Launching an advertising agency is a low-cost way to enter the world of entrepreneurship.
Every business needs to advertise itself and spread the word to new customers if it wants to keep growing. Many companies, including small businesses, rely on the expertise of advertising agencies to help them create and execute effective marketing strategies.
In the era of digital marketing, ad agencies conduct their business and provide services primarily online, making them both low-cost and COVID-friendly.
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.
Benefits of starting an advertising agency
There are nearly 14,000 established advertising agencies in the United States, and they are projected to generate more than $45 billion in revenue by the end of 2020, according to a report from 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, if they so choose. 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.
How to start an advertising agency
Once you've decided to start your own ad agency, follow these steps:
1. 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. Therefore, you'll want to 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. There are several pricing models you can use to charge your clients, and the best one for you depends on the type of work you do and the way you work with your clients. You'll need to decide if you're going to 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 hours of service. 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.
By subscribing to trade publications, blogs and podcasts geared toward ad agencies, you can keep up with industry events, trends, suppliers and technology. Here are some reputable ad industry sources:
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, you might consider joining one of the following organizations for general advertising and marketing professionals:
- American Advertising Federation
- American Marketing Association
- Association of National Advertisers (ANA)
- Interactive Advertising Bureau (IAB)
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 (industries, business size, location, services needed, etc.). Once you've defined your ideal client, start researching 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. Be sure to 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 so you can 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.
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 clearly 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 to create a more customized web presence.
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 up front what the agency might be able to do for them.
That's why you need to pull out all the stops for your own digital presence and show off your strengths to prospects. For instance, if you offer graphic design services for client ad campaigns, make sure 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.
Jenni Simcoe contributed to the reporting and writing in this article.