How to Start a Successful Digital Marketing Agency in 2023

Is a digital marketing agency a good business to start?

I suspect at some point or another, everybody has dreamt about starting their own business. After all, we’d all love financial freedom and flexibility, yet 2 in 10 businesses fail (including digital marketing agencies) in their first year.

So, in this article, I want to discuss whether 2023 is a good time to start a digital marketing agency business and outline some of the areas you should consider and focus on if you want to be successful. There are no shortcuts so by following this outline, you will be giving yourself the best chance of success.

Starting a digital marketing agency can be a challenging yet rewarding experience, especially in 2023 when the industry is rapidly evolving and constantly changing. The key to success in this competitive market is to be flexible, adaptable, and have a deep understanding of the latest digital marketing trends and continually develop your digital marketing skills. You also need to have a clear differentiating proposition and niche (more on that later) – this is vital so don’t skip this step!

Let’s start by considering if it’s the right time for you to start your own digital marketing agency:

Market Demand

Is there a demand for digital marketing services in your area or industry? Conducting market research and identifying your target audience is vital to help you determine whether starting a digital marketing agency is a viable option. This is one of the biggest mistakes I see time and again when people are considering starting a new business or launching a new product - they don’t do their market research and validation first. So, although there is always going to be much demand for digital advertising and marketing services, where are you going to specialise, and how are you going to stand out from a very competitive market?

The only way to validate your business idea is to talk to potential customers.  This is a ‘slow down to speed up’ moment.  Invest the time testing your idea with your potential audience and use their feedback to refine your business idea or offering (or realise that you need to totally rethink your idea if the feedback shows there is no demand. 

It’s important you sell PAIN KILLERS not VITAMIN PILLS to your audience and by this I mean you are genuinely solving a problem for your audience rather than trying to sell them something that would be helpful, but it doesn’t solve one of the top 3 ‘fires’ they are currently trying to put out.

Resources & Funding

Starting a digital agency can require significant resources (especially time) and funding. Consider whether you have the necessary capital, technology, and time to get started and sustain the business. 

Are you going to start this as a side hustle or are you going all in?  The first approach can be challenging because you are trying to juggle many balls but the second is much riskier.  So go into this with your eyes wide open!  If you start as a side hustle then know what your targets are to go all in and also make sure you can allocate enough time to work on this project otherwise it will always remain as a side hustle!

It’s good to have competition, but you need to find a way to clearly differentiate yourself so that you win clients because of your expertise rather than being cheaper than the competition. As you will see below, having a clear differentiator and niche is crucial for your success.

Passion & Commitment 

Finally, consider whether you have the passion and commitment to start and grow a digital marketing agency. Consider your WHY?  Why do you want to start? What are your short, mid and long-term goals? 

Starting a business can be challenging, it’s not as easy as some would make out and it requires dedication, hard work, and a willingness to learn and adapt.

You also need to be good at doing three things to successfully start, grow and run your own business:

1. Be good at delivering digital marketing services

2. Be good at winning a consistent flow of new business

3. Be good at running a business

Ultimately, starting a digital marketing agency can be a rewarding experience for those with the necessary skills, resources, and passion. However, it's important to carefully consider the factors above before deciding to go all in.

OK so once you have decided that you want to run your own digital marketing agency, now we need to discuss the areas you need to focus on to ensure that you have a pain-free as possible journey to starting and growing your own business.

So, let’s dig into some key steps you must follow to start your own successful  digital marketing business in 2023:

Identify Your Niche

The digital marketing industry is highly competitive, and to stand out, you need to specialise in a specific niche. Identify your area of expertise, whether it's social media marketing, content marketing, search engine optimisation, paid advertising, email marketing, or any other digital marketing service.

Don’t try and be a generalist (you will find it very hard to be successful and win business) but focus on a specific niche.  This will help you build your brand, establish yourself as an expert in your field, and attract more clients who are looking for your specific skills and services, and ultimately, as the expert, you’ll be able to charge higher fees.

Sometimes your niche will be obvious (e.g., it was obvious to me when I started coaching that I wanted to specialise with SME Marketing agencies since that was my background) but sometimes it can be more challenging to establish. I’ve written at length about how to find your niche so you can learn more about that here.

Define Your Target Audience

So now you’ve worked out your niche, you need to define your target audience and understand, specifically the challenges they have that your product or service can solve. You cannot target anybody that might need digital marketing services, but a subset of people who will understand and value what you do. Think of your target market as a fruit tree and consider that your target audience is the ripe fruit that is already on the ground, not the juicy fruit, that’s at the top of the tree, but very hard to reach! Be mindful that you are not targeting everyone – this might sound like an attractive idea but the reality is in your efforts to target everyone, you will target no one since your marketing messaging will be too vague and generalised.

Researching and analysing competitors in your chosen niche

Now you have established your niche and your target audience. You need to research and analyse your competitors in this niche. And if your answer to your competitive research is “I don’t have any competitors”, then I would be rather concerned and question whether the market really exists!

So do your research on your competitors to understand how they position themselves and the marketing messaging that they are using. Consider how you can go against what they’re saying or do what they’re saying better (don’t just copy their messaging!).

Developing a unique value proposition for your agency

Once the research stage is completed, you will be able to now articulate a clear value proposition and ‘elevator pitch’.  This will help your target audience understand what you do, why you are different and how you can help them.  Use all this research in your outbound marketing (website, emails, blogs, social media management, videos etc.)

Develop Your Digital Marketing Skills

To start a successful digital marketing agency, you need to deeply understand digital marketing and the skills required to provide high-quality digital marketing services. Take online courses, attend industry conferences, read industry blogs, and gain experience by working on your own digital marketing projects. The more skills and experience you have, the better equipped you will be to provide value to your clients. And this is a fast-moving market, so you need to keep investing in your own (and your team’s) digital marketing skills.

Developing a clear and realistic business plan that includes financial projections, marketing strategies, and operational plans

A successful business plan is so much more than just financial information. It needs to look holistically at your whole business, including your market, your products, your staff, your sales & marketing strategy, financial numbers and culture.

Set Your Business Goals

In order to run a profitable business your business plan needs to be ambitious but realistic, so set your business goals accordingly, and make sure you are reviewing your plan regularly and updating it based on what you know today that you didn’t know last month.

Your business plan gives you detailed steps to achieving your goals so you must allocate time every month to reviewing, actioning and amending your plan. Don’t overlook this or kid yourself that you don’t have time because as I said, you will end up being at the mercy of external factors and feel out of control which in turn, leads to a stressful business.

Define Your Services & Pricing

Now you’ve got a clear niche you need to decide which digital marketing services you’re going to offer and set your prices based on your experience, expertise, and the competitive landscape in your niche.

Try not to be a “jack of all trades” and instead focus on the 1,2 or 3 core services that you will deliver and be seen as the “go to” specialist.

Having more services will just spread too thin and you will not be able to maintain your expert level across all these service areas.  Also, the market will see you as a generalist (which we have already established is a bad idea!).

Over time as you establish your core services you can consider adding more services but start off focusing on 1-2 areas only.

Charge on value, not time

In the early days of running your agency, you may feel more comfortable selling hours or day rates to your clients, but this is a big mistake instead take a value pricing and selling approach and focus on the outcomes that you’re going to deliver for your clients and price accordingly. This is a big topic, so if you want to learn more about value pricing and selling, grab a copy of my free guide.

Create Your Brand Identity

Your brand identity is crucial in the digital marketing industry, where branding is a key component of every marketing strategy. Develop a brand identity that reflects your digital agency's values, personality, and expertise. Create a logo, website, and social media profiles that are consistent with your brand identity and help you establish a strong online presence.

Establishing a professional and functional website

Your website will often be the first port of call for any potential clients.  So you want to invest time in building a website that shows your target audience you really understand them and then explain how you can solve their pain. Make sure the website starts off by talking about your clients rather than you.

Also, consider what is the purpose of your website. Is it brochureware, is it a place where you want to generate leads or indeed is it a place where clients will buy your services? Consider all of this before you start developing your site.

Market Your Agency

“Build it and they will come” certainly does not apply to starting a business so you not only need to be good at delivering your digital marketing services but you also need to be great at marketing your digital marketing agency if you want to attract a consistent flow of new clients and avoid the dreaded feast or famine cycle that so many businesses go through.

So, consider how will you generate leads. Use a variety of marketing channels to reach your target audience, including social media, email marketing, content marketing, paid advertising, and search engine optimization. Also, consider what partnerships you can develop (both marketing partnerships and referral partners).

Focus on building relationships with your prospective clients and demonstrating your expertise and value.

My advice is to pick 2-3 channels and go deep with them.  To determine what channels to use, consider which ones you are most comfortable with (and therefore can create content consistently) and overlay that with the channels that your ideal target customer uses. 

Now of course to do this you need to really know who your ideal target customer is and what pains they have that your digital marketing services can solve.  So start by defining exactly who your ideal customer avatar is (you can learn more about customer avatars here).

How Do I Get My First Client?

Now you have all the basics in place you need to find your first client, and whilst you’ll have started with your marketing, the reality is that your campaigns will deliver results in the medium to long term so in the meantime, you need to earn some money and the best way to do that is to reach out to your network and tell them what you are up to and see if they have any needs or if they can recommend you or introduce you to 2 to 3 other contacts.

If you take this approach then before you know it, you’ll have increased your network significantly and you’ll be able to win your first clients through a friendly introduction. This is how I started and won my first clients, and it’s the advice I give to my private coaching clients when they are just starting out.

Building a strong portfolio and case studies

One important area to help you build credibility is to have testimonials and case studies from clients. So make sure part of your client journey is to ask for a testimonial or case study. These don’t need to be long.  They can be a paragraph or 2 or better still a quick video or they could be a full-blown case study.

Just make sure you are asking for these at the right time in the client journey.

Provide Exceptional (yet Profitable) Service

Going above and beyond to deliver high-quality services that exceed their expectations is fine as long as they know this (so they don’t expect it all the time) and are willing to pay.

Over-servicing clients, because you believe that’s the only way to retain them, is a sure way to being poor, overworked, stretched, and stressed!

Make sure you are seeking feedback at the appropriate time and use it to improve your services and grow your business.

Build Your Team

As your business grows, you'll need to build a team of talented digital marketing professionals who can help you provide high-quality services to your clients. Identify the skills that you need to have on your team, such as content writers, social media managers, graphic designers, and web developers.

Create clear roles & responsibilities for each role (before you start recruiting) and use them to find the right people and ensure that once they are hired, they know what is expected of them.

Hiring and recruiting top talent in areas such as creative, technology, and analytics

Your vision and business plan will identify the key indicators as to when to make a hire. Ideally, you want to staff to be in-house (even if it’s a remote worker) rather than building a business solely using freelancers (which is a bit like building a business on quicksand).

Initially, you may well outsource to freelancers, but keep an eye on the costs, and when they become significant enough, that should be the point to bring the role in-house.

Digital Marketing Team Structure

As noted, your business plan will show you who, and when to hire, but your initial hires are likely to be people who can deliver client work, giving you a bigger capacity and allowing you to delegate so that you can focus on growing your digital marketing agency.

Make sure as you hire team members you are a great manager. Dedicate time to leading them well and delegating effectively – setting them, yourself, and your clients for success.

In Conclusion

Starting a successful digital marketing agency is a challenging but rewarding endeavour. By following these key steps, you can establish yourself as an expert in your niche, build a strong brand identity, and attract new clients who value your digital marketing services and therefore are happy to pay a fair fee.

Start by getting clear on who you want to be, who you are serving and where your digital marketing agency is headed.

Get these foundational building blocks in place and make sure you are focusing your time on not only delivering exceptional service to your clients but also focusing on the future of your agency so you’re consistently marketing month on month.

Do this and you will be building a robust, scalable agency that will truly give you the flexibility, freedom and control you aspired to when you dreamt of starting your own business.

If you want to learn more about building an agency that is ultimately, less dependent on you then grab a copy of my book, The Self-Running Agency.

Finally, this is a huge topic and one that I have just skimmed the surface of in this article, so if you want to discuss your digital marketing agency in more detail, book a free strategy call with me.