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Updated Apr 10, 2024

Starting an Advertising Agency

Launching an advertising agency is a low-cost way to enter the world of entrepreneurship.

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Sean Peek, Senior Analyst & Expert on Business Ownership
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Every business needs to advertise and spread the word to new customers to keep growing. Some small businesses and startups may need to keep their marketing and advertising needs in-house to start, but external marketing and advertising agencies can bring many benefits to the table, especially for companies looking to expand their reach. Many companies, including small businesses, rely on the expertise of advertising agencies to help them create and execute effective marketing strategies

In the digital marketing era, ad agencies conduct their business and provide services primarily online, making them both low-cost and COVID-19-friendly. While some agencies prefer to run their operations out of physical locations, traditional Mad Men operations are quickly becoming a thing of the past. This paves the way for more accessible and specialized advertising agencies to cater to a broader range of clients and businesses. 

If you’re an aspiring entrepreneur with a background in marketing and communications, here’s what you need to know about starting an advertising agency.

How to start an advertising agency

Once you’ve decided to start your own ad agency, follow these steps.

2. Create a business plan for your advertising agency.

Before you can get up and running, you’ll need to create a detailed business plan to guide your growth and internal strategy.

The three main purposes of a business plan are to establish your business focus, secure funding (if you’re planning to seek investor capital as your agency grows), and attract executive leaders to help you manage your company. Include the following elements in your plan.

  • Executive summary: What does your advertising agency do?
  • Company description: What defines your company?
  • Product/service overview: What services do you offer your clients?
  • Market analysis: What kinds of clients does your agency target?
  • Financial plan: What are your expected expenses, and how will you make money to sustain operations?

2. Choose your pricing model.

Most advertising agencies make money by brainstorming and developing creative assets for their clients, including traditional advertising campaigns and content marketing pieces, like blogs and social media posts. You can use several pricing models to charge your clients. The best one for you depends on the type of work you do and how you work with your clients. You’ll need to decide if you’ll charge per hour, per project or according to a fixed retainer model, in which a client pays an agreed-upon amount in advance for a certain number of service hours. A flexible or hybrid approach with different payment structures can help you meet clients’ needs while allowing them to stay on budget. 

3. Stay on top of the advertising game.

If you subscribe to trade publications, blogs and podcasts geared toward ad agencies, you can keep up with industry events, trends, suppliers and technology. Here are some top advertising blogs to follow, as well as reputable ad industry sources:

FYIDid you know
Help keep your website at the top of search engine results pages (SERPs) by sharing industry trends, emerging strategies and other tidbits with your target audience through your site’s blog. Not only does this help refresh the content on your site, but it also shows your audience your willingness to share information freely.

4. Join advertising industry trade associations.

Joining a trade association allows you to continue your education, keep up with trends and technology, meet with your peers at trade shows and conventions, and enter awards contests to add to your credentials.

While there are many niche organizations for specific types of advertisers, consider joining one of the following organizations for general advertising and marketing professionals:

5. Find clients for your advertising agency.

Every advertising agency needs clients. Before you start spreading the word about your marketing services, decide what types of businesses you want to work with (in terms of industries, business size, location, services needed and so on). Once you’ve defined your ideal client, research companies that fit your description and study their current advertising efforts.

By going after businesses with a small or lackluster marketing presence, you can offer yourself as a solution for busy entrepreneurs and business leaders who need help taking their advertising to the next level. Highlight the benefits of advertising and demonstrate how good marketing can help your prospects earn new business and grow their revenue.

Once you have a few regular clients, you can politely and professionally request a testimonial or referral to keep expanding your client base through word-of-mouth recommendations.

6. Build your contacts.

If you’re planning to help your clients with ad placements on television, radio shows, podcasts, blogs and news publications, you’ll need to start building a stable of media contacts. From these outlets, collect media kits that list advertising rates, demographics and specs so you know what kinds of campaigns might be appropriate for your clients to place there. Prepare to introduce yourself to sales representatives at the media outlets you plan to use regularly. Create a portfolio of past work, if you have been in the industry, to highlight ad campaigns you’ve worked on in the past and thus make your ad sales meetings go more smoothly.

TipBottom line
If you don’t have a brick-and-mortar shop, your website may be one of the only places where your target audience interacts with your ad agency. Make sure you have a responsive website that is as inclusive as possible. Include image and alt-text tags, choose high-contrast colors for easier accessibility, and keep your site updated to ensure all pages and aspects load quickly and smoothly.

7. Create an incredible website to sell your services.

Like all modern businesses, your advertising agency needs a robust, informative website that engages potential clients and explains how you can help them with their marketing campaigns. You can go the DIY route and choose one of the many available website-building tools, or hire a professional web designer or digital marketing agency to create a more customized web presence. [Read related article: The Best Website Builders and Design Services of 2024]

Either way, you’ll want your small business website to have an appropriate domain name, pages that define who you are and what you offer, a contact form, a payment portal (if you plan to accept client payments through your website), and high-quality, original images to visually communicate your brand.

8. Develop your own marketing plan to advertise your business.

Advertising agencies have a unique advantage over other types of service businesses: Their own marketing and advertising efforts serve as a work sample and let potential clients see upfront what the agency might be able to do for them.

That’s why you need to pull out all the stops for your digital presence and show off your strengths to prospects. For instance, if you offer graphic design services for client ad campaigns, ensure all of the graphic elements of your website and social media are impeccable. If you offer copywriting services, maintain a well-written, SEO-friendly blog on your website so they can see your expertise and writing style.

In other words, let your marketing strategy speak for itself so your agency can keep growing and attracting new clients. [If your target audience is active on Pinterest, learn the do’s and don’ts of advertising on the platform.]

Did You Know?Did you know
When developing your social media marketing strategy, don’t assume you need to create profiles on every available platform. Narrow down which platforms you should focus on by determining which platforms your target audience uses. It’s better to have a couple of fully developed, active social channels than profiles on every platform that are poorly managed and maintained.

Benefits of starting an advertising agency

There are nearly 14,000 established advertising agencies in the United States, and they generated about $57 billion in 2021, according to U.S. Census Bureau data as reported by Statista. It’s not hard to see why this startup path is so attractive: It’s relatively easy to launch and has the potential for a big payoff.

Here are some benefits of starting an ad agency:

  • Low overhead and startup costs. Many agencies operate remotely, so they don’t need to invest in a brick-and-mortar office space. In most cases, your only startup costs will be technology equipment (hardware and software), internet service and any applicable business registration. You don’t need a big team to get started, either. You can run the business and execute a lot of the deliverables yourself, in the beginning, to save money on salaries and wages.
  • Large potential client base. Thanks to digital tools, ad agencies can serve clients anywhere in the world. Although the marketing industry is crowded, there are a lot of opportunities to carve out a niche by catering to specific types of businesses, such as restaurants, salons, medical practices or law firms.
  • Low barrier to entry. You don’t need years of marketing experience to start a digital advertising agency because the industry is constantly changing. With a baseline knowledge of content marketing and social media, plus a willingness to learn new and emerging platforms, you can make a name for yourself as a professional advertiser.
  • Scalability. With a robust team of affordable freelancers and contractors, your agency can scale up quickly and offer full-service marketing campaigns with copywriting, social media, email marketing, graphic design, SEO and more.

Jenni Simcoe contributed to this article.

author image
Sean Peek, Senior Analyst & Expert on Business Ownership
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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