Starting an Advertising Agency

How to start an advertising agency

Although launching an advertising agency may seem straightforward, it may take a while to build your client base.

“Don’t underestimate the difficulty of getting clients,” said Rob Lewis, founder and executive creative director at Good Conduct, a Denver-based creative agency. “If you can launch with [a client], it will give you a longer runway and a little stability as you figure everything out. And there is a lot more to figure out.” 

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

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. Expect this plan to evolve as you gather input and test your pitch. “You’re not going to get everything right, right off the bat,” Lewis said.

There are three main purposes of a business plan: to establish your business focus, to secure funding (if you’re planning to seek investor capital as your agency grows), and to 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?

Your business plan should also incorporate SMART goals — specific, measurable, attainable, relevant and time-based goals — to increase your chances of success.

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 your business depends on what 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. Choose your partner(s) wisely.

One consideration is whether you want to go into business with a partner. For John Kovacevich, founder and creative director at Agency SOS, starting solo allowed him to make decisions independently, move faster and build direct relationships with business associates. 

Others, like Lewis, prefer to lighten the load with a partner who has complementary skills to support the business. 

“Have a partner with good business sense,” Lewis advised. “Someone in the agency will need to make time for the business side of the agency. From payroll to legal council, production insurance, regular insurance, to processes and server space, there’s a lot of things a pure creative [person] doesn’t consider when starting an agency.”

4. Stay abreast of industry developments.

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:

• Adweek
• Ad Age
• Digiday
• Kissmetrics
• Moz
• PR Daily
• Seth Godin

5. 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. [Learn how technology is changing online advertising.]

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

• 4A’s
• American Advertising Federation
• American Marketing Association
• Association of National Advertisers (ANA)
• Interactive Advertising Bureau (IAB)

6. Find clients for your advertising agency.

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

Then, you can offer your business as a solution for busy entrepreneurs and business leaders who need help taking their advertising to the next level. Demonstrate how good advertising can help them earn new business and grow their revenue.

Keep in mind that launching and running an advertising startup is very different from working at a large ad agency. If you’re used to working for a big company, you’ll have to adjust your expectations and budget accordingly.

“You may have worked at some big shops and created some Cannes Lions-winning work, but that was before, and this is now,” Lewis advised. “A couple [of] times, we found ourselves over-estimating budgets or a brand’s creative aspirations because of our past experience, and it scared those potential clients away. So, consider why a brand is speaking with you and not the 1,000 other more established agencies, and budget accordingly.”

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. 

7. Build your network.

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. If you have been in the industry, create a portfolio of your past work to highlight ad campaigns you’ve worked on and make your ad sales meetings go more smoothly.

Start reconnecting with contacts in your existing network. Even if you don’t think the relationships will help you now, developing them can provide valuable opportunities, referrals or advice when you least expect it, Kovacevich noted. Don’t be afraid to leverage this support when necessary; many people in your network are likely willing to help, but you must make your needs known and invest effort in maintaining those connections. 

“Relationships are everything,” Lewis said. “As a new agency, you’re asking people to take a risk by working with an unproven entity. If you’re talking to people you’ve already built trust with in a previous role, they’ll be much more likely to give you a shot.” 

8. 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 advertising campaigns. You can 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: Best Website Builders and Design Services]

Either way, you’ll want your small business website to have an appropriate domain name, pages that explain 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.

9. 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 that all of the graphic elements of your website and social media are impeccable. If you provide 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.]

Benefits of starting an advertising agency

If you’re thinking about entering the advertising industry, now is a great time. With more people working remotely and decentralized business models on the rise, the playing field has leveled, giving small agencies a better chance to compete with larger ones.

“Since the pandemic, everything in the industry has changed,” Lewis said. “We’re seeing the CMO [chief marketing officer] … in one place, the brand manager in another and their support staff scattered around the country — or even countries. … It just comes down to the people. If you have good ones, you’re well on your way.”

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 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.

Scalability

With a robust team of affordable freelancers and contractors, your agency can scale up quickly and offer full-service campaigns for ad design, ad placements, copywriting, social media, email marketing, graphic design, search engine optimization and more.

Low barrier to entry

You don’t need years of experience to start a digital advertising agency because the industry is constantly changing. With baseline knowledge of copywriting and design, plus a willingness to learn new and emerging platforms, you can launch your business and start making a name for yourself. In fact, many smaller agencies now work with larger brands. 

“Bigger brands have started to consider smaller agencies a real viability,” Lewis said. “We’re seeing a real renaissance in the industry, with more brands working with small agencies and smaller agencies creating some of the best work.”

Miranda Fraraccio and Jenni Simcoe contributed to this article.