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How to Start a Digital Advertising Agency | 10 Actionable Steps

Pawel Halas
30 min read
Feb 10, 2025

Ever feel like businesses are throwing money at ads or techniques that just don’t stick? You’ve probably seen it firsthand: poorly targeted campaigns, wasted budgets, and brands struggling to keep up in a digital-first world.

Now, let's see it as an opportunity. What if you start your own digital advertising agency to solve these problems and help businesses thrive online? You know how the algorithms work, how to optimize for clicks, and how to turn impressions into loyal customers. Why not take that expertise and build something for yourself?

Starting a digital marketing agency gives you the freedom to work with clients you choose, scale on your terms, and finally reap the full rewards of your expertise.

But it’s not just about setting up a website and calling it a day. It’s about carving out your niche, building client trust, and staying ahead in a fiercely competitive market.

If you’re ready to step out of the shadows and turn your marketing know-how into a business that works for you, keep reading. I'll break down exactly how to build your agency from the ground up, step by step, with actionable insights to help you succeed. Let's dive in!

Understanding the digital marketing landscape

Digital advertising is how brands connect with their audience online. It’s the art (and science) of delivering the right message to the right people at the right time, whether scrolling through Instagram, Googling a product, or binge-watching videos on YouTube.

Unlike traditional advertising, where billboards or TV ads hit everyone, digital advertising is hyper-targeted. You can reach a specific age group, location, or even people interested in niche hobbies, all with a few clicks. It’s about results you can measure, tweak, and improve in real-time.

The numbers don’t lie. Digital ad spending is skyrocketing. Global cloud spending is expected to hit over $723 billion in 2025. Social media platforms alone rake in billions as businesses fight for ad space.

Short-form video, like TikTok and Instagram Reels, is exploding, with video ads getting better engagement rates than most other formats. And here’s the kicker: mobile ad revenue now dominates, with over 70% of digital ads shown on phones.

Agencies are the backbone of this ecosystem. Businesses often lack the expertise, time, or tools to run digital campaigns effectively. That’s where you step in. Agencies manage everything: strategy, execution, and optimization.

You become the partner brands rely on to deliver ROI, build audiences, and keep them ahead of the competition. In this space, agencies aren’t just service providers. They’re the strategic force driving growth.

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Types of digital advertising agencies

Not all digital marketing agencies are the same. Each focuses on specific services or industries, depending on their expertise and target market. Let’s break them down:

Each type has its own strengths, so pick what aligns with your skills and passion. Specializing helps you stand out in a crowded market.

Is starting your own digital marketing agency the right move for you?

With people spending more time online, digital marketing has become essential. This trend isn’t slowing down, making now a great time to start a digital marketing agency. But before jumping in, it’s worth asking yourself a few key questions to see if this is the right path for you.

👉 Read How to Start a Marketing Agency? A Step-By-Step Guide

1. Is there a demand for your services?

First, is there a market for what you want to offer? Look around! Are other agencies providing similar services? Are businesses actively seeking help with digital marketing? If the answer is yes, that’s a green light. The best way to confirm demand is to test the waters: start reaching out to potential clients to gauge interest.

2. Can you deliver results?

Clients hire agencies to solve problems, not just run ads. If you’ve worked as a marketer or freelancer, you’ve probably gained the experience to prove you can produce results.

A portfolio, testimonials, or even personal projects demonstrating success can set you apart. Producing measurable outcomes, like increased website traffic or higher conversions, is critical in building client trust.

3. Are you ready to build a team?

Running an agency isn’t a one-person show. Scaling means hiring people to help manage clients and campaigns. This involves setting up systems, recruiting talent, and managing employees.

Are you ready to handle a growing team's legal, training, and leadership responsibilities? Running an agency is about more than marketing: it’s about running a business.

4. Do you have the commitment?

Starting an agency is a marathon, and there will be challenges: landing your first client, losing a client, or making investments that don’t pay off. Success requires showing up every day, even when things feel tough. Passion for marketing and a clear vision for the businesses you want to help will keep you motivated.

5. What’s your vision for your agency?

What do you want your agency to look like? Do you want to focus on freedom, working remotely with low-maintenance clients? Or are you aiming for high profits, working with big-name clients? Maybe creativity is your priority, choosing projects that let you innovate. Your vision will shape how you build and run your agency, so take time to define it.

Starting a digital marketing business can be incredibly rewarding, but it’s not without challenges. By asking yourself these questions and aligning with your goals, you’ll know if this is the right move for you.

The steps to start a digital marketing agency

Starting a digital marketing agency takes effort, but the rewards can be huge. With clear goals, the right skills, and a drive to succeed, you’ll be well on your way to building a thriving business. Here's how to do it step-by-step:

1. Assess your skills and resources

To run a successful digital marketing agency, you need more than just enthusiasm. Here are the core skills you should assess:

Marketing skills

Business skills

Resources for upskilling

If you’re not confident in some areas, that’s okay. There are plenty of ways to level up:

How to leverage your existing expertise

Think about what you’re already good at. If you’ve worked in sales, you might be great at pitching services to clients. If you’ve done freelance design, you’re already halfway there for creating ad visuals. Your existing skills can give you a head start.

Tip: Play to your strengths when marketing your agency. If SEO is your expertise, offer SEO audits before expanding your services.

Networking and mentorship

You don’t have to figure it all out on your own. Building relationships in the industry can open doors and fast-track your growth.

Experienced professionals have already made the mistakes you’re trying to avoid. Connecting with them can give you invaluable insights. Plus, referrals from your network can land you your first clients.

You can consider:

Also, determine your startup budget. You’ll need funds for tools, advertising your agency, and maybe even hiring freelancers. Start small if necessary. Some of the best agencies started with minimal budgets.

Assessing your skills and resources might feel overwhelming, but it’s the foundation for success. Start by listing your strengths, identifying areas for growth, and gathering the tools you’ll need. The more prepared you are, the smoother your agency launch will be. You’ve got this!

2. Find your niche and define services

The digital marketing space is crowded. Trying to be everything to everyone dilutes your value. Specializing helps you build expertise, credibility, and a name for yourself. Clients are likelier to choose someone who “gets” their industry over a generalist.

Niching can help you win clients because of:

Some examples of successful niche agencies are:

Research your target audience

Every industry has specific challenges. Your job is to understand them deeply. For example:

The more you know about your audience’s struggles, the better you can offer solutions.

Let’s say you specialize in SaaS. You can tailor ad strategies around those goals by understanding that your clients need demos and free trials to convert leads. Compare that to a generalist marketer who might run generic ads with no call-to-action relevant to SaaS. The difference in performance is night and day.

Define your service offerings

Once you’ve picked a niche, determine which digital marketing services your ideal clients need most. Here are some options:

To choose the right services for your digital agency, consider your strengths and your audience's needs. For instance:

Test your offerings and business model early on. You don’t have to do everything from day one. Start with one or two services, nail them, and expand as you grow.

3. Conduct market research and competitor analysis

Let's get one thing clear: there are no secrets in marketing. Chances are, your competitors are doing things you can learn from, whether it’s their approach to content, targeting, or client management.

Competitor analysis gives you insights into:

How to analyze your competitors

Identify your top competitors

Start by finding 3–5 agencies that are already established in your niche. These agencies should be doing something similar to what you want to offer, whether it’s social media marketing, PPC, or SEO.

Use Google, social media, and even LinkedIn to find competitors. You can also check out tools like Semrush or agency directories to get a list of potential competitors.

Study their websites

Look at how your competitors position themselves. What services are they offering? How do they talk about their results? Are they using case studies or testimonials to build trust?

Note things like:

Check Their social media presence

Look at how active your competitors are on platforms like Facebook, Instagram, LinkedIn, and Twitter. Are they running ads? What kind of engagement do they get?

Pay attention to:

Understand their pricing

Pricing can be tricky, but it’s important to understand how your competitors price their services. Are they charging premium rates? Do they offer packages or hourly rates?

Knowing this helps you determine if you’re underpricing or overpricing your services. Aim for competitive pricing that aligns with your value, not just what others are charging.

Using competitor insights to your advantage

Competitor analysis isn’t about copying others. It’s about carving out your own niche. Here’s how to utilize your findings:

By keeping an eye on what others are doing, you’ll be in a better position to offer something that stands out, and that’s how you win clients.

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4. Financial projections and budget

When planning for your agency’s financial future, it’s crucial to set realistic revenue targets. How much do you need to make monthly and annually to cover your costs and turn a profit? Break it down into attainable goals. For example, how many clients will it take to hit your revenue target?

Factor in both fixed and variable expenses such as office space, software tools, marketing campaigns, and employee salaries. Keep a close eye on cash flow and aim for a clear path to profitability.

Most agencies can expect to break even within the first 6–12 months, depending on client acquisition speed. Setting conservative financial goals will allow you to adjust quickly and scale responsibly.

Growth plan

Scaling your agency requires a solid strategy. Start by evaluating the demand for your services and planning for gradual growth. Will you expand your team? Initially, this could mean hiring freelancers or contractors before transitioning to full-time employees.

You’ll also want to explore new markets or additional services as you gain traction. For example, you could offer SEO alongside social media marketing or target new industries. Plan for sustainable growth, not just rapid expansion.

Focus on maintaining quality while increasing your client base. A well-thought-out growth plan ensures that your agency evolves in a way that’s both manageable and profitable.

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5. Legal and administrative setup

When starting your digital marketing company, getting the legal and administrative details right is key. It may seem like a lot of paperwork, but this foundation will set you up for smooth sailing down the line.

Registering your business

You need to decide on a business structure. The most common options are:

Once you've chosen your structure, register your business with your local government. You’ll also need to secure any permits and licenses specific to your location and business type.

Taxation and accounting basics

Tracking expenses and setting aside taxes from the start will save you headaches later. Consider using tools like QuickBooks or Wave to manage your finances. These platforms can help you keep track of:

It’s a good idea to set aside a percentage of your earnings for taxes. You’ll also need to keep detailed records to make tax season easier.

Creating contracts and policies

Clear contracts protect both you and your clients. Draft solid service agreements, NDAs (Non-Disclosure Agreements), and SLAs (Service Level Agreements) that outline deliverables, timelines, and payment terms. Be specific:

This clarity minimizes misunderstandings and sets expectations from day one.

6. Build your agency brand

Your agency's brand isn’t just your logo or website. It's how your business is perceived. It’s the way clients connect with you and why they choose you over your competition.

Create a strong brand identity

Your brand identity is the core of how you present yourself to the world. It starts with the basics:

Once you’ve got these key elements, it's time to craft an engaging website. Here are a few tips for creating a site that converts:

Social media presence

In today’s digital world, you need to be on social media to grow your brand. But you don’t need to be everywhere. Focus on platforms that give you the most exposure and where your target clients are hanging out.

These platforms are where you’ll build trust and show your expertise. Keep your content consistent and valuable to your audience.

Content marketing strategy

One of the best ways to establish your agency’s authority is by providing valuable content. Here’s how to create a content strategy that works:

Make sure the content you create answers your audience's pain points. If you can solve their problems before they even contact you, you’re already ahead.

Showcasing your portfolio

Building a strong portfolio is key. You may not have clients right away, so what can you do?

Your portfolio should focus on results and how your services positively impacted your client. Real-world results and numbers build credibility.

7. Determine your pricing model

Pricing your services can make or break your digital agency. Get it right, and clients will see the value. Get it wrong, and you’ll either lose clients or lose money. Here are some options:

Don’t pull numbers out of thin air. Calculate your costs first. Include software, salaries, office space, taxes, and a buffer for profit. Then figure out how many clients you can realistically serve and how much you need to charge each one to hit your revenue goals.

Add value, not just a price

Clients don’t just pay for hours or deliverables. They pay for results. Always frame your pricing around the outcomes you’ll achieve. Show how your work increases revenue, saves time, or reduces stress.

Also, stay flexible. Pricing isn’t set in stone. Be ready to adjust as your business grows or clients’ needs evolve. Offer custom packages, upsell add-ons, or provide tiered pricing to fit different budgets.

Your pricing should reflect the value you bring and the goals you want to hit. Whether it’s hourly, flat, retainer, or performance-based, pick a model that aligns with your expertise and clients’ expectations. Keep it clear, fair, and focused on delivering results.

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8. Build a talented team with diverse skill sets

An agency is nothing without the digital marketing professionals behind you. Building a talented team with diverse skill sets is one of the most important steps to scaling your agency.

Sure, you might be able to do everything yourself in the beginning, but as you grow, you’ll need help to tackle bigger clients and more complex projects.

Start small, focused, and effective

In the early stages, you don’t need a full-fledged team. You need core team members who are adaptable and hungry to take your agency to the next level.

First, identify your most crucial roles, like:

Start with people with a broad skill set and are willing to wear multiple hats. This means hiring team members who can jump into different roles when needed. For example, your content creator may also be able to assist with social media marketing or create some basic graphics for the blog posts they write.

Also, look for individuals who are self-starters, quick learners, and passionate about your agency. Attitude and adaptability are crucial.

Upscaling your team as you grow

Once you’ve got a few clients and you’re starting to see revenue, it’s time to think about scaling your team. You need a solid infrastructure to keep things running smoothly while also expanding your services. You can add specialized roles and digital marketing skills like social media management, email marketing specialist, or graphic designer.

It’s important that team members can learn from one another. For example, your SEO expert can host a lunch-and-learn session for your content writers on SEO best practices. This way, everyone is aligned with the same goals and objectives, and your clients get cohesive strategies across all channels.

Also, focus on the diversity of your team. A diverse team isn’t just about gender or race. It’s about different perspectives and skill sets. For example:

Encourage new ideas and be open to different approaches. As your team grows and diversifies, it will give you a competitive edge and open up new opportunities

9. Find clients and market yourself

You’ve got the skills. You’ve got the team. Now comes the most crucial part of running a digital marketing agency: finding clients. Without clients, all the expertise in the world doesn’t mean a thing. But don’t worry, marketing yourself and landing clients is very much within your control.

Unique value proposition (UVP)

Before diving into the client hunt, nail down what makes you different. Ask yourself: Why should a client choose your agency over another? You need a clear value proposition: something that speaks to your audience's pain points and shows how you can solve them better than anyone else.

Example: If your niche is local businesses, maybe you specialize in hyper-targeted local ads with a proven ROI. If you focus on eCommerce, emphasize your expertise in driving online sales and increasing customer lifetime value. Whatever your niche is, be specific about the value you provide and how it stands out from the crowd.

Strong online presence

Your online presence is your digital handshake. It’s how potential clients find, evaluate, and trust you.

Start with a simple, professional website. Highlight your services, past successes, and why clients should choose you. Use clear calls to action like “Request a Free Quote” or “View Our Work.” Make your UVP stand out on the homepage so visitors immediately know what sets you apart.

Be active on social media platforms that matter to your target audience. Use LinkedIn for B2B connections. Share creative campaigns or results on Instagram and Facebook. Post consistently, engage with followers and showcase your expertise through content like tips or success stories.

Networking

It’s not just what you know; it’s also who you know. Networking is everything.

Digital marketing forums, LinkedIn groups, and even subreddits are fantastic places to connect with potential clients or fellow professionals who can refer you. Engage in conversations, offer value, and build your online reputation.

Also, one of the best ways to get clients is through word of mouth. Offer excellent service, and clients will refer you to others. Consider setting up a referral program or offering incentives for clients who bring in new business.

Cold outreach

While inbound marketing is a great long-term strategy, cold outreach can bring immediate results. It’s all about personalization and value.

Show proof: Case studies and testimonials

Nothing sells better than success stories. If you’ve worked with clients in the past, show it! If not, you can still build a portfolio by working on mock projects or helping out a few businesses in exchange for testimonials.

Create detailed case studies that show the problem, your solution, and the results. The more specific, the better. If you helped a client increase sales by 20% or boosted organic traffic by 50%, share that data. Potential clients love results.

Ask happy clients for testimonials. Social proof builds trust. If you’re just starting and don’t have many testimonials, consider offering discounted services to get those initial reviews.

Paid ads

Once you have a budget to play with, paid ads can help you reach the right people faster.

Run targeted ads for keywords related to your services and industry. If someone is actively searching for a “digital marketing agency for local businesses,” they will find you first.

Social media platforms allow hyper-targeted ads to reach businesses based on location, interests, and behavior. Through paid ads, you can show off your expertise and drive leads.

Never stop hustling

Client acquisition is a never-ending process. Even once you land clients, keep marketing yourself. Never let your brand go stagnant. Keep networking, keep sharing valuable content, and keep offering excellent service. The more you market, the more clients will find you.

10. Manage projects and deliver results

Effective project management is the backbone of a successful digital agency.

Onboarding clients

The onboarding phase sets the tone for the relationship. Start with a detailed discovery session. Ask the right questions: What are their goals? Who’s their target audience? What’s their budget and timeline?

Once you’ve gathered the details, create a clear onboarding process. Share a welcome packet outlining what clients can expect and what you need from them.

Set up tools like shared folders, project timelines, and communication channels. Tools like Asana or Trello help keep everything organized. Remember, clarity at this stage avoids confusion later.

Campaign execution

When it’s time to execute, your tools and strategy matter. Platforms like Google Ads, Facebook Ads Manager, and HubSpot are great for managing and optimizing campaigns.

Focus on tracking and analyzing key metrics. Click-through rates (CTR), return on investment (ROI), and cost per click (CPC) are vital to measure performance. Regular reporting is non-negotiable. Clients should see how their money is working for them. Use simple dashboards or PDF reports to highlight wins and areas of improvement.

Stay agile. If a campaign isn’t performing, tweak it. This will show your clients that you’re on top of things.

Retaining clients

Retaining clients is where real growth happens. Build trust by being transparent. Share what’s working, what isn’t, and what you’re doing to improve results. Consistency and honesty will earn loyalty.

Offer value beyond the basics. Upsell additional services like advanced analytics, content creation, or new ad channels. Show clients how these extras can help them grow even more.

Happy clients stick around, and they refer others. Deliver results and communicate clearly, and you’ll keep them coming back and keep your digital marketing agency profitable.

How to scale your agency for long-term growth?

Scaling your agency takes smart decisions and a forward-thinking approach. It’s about working smarter, not just harder.

Expand your team

You can’t scale alone. Start by hiring specialists like copywriters, designers, or data analysts. These experts bring skills that elevate your campaigns and save you time.

Decide between outsourcing and building an in-house team. Outsourcing is flexible and budget-friendly, especially for short-term needs. However, an in-house team offers consistency and better collaboration. Weigh the pros and cons based on your workload and long-term goals.

Automating processes

Automation is your secret weapon for scaling. Tools like HubSpot, ClickUp, or Asana help streamline workflows. Use time-tracking tools to manage productivity and CRM software to nurture client relationships. Reporting platforms like Google Data Studio save hours on creating client updates. By automating repetitive tasks, you free up time for strategic growth.

Diversify revenue streams

Don’t rely on client projects alone. Diversify your income by selling templates, creating online courses, or hosting marketing workshops. These options generate passive income while showcasing your expertise.

For example, a downloadable SEO audit template could attract new leads while earning you money. Think of products that solve client pain points.

Expand into international markets

Global expansion is a game-changer. Research markets where your services are in demand. Start small by targeting English-speaking regions before tackling markets with language or cultural differences.

When expanding, hire or partner with local talent. They’ll help navigate cultural nuances and build trust with clients.

Recommended tools, resources, and communities

Starting and running an agency becomes smoother with the right digital marketing tools, resources, and a strong network.

Your tech stack can make or break your efficiency. Start with these must-haves:

Some efficient tools to deliver impactful campaigns include:

Stay sharp by learning from the best educational resources:

Always invest time in upskilling. It pays off.

If you’re serious about scaling, consider joining the LiveChat Solution Program. It’s built for agencies like yours to unlock recurring revenue while offering tailored communication solutions to clients.

Here’s why it’s a game-changer:

Joining this program aligns your services with trusted solutions, enhancing your credibility and revenue streams.

Summing Up

Starting a digital marketing agency may seem overwhelming, but breaking it down into clear steps makes it achievable. Assess your skills, define your niche, and craft a solid business plan.

Build a strong online presence and network actively to attract clients. Focus on delivering measurable results and maintaining client trust. When you're ready, scale by hiring talent, automating processes, and exploring new revenue streams.

Remember, the journey won’t be perfect. But every successful agency started with someone taking that first bold step. Stay focused on providing value, learning continuously, and adapting to industry trends.

Don’t wait for the perfect moment—it doesn’t exist. Take action today. Whether you register your business, design your website, or join a program like the Solution Program, every step moves you closer to your goal. Your agency’s future starts with what you do now. So, take that leap. You’ve got this!