be a Contractor Before Becoming a Founder.

Having a job that pays and allows you to have brain surgery without a lifetime of debt is a luxury many of us take for granted. Taking the leap of working for yourself has a list of risks so long that it could make for the separate blog post. What mitigates a lot of that risk is actually developing the foundation for a business before making the decision to do it full-time. I suggest doing some contracting work on the side for a period while holding down a full-time job for a variety of reasons, chief among them…

It allows you to strike out on your own without assuming much risk

You get a taste of the entrepreneurial life when you begin to do side work. From invoicing to having to put aside extra cash for taxes, the small but very important elements of running your own business come into play.

You also have to manage your time wisely if you are going to still have a full-time job. This means working nights and weekends when you would rather be watching Netflix.

It allows you to build valuable relationships

If you are able to get some side work through mutual connections, former coworkers, or by simply networking yourself, it will give you the experience necessary when it comes to building and maintaining client relationships.

Having to negotiate the cost of your services is another skill that many overlook early on.

Your time and expertise are worth something regardless of how well you know the person on the other end. Building the skill of ascertaining how much you should charge for a specific project or service will become extremely valuable down the line.

3: Develop the Right Business Model

There are a lot of different ways to set up a digital marketing agency. The services you provide and how you bill for your work become a critical part of how efficiently your business is managed over time.

Hourly

Many consultants will opt to bill their clients on an hourly basis. This is because a lot of their time is one-on-one with the clients, whether over the phone or directly in person. This billing model becomes muddy over longer and more complex service offerings.

Fluctuations in hours spent on digital marketing for a particular client are common; it is going to vary widely over time. There are a variety of factors in play: Setting up and launching entirely new campaigns or promotions, restructuring accounts, time spent on calls, and maintaining something that is working well for them.

Flat Retainer

The flat retainer is the simplest of all the pricing models. You assess how much the work and time for a specific client is worth and you both agree on a flat monthly fee.

I suggest having an agreement in your contract that guarantees that price for a period of time (on a quarterly basis, perhaps); then you can renegotiate once that time is up. The biggest upside of a retainer-based model is that it allows you to forecast your earnings and hypothetically see how much you will earn if your current clients stay on for a full 12 months. This is essential to growing the business because you can set goals and prepare for setbacks.

Commission-based

This is one that is often used by agencies in an attempt to gain a competitive advantage over others.

Essentially, they only get paid when the client makes money off of a sale.

This sounds enticing early on because you want to build trust with a client that you are doing everything in your power to help them be successful. Folks who have failed experiences with agencies often bring up the fact that they were paying all kind of money only to have no results or ROI. A gun-for-hire approach like this can appear truly tantalizing for a client who’s been burned before.

The downside to this model is that unless you have great insight into the operations end of the client’s business, it’s going to make billing them extremely difficult. For SaaS businesses and companies with complex sales funnels, this pricing model would be a complete nightmare. I would only suggest this model for ecommerce or clients selling things directly. That way you can assess how many sales you have driven and do the math that way. Another downside to this is the fact that it relies heavily on the product being sold. If there is a significant profit margin, then it makes sense. Otherwise you may be giving yourself unnecessary headaches.

The best piece of advice I have is to keep it simple. Last thing you need is to be solving math equations at the end of every month and not knowing how much you’re going to make.

Percentage of Spend

This pricing 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 are going to turn down clients with little or no pre-existing spend.

When you’re just starting out this may not be the best option as you will want to grow your network, but over time you will realize that having larger clients is far more beneficial to you for a number of reasons. The downside is if you decide to conduct business fully on a percentage of spend model because there are many internal factors within businesses that are going to dictate budget. Some of these factors are within your control (results) but many others are not (internal decisions, seasonality, and other costs). You don’t want to get into a situation where your client is spending a very small amount per month and you are only getting 10% of that with the expectation of being on calls and putting the time into it.

My suggestion is to start out with a flat retainer fee as mentioned above and then, as your agency grows, implement a percentage of spend model on top of the retainer. This makes it clear to the client that if they want to scale and spend more, it’s going to require more work on your end to make it happen.

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