How Profitable is a Digital Marketing Agency?

Learn how profitable running a Digital Marketing Agency can be! Understand what makes Digital Marketing Agencies successful & how they generate revenue.

How Profitable is a Digital Marketing Agency?

The average marketing agency sees a net profit margin between 6 and 10 percent, and digital agencies report even higher margins of around 20%. Corporate advertising agencies, in some cases, report margins of up to 40 percent. There is a lot of room for growth in the marketing field. For digital marketing agencies less than five years old, a revenue increase of 30 to 50 percent annually is considered a reasonable benchmark.

In fact, the prices of digital marketing agencies have increased more than any other industry year after year. For example, you could specialize in applying a particular digital marketing channel to a specific industry, or you could leverage existing digital marketing techniques in new ways. Launch your digital marketing arm to provide and execute digital marketing strategies for your customers. In my more than 13 years in the digital space, I have had the opportunity to work both internally, with regard to digital marketing, as well as for an agency.

The digital world is constantly changing, and one of the keys to success in digital marketing is your flexibility and adaptability, and that must be reflected in the services you offer. If you've had the slightest success with digital marketing, the idea of creating your own agency has probably crossed your mind. Creating an agency makes it possible to achieve bigger projects, higher profits and better clients. It means being able to generate more revenue than you can on your own, and better yet, it means increasing profits without corresponding workload growth by leveraging the efforts of others.

Is there a demand for your services? Understanding whether or not there is demand for the type of digital marketing agency you want to create is not a clear process. For example, you can choose to focus on a channel that Gartner shows as “Innovation Trigger” (for example,. When we launched our agency, we did it because the specific SEO and digital marketing practices we used were different from what others did in the space and were producing results. That made us confident that we could deliver on the promises we made to customers and that we could do so thanks to the new and innovative approaches we were taking.

Deciding to create an agency because you think you should is not a convincing differentiator. Throwing because you want to earn more money than you can on your own doesn't differentiate you from others in a significant way. Fortunately, there are many ways to differentiate your agency. Your team could be your differentiator, just like the size of the companies you decide to work with.

Regardless of how you decide to specialize, make sure you can back up any claims you make with real results. If your competitive differentiator is hypothetical, try it before you start selling it. By definition, creating an agency means growing a team. But too many aspiring agency owners spend so much time thinking about the potential financial rewards of enlargement that they forget the very real requirements that expansion places on them.

Adding full-time employees means navigating legal employment structures. It means developing internal hierarchies, recruiting team members, training them, and dictating discipline as needed. If you've developed your career in digital marketing, shifting your approach to hiring and managing can mean learning a whole new skill set. Sure, if you're a strong enough seller, you can get some smaller contracts right away.

But getting the big names whose logos you'll be proud to put on your agency's website can take years of committed effort. According to Web Strategies, a more reliable source, the latest CMO survey showed that 9.8% of total revenue is average marketing spend. This may vary depending on the type of business. B2C should spend a little more money at 15.6% of revenues on marketing and for B2B companies spend only 8.6% of revenues.

Interested by 65 countries around the world, successful digital agency acquisitions point to a growing market for many years. Brett McHale is the founder of Empiric Marketing, a digital marketing agency dedicated to scaling startups through paid search and social media. With more people using marketing agencies and promoting themselves for free, marketing agencies are finding it harder than ever to justify their costs. Rather than relying on those vanity metrics, digital marketers should build their marketing ROI framework based on valuable metrics such as conversion rates, qualified leads, customer acquisition costs, customer lifetime value, and so on.

As traditional media companies and advertising agencies rush to adapt and stay relevant in a rapidly changing market, digital marketing agencies have flourished as the pulse of future advertising. The added value of its digital marketing services generated unprecedented revenues and profitability. A company of any category that approaches digital marketing to reach its online audience and wants to become profitable can make a profit over time. Running a profitable digital marketing agency is an exciting opportunity that brings challenges and rewards.

Buyers are realizing the lucrative (and relatively low-risk) industry of digital marketing agencies. In simple terms, digital marketing is online marketing that uses the Internet to reach customers through digital communication. It's easy to adapt and master digital marketing with the right learning to develop the skills needed to run a digital marketing agency as a profitable business. Therefore, there are enormous growth opportunities for digital marketing in the field of marketing, as the return on investment is higher compared to traditional marketing.

The main function of the digital marketing agency is to provide solutions to achieve your marketing objectives and grow your business.

Tommy Staiano
Tommy Staiano

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