If you’ve ever wondered how to start an ad agency, you’ll be thrilled to know there’s never been a better time. While an advertising agency may conjure up images like that of Mad Men, the truth is that it’s an exciting and lucrative entrepreneurial opportunity.
The advertising world is big business. Big companies need it, and small businesses thrive on it. Everywhere you look, we are surrounded by advertisements and ad messages.
Companies in the United States spend more money on advertising than anywhere else in the world — to the tune of $228 billion in 2020. In 2020, advertising agencies in the U.S generated a total of $54.4 billion in revenue.
The good news? You can start an ad agency and own a slice of this massive pie.
- What does an ad agency do?
- What you need to start an ad agency
- How to start an ad agency
- Create a business plan
- Establish a niche
- Hone in on your skills
- Freelance before you go full-time
- Create your website
- Market your services
- Get your finances in order
- The legal requirements
- Take the first step
- Scale your business
What Does an Ad Agency Do?
Simply put, an ad agency is responsible for implementing the advertising for a business. This can be in traditional or digital form. Alternately, your agency can focus solely on creative, media buying, or social media.
Your agency can also specialize in certain types of clients. You can choose to work with start-ups, small businesses, non-profits, or specific brands or niches.
Basic responsibilities of an advertising agency might include:
- Running a client’s social media
- Updating a client’s website
- Creating campaigns
- Developing advertising strategies for clients
- Create landing pages and other digital marketing assets
- Performing analysis on campaigns
- Developing new advertising campaigns based on analytics
- Administrative duties such as phone calls, emails, invoicing
What You Need to Start an Ad Agency
One of the best aspects of starting an ad agency is the fact it’s super easy to get started. We will talk more about specific steps, but let’s look at what you need in the beginning.
Experience With Ad Campaigns
Although you can definitely sharpen your skills as you ramp up your business, it’s helpful to already have experience with advertising. Your clients will want to know what kind of experience you have and how you can help them.
A Laptop and Reliable Internet
In this digital age, it’s a no-brainer that you need a computer and reliable internet. You don’t have to go crazy with the most expensive, fastest machine around, but you do need a reliable way to work.
A Dedicated Office Space
This doesn’t mean you have to rent the sweet, industrial loft in the hippest part of town. You can start your ad agency completely online, but you should treat it like a business because it is a business.
Having a dedicated office space — whether in your home or rented — will allow you a space to remain focused. Also, don’t forget that you’ll need a professional-looking backdrop for Zoom calls for meetings with clients.
You might not have the slickest portfolio in the world, but a website can show off what you do have. Make it easy for potential clients to find your advertising agency.
Don’t worry if it’s a low-cost version. You can upgrade your website as you add more clients.
A Willingness to Keep Learning
With digital being such a big part of advertising, it’s important to stay up on the latest trends. Whether you become an expert in Facebook ads, Pinterest advertising, or TikTok for businesses, you’ll always need a thirst for knowledge.
How to Start an Ad Agency
So how do you go about actually starting an advertising agency? If you’ve got your laptop ready and your creative juices flowing, here’s how you get started.
As you’re going through these steps, keep in mind some of these will happen at the same time or may go out of order. The important thing is creating a plan and then getting started.
1. Create a Business Plan
Like other businesses, if you choose to start an ad agency, you need to start with a solid business plan. Whether you focus on digital marketing or traditional advertising, an ad agency is a business first — and that calls for a business plan.
What should your business plan include? At the minimum, it should cover the following:
- Your audience for the plan. Is this business plan for internal purposes, investors and stakeholders, or customers? First, define and address your audience. From there, you will craft your business plan to address the needs of your readers.
- Your target market. What businesses will your advertising agency primarily work with?
- Business goals with real numbers. Put your goals for your ad agency in your business plan. Your goals should be based on the analytics you’ve researched. These analytics can include:
- Industry trends and analysis
- Customer analysis
- Financial analysis
- SWOT analysis: Strengths, weaknesses, opportunities, and threats for your business and/or your biggest competitors. Once you have this information, you can build your business goals based on the information you’ve gathered.
- Your advertising services. Clearly state what your ad agency will focus on, whether it’s social media, digital display advertising, media buying, or something else.
- Your own marketing plans. How will you obtain new clients? How much do you need to get your website started? Will you run your own Facebook ads geared towards specific demographics and business owners?
Remember, a business plan can be fluid. It’s ok if you need to update your business plan throughout the year or annually. As you achieve your goals, you can update with new ones!
If you want more guidance, here is our full article on creating a business plan for digital marketing agencies. It may not be anything you ever have to present to investors or a room full of people, but forcing yourself to create a plan will give you the foundation for your ad agency.
2. Establish Your Niche
We touched on this in the business plan section, but it’s an important step to emphasize when you start an ad agency. Since advertising is such a broad topic and there are so many different types of businesses, you need to choose a specific path for your own agency.
If you skip this step, you might feel “all over the place.” Establishing your niche helps you reign in your ideas and set the foundation for your advertising business.
First, spend time listing out your services. Not only does this help you communicate the information to your client, but it also gives you focus on training and education as you move forward.
For instance, if you only want to work with ad campaigns for clients using social media platforms, then you know you need to stay current on TikTok, Facebook, YouTube, Pinterest, Google Ads, or whatever platforms you specialize in.
Second, what kind of clients do you want to work with? Do you prefer bigger companies or small mom and pops? Think about the industry you prefer.
Remember, there are many, many businesses that need help with advertising, such as:
- Bloggers and influencers
- Restaurants, bars, wineries, and breweries
- Non-profit organizations
- Financial services
- Technology companies
- Salons and skincare
- Medical offices
- Interior design and services
- Real estate agents
- Home improvement businesses
These are only a few examples of industries you could work with. In other words, there are lots of businesses out there, so it’s important for you to narrow down where you want to concentrate.
3. Hone in on Your Skills
When you do land on your niche, it’s time to honestly evaluate your skill level. You will probably need further training in some areas so that you can establish more authority as an expert.
This doesn’t mean you need to go to college or get an advertising degree. It means you need to be ready to have the latest skills.
For example, if running Facebook ad campaigns is one of the niche areas you will focus on, it’s critical you are up-to-date on the latest practices. You may need to enroll in online courses or run campaigns for your own company to make sure you know exactly what to do for clients.
Fine-tuning your skills will remain on your “to-do” list as you run your ad agency. There are constant changes to the digital world, and it’s up to you to stay on top of them. Remember a few years ago when no one had ever heard of TikTok?
4. Freelance Before You Go Full-Time
Starting a business on your own can be overwhelming. Fortunately, when you start an ad agency, you can slowly transition and build from there.
Starting out as a freelancer before you dive in full-time makes a lot of sense. For starters, you can pick up smaller accounts and discover which niche you enjoy working with the most or the areas you are most skilled in.
Secondly, it allows you to build your roster of clients and eventually ask for referrals. You can also point to real results from working with clients. By freelancing, you can start from the ground up without the major investment a full-time advertising agency may require.
If you do freelance, be sure to give your clients the same attention you would if you were full-time. This will help you build your reputation and possibly earn repeat business.
Getting Started as a Freelancer
Getting started as a freelancer is easier than you might think.
One option is to register with a site such as Fiverr. Customers from all over the world come to this site to purchase creative services. You can try landing gigs for specific jobs, such as creating Facebook ad campaigns or creating a set of Instagram captions.
Another idea is to advertise to your own network. Contact people you may know through social media and let them know you have a new business venture. Other people in your network might be starting new businesses you may not be aware of or may need help for one or two projects.
You could also offer to barter with someone you know who owns a business and needs help with advertising. In return for running a campaign for a set amount of time, you could ask them for a referral or a review you can use on LinkedIn and your website.
5. Create Your Website
Whether you build your own website or hire someone to do this for you, if you’re freelancing or full-time, this is a step that needs to be completed. Just know that your website should always be self hosted on a platform like BlueHost.
Not only is a website critical for people to find you, but it’s your digital calling card. It showcases everything you’re capable of doing for a business.
What does a great website for an ad agency look like? It needs to include the critical information on the very first page:
- Contact information
- Services offered
- What sets you apart from other agencies
But it could also include other pages, such as:
- Your portfolio
- Starting prices for your services
- Your background information
- Blog posts
Your website is not only a chance to talk about your services, but you can show your personality. Don’t be afraid to get creative, especially if website design is part of your advertising services.
Remember, you can update your website as you go. As your business grows, you can add more pages and invest more money into it.
The main point is to get started and make it easy for people to know how to contact you.
6. Market Your Services
In addition to your website, you need a way to attract potential clients. Unfortunately, just putting a logo on a business card doesn’t mean the clients will flock to you. You have to attract them!
Like we mentioned with freelancing, there are several ways to market your services and business, including:
- Reaching out to your current network. Especially if you’re a part of the industry, your ad agency will focus on. Tell everyone you know — from friends and family to past colleagues — that you now have an agency and you’re ready to help.
- Using Facebook to generate leads. Facebook is a fantastic source for both direct and indirect leads. There are several ways to get noticed on Facebook, including running an ad campaign, posting a blog, or running a contest.
- Getting social. Beyond Facebook ads, there are so many platforms you can use to help spread the message that you are now open for business. Don’t forget Instagram, Pinterest, Twitter, and LinkedIn.
Now that you have your marketing plans in place, you can focus on setting up your finances and permits.
7. Get Your Finances In Order
You might not have any money in your account right away, but it’s important to set up your finances correctly from the beginning. Establishing a business banking account is essential.
Separating your business account from your personal one is not only the right way to run a business, but it can save you from a major headache later on down the road.
You can choose a bank you already have a relationship with or simply use an online business bank to open up an account.
As your agency grows, you may need the help of an accountant, bookkeeper, or both. However, in the beginning, a business bank account will be the first step to organizing your finances.
Define How You Will Get Paid
Before you open up your business checking account, be sure to establish how you will charge your clients. Agencies can work in a few different ways, so having this information lined up before you start will be important.
- Hourly: Charging by the hour is one method and usually works well when you are consulting with clients. If clients are using your expertise to improve on their existing marketing plan, an hourly fee is typically easier to work within.
- Retainer: A retainer fee is a flat monthly rate you and the client agree upon. If you set up your payment this way, be sure to clearly outline what’s included in the services. You’ll need to account for any costs for outsourcing projects as well.
- Percentage of spend: This is best suited for larger clients and projects, but you will be paid a percentage based on the overall advertising spend for a project.
8. The Legal Requirements
Depending on where you live, you may need to file for a business license and/or a business permit. Don’t skip this step either, as boring as it may sound! LegalZoom is our favorite resource for all the legal topics related to starting a business.
Research what federal and state permits are needed, and then you can determine your next steps. Once you get this done, you’ll be able to begin your business operations the right way.
If you’re curious about establishing your business as an LLC, this is where working with a professional is recommended. A CPA or tax attorney can get your business established and answer questions specific to your state.
9. Take the First Step
Starting an ad agency — or starting a business in general — can be overwhelming. You might be worried about failing, not having enough clients, not knowing enough about finances, or a long list of other concerns.
Truthfully, there’s one thing all businesses have in common:
All businesses begin by taking the first step.
Sure, there are lots of reasons why a business may not succeed. Fortunately, there are also plenty of opportunities for a business to thrive.
Starting an ad agency is a great way to pursue your entrepreneurial dreams and help clients grow their own businesses. The best part is that it only takes that very first step and getting over the fear of the unknown.
10. Scale Your Business
Scaling your business is an exciting topic because it means you have the chance to watch it grow. It’s also tough to balance some of the questions that come along with growth, such as when to start hiring workers or professionals like a CPA.
The main point to remember with scaling your business is that going slow may be the better approach. This is hard for some people to understand because we live in a modern age of start-ups and six-figure success stories on every website.
Scaling can be about controlled growth. Hiring contractors is a great first step. You can bring on people for specific projects, but you do not have long-term obligations like you do with full-time employees.
As you’re growing, look for opportunities to hire professionals to make your business run more smoothly. This could include a CPA, a virtual assistant, your own social media and marketing manager, or a bookkeeper.
You could even explore the idea of bringing on a partner to help you run the business.
There’s no defined time period for scaling. It should be based on the pace of your business and not someone else’s.
Final Thoughts When You Start an Ad Agency
One of the most fascinating aspects of starting an ad agency is how you will constantly be learning new ideas and new ways of doing things. In order to keep up with the best practices for your clients, you’ll always need to have a pulse on the latest advertising trends.
Taking courses such as the Facebook Side Hustle Course can keep your skills sharp and help you get real results for your clients. We also highly recommend courses such as the Pinterest VA Course, ClickFunnels, or other similar courses.
If you do want to start an ad agency, taking the time to put together your business plans while setting up your website, finances, and permits correctly will ensure you start down the right path.