Digital Marketing Agency Guide: Step-by-Step, Pros & Cons, and Comparisons To Other Models

What is a digital marketing agency?

A digital marketing agency is a business that sells digital marketing services to businesses to improve their online visibility through digital channels like search engines, social media, email, and even large language models (LLMs) like ChatGPT. The purpose of a digital marketing agency is to increase brand awareness, generate leads, and drive higher sales and revenue for a business.

A digital marketing agency can offer a range of services, including:

• Search engine optimization (SEO): Boosting organic rankings and performing technical website optimizations for ranking in search engines like Google, Bing, and Yandex.
• Pay-per-click (PPC) advertising: Running Google Ads, social ads (Facebook Ads, TikTok Ads), and performing paid search management.
• Email marketing: Managing email lists, copywriting and running campaigns, and automating email sequences.
• Social media marketing: Creating static and video content for social media channels like Instagram, TikTok, YouTube, and Facebook, managing online communities, and running paid social campaigns.
• Web design and development: Building responsive websites, optimizing UX/UI for conversions, improving site speed and performance, and implementing technical infrastructure for SEO and tracking.
• Content Marketing: Developing blog strategies, writing SEO-optimized articles and landing pages, creating video scripts and infographics, and distributing content across owned and earned media channels.

Unlike a digital marketing freelancer, who carries out these services with their own skills, digital marketing agencies employ the skills and expertise of multiple people to perform digital marketing services as a team unit. Agencies handle complex, multi-channel campaigns; freelancers excel at focused, niche projects.

A digital marketing agency can serve a diverse range of clients, including:

• Local businesses: Restaurants, law firms, medical practices seeking local visibility
• Ecommerce brands: Online retailers needing traffic and conversion optimization
• SaaS companies: Software businesses requiring lead generation and user acquisition
• B2B enterprises: Corporate clients focused on demand generation and brand authority

How do digital marketing agencies make money?

Digital marketing agencies make money by charging clients for digital marketing services on a monthly retainer, per project, or based on performance.

• Monthly retainer: The agency provides ongoing services and receives a flat monthly fee. This model is common for SEO and social media management, where work is continuous.
• Per project: The agency charges a one-time fee for a project with a specific scope, such as delivering a 10 page website build for $3,000. Project work can also be charged on an hourly-basis.
• Performance-based fees: The client only pays when results are delivered, such as new leads, booked calls, or ad conversions.

I run a performance-based digital marketing agency because I get paid for the leads I generate for local businesses. However, unlike a standard digital marketing agency that generates leads through a business’s marketing channels, I create my own marketing channels that I own to generate these leads.

How much can you make with a digital marketing agency?

You can make $0 to $1,000,000+ per year with a digital marketing agency, depending on factors like specific services offered, target client profile, and agency team size. Data of over 100,000 digital marketing agencies from online business directory Clutch shows that digital marketing agencies serving medium to enterprise clients charge between $5,000 to $50,000 per month.

Reddit user timtruth says they make $40K per month by selling digital marketing services to 12-15 small business clients.

Another Redditor, Primary_Door4822, says they make $68K per month with 8 clients using a performance-based model.

I make $52K per month by using my digital marketing skills to sell leads to local businesses like roofers and homebuilders.

What are the pros and cons of starting a digital marketing agency?

Pros:

• Low startup costs - You can start pitching services to businesses with just a laptop and some basic marketing knowledge. With under $500 you can set up a website and access useful tools like Ahrefs or Semrush.
• High earnings potential - It’s not difficult to scale past 6 figures per year by retaining a handful of clients on monthly retainer contracts.
• Highly scalable - Your revenue potential is only limited by your team’s capacity to close new clients and successfully perform the work.
• Global reach - Your work takes place in the digital space, so you can pursue clients from any region in the world as long as you can accommodate their language needs.
• Develop high-demand skills - The digital marketing industry is expected to grow at a strong 13.6% through 2033, according to marketing research firm Market.us, showing high demand for skills like SEO, PPC, and social media management.

Cons:

• Client dependence - Your income is susceptible to fluctuations because of client churn.
• High competition - It’s estimated that there are already over 433K digital marketing agencies worldwide, and you’re also competing against freelancers and in-house talent to provide marketing support.
• Consistent client communication - You work directly on client’s marketing channels, so you need to communicate closely to get approval on marketing outreach and branding desires.
• Service cost validation - You need to show clients how your services are positively impacting their business with real data to keep clients long-term.
• Difficulty closing clients without a reputation - Prospective clients typically want to see successful case studies and client testimonials before paying a digital marketing agency.

What are the main types of digital marketing agencies you can start?

The main types of digital marketing agencies you can start include:

1. SEO agency
2. PPC advertising agency
3. Social media marketing agency (SMMA)
4. Email marketing agency

In order to really decide which digital marketing agency is the best option for you check out-> [ 18 Digital Marketing Agencies Compared: Pros, Cons & What’s the Best? ]

1. SEO agency

SEO agencies specialize in helping businesses rank higher in organic search results by improving their website content, structure, and authority. These agencies focus on long-term visibility through search engines and increasingly, AI-powered discovery platforms like ChatGPT and Perplexity.

Common SEO agency services include:

• Keyword research and strategy - Analyzing keyword difficulty, search volume, and competition level. Building topical maps and content silos for long-term ranking potential.
• On-page SEO - Optimizing meta titles, descriptions, headers, and internal linking. Improving keyword placement and topical depth in content.
• Technical SEO - Optimizing site speed (Core Web Vitals). Enhancing mobile responsiveness, schema markup, and managing indexation. Configuring the XML sitemap and robots.txt files.
• Website content creation - Writing blog posts, landing pages, and service pages that align with search intent.
• Link building and digital PR - Earning backlinks through methods like guest posting, and niche edits. Creating a positive reputation through mentions in respected media platforms.
• GMB management - Improving local maps visibility by stimulating Google Business profile reviews, optimizing business details, and ensuring NAP consistency.

Beginner Insight:

Most new SEO agency owners land their first client in 2–4 months, typically charging $500–$2,000/month. The biggest challenge is client retention, once rankings improve, clients often want to cancel, even though ongoing SEO is needed to stay competitive.

I’ve gotten my own SEO agency up to $9K/month by selling local SEO and link building services. However, I found it difficult to scale past that because clients often churn after you get them to rank high on Google because they think they don’t need to continue investing in SEO.

2. PPC agency

PPC agencies help businesses generate immediate traffic and conversions by managing paid advertising campaigns across platforms like Google Ads, YouTube, Meta, LinkedIn, and TikTok. These agencies focus on performance-driven marketing, where every click is tracked, and every dollar spent must produce measurable results.

Common PPC agency services include:

• Campaign strategy & planning – Defining campaign goals (e.g., ROAS, CPL), selecting the right platforms, setting budgets, and outlining bidding strategies based on target audience behavior.
• Keyword research & targeting – Identifying high-intent keywords, organizing them into themed ad groups, and applying match types and negative keywords to refine targeting.
• Campaign setup & ongoing management – Building ad structures in platforms like Google Ads, Meta Ads Manager, or TikTok Ads. Managing search, display, shopping, and video campaigns across multiple channels.
• Ad copywriting & creative development – Writing high-CTR ad headlines and descriptions. Creating display banners and video creatives. A/B testing ads to improve engagement and conversion rates.
• Landing page optimization – Designing or refining pages to match ad intent. Applying CRO strategies like clear CTAs, trust elements, and mobile-first layouts to increase conversion rates.
• Conversion tracking & analytics – Setting up GA4, Google Ads tags, and UTM parameters to track campaign performance. Installing Meta, TikTok, and LinkedIn pixels for retargeting and audience expansion.
• Social media ads management – Running paid campaigns on Facebook ads, Instagram ads, TikTok ads, LinkedIn ads, and X ads. Using interest-based targeting, lookalikes, and custom audiences to drive platform-specific performance.

Beginner Insight:

PPC agencies tend to land clients faster than SEO, especially with small retainers or ad spend-based pricing. Expect $1,000–$5,000/month depending on platform and spend.

But if results don’t show in 30–60 days, churn is likely. Ad disapprovals, poor tracking, or bad offers can kill performance. The most successful PPC agencies stick to one niche and get great at ads and landing pages.

3. Social media marketing agency

Social media marketing agencies help businesses grow their online presence by managing both organic content and paid social campaigns across platforms like Instagram, TikTok, Facebook, LinkedIn, and YouTube. SMMA owners often position themselves as full-service partners, offering everything from daily posting to ROI-driven ad strategy.

Common SMMA services include:

• Social media strategy development – Researching the client’s audience and competitors to create a platform-specific strategy. Defining goals like engagement, brand awareness, or lead gen. Building tone-of-voice guidelines and monthly content calendars.
• Content creation & publishing – Producing short-form videos, carousel posts, images, Reels, and Stories tailored to each platform. Writing captions optimized for engagement and publishing consistently with tools like Buffer or Hootsuite.
• Account management & community engagement – Managing daily posting, DMs, comments, and brand mentions. Moderating communities, responding to inquiries, and ensuring the brand voice remains consistent across all platforms.
• Paid social advertising (Social PPC) – Running and optimizing paid campaigns on Facebook, Instagram, TikTok, LinkedIn, and YouTube. Setting up pixel tracking, custom audiences, and budget scaling based on performance data.
• Influencer & creator partnerships – Sourcing niche influencers, negotiating contracts, and managing deliverables. Tracking ROI with promo codes or affiliate links.
• Community building initiatives – Encouraging user-generated content, hosting giveaways or polls, and creating interactive moments like Q&As or livestreams to strengthen audience loyalty.

Beginner Insight:

New SMMA owners often charge $500–$2,000/month for content and account management, but closing clients takes 3–6 months without case studies.

The biggest pain point is proving ROI from organic content. Clients expect results fast, so if engagement doesn’t grow, they leave. Many agencies burn out trying to do everything; the best ones specialize in paid social or productized content offers.

4. Email marketing agency

Email marketing agencies help businesses drive sales, retention, and customer engagement by building, managing, and optimizing email communication systems. These agencies focus on backend revenue growth by turning subscribers into customers through automation, segmentation, and persuasive messaging.

Common email marketing agency services include:

• Email strategy & planning – Designing a roadmap aligned with client goals like sales, retention, or engagement. Establishing campaign frequency, automation triggers, and benchmarks like open rate, CTR, and conversion rate.
• List building & segmentation – Growing opt-in lists through lead magnets, popups, and ethical collection methods. Cleaning lists regularly and segmenting by engagement, purchase history, or behavior to increase message relevance.
• Automation & drip campaigns – Building email sequences such as welcome series, cart abandonment flows, and post-purchase journeys with tools like ActiveCampaign and Ontraport. Triggering campaigns using CRM data or behavioral actions like clicks or site visits.
• Campaign design & copywriting – Creating mobile-responsive templates with persuasive copywriting. Including CTAs, personalization tokens, dynamic content blocks, and brand-aligned design to drive results.
• Deliverability optimization – Ensuring emails land in the inbox by managing bounce rates, authenticating domains (SPF, DKIM, DMARC), and reducing spam complaints through sender reputation management.
• A/B testing & performance optimization – Testing subject lines, send times, copy variations, and design elements. Using test insights to refine future campaigns and improve key metrics over time.

Beginner Insight:

Many new email marketing agency owners report it takes about 3–4 months to land their first client, typically charging $500 to $1,000/month. While startup costs are low, client retention is the biggest challenge. It’s difficult to prove your value if the client’s website, offer, or product isn’t optimized for conversions.

On top of that, landing high-quality clients is getting harder, since many small businesses feel they can “DIY” email campaigns using tools like Mailchimp, ConvertKit, or Ontraport, even if their execution lacks long-term strategy.

How to start a digital marketing agency as a beginner?

To start a digital marketing agency as a beginner:

1. Choose a specific niche to target - For example, local dentists or Shopify Ecommerce stores
2. Decide which type of digital marketing agency you want to start and which specific services you will offer - For example, SEO agency selling link building services
3. Develop an online presence - Create a business website, publish on social media channels, and set up a Google Business profile if targeting local clients
4. Organize a digital marketing team - You can hire freelancers for project work from platforms like Upwork and Fiverr.
5. Employ the necessary digital marketing tools to support your services - For example, Screaming Frog if you offer technical SEO audits.
6. Set pricing for your digital marketing services - For example, leading digital agency Web FX says most email marketing agencies charge $51-$1,000 per month.
7. Perform client outreach and pitch your services - You can reach clients through methods like cold emails, cold calls, in-person visits, and by getting referrals.
8. Collect reviews and testimonials - More than 99% of American consumers read online reviews before making purchases and reviews influence 93% of consumers’ purchasing decisions, according to Capital One Shopping.
9. Scale your business - Continuing pitching more clients, upgrading your team and services, and raising prices as you develop a reputation for successful results.

What are the best digital marketing agency courses?

Want to focus more on learning digital marketing skills rather than just starting a digital marketing agency? Check out these courses.

What are the best courses to learn digital marketing skills?

The best courses to learn digital marketing skills include:

• VSL Masterclass by Peter Kell
• Legendary Marketer by David Sharpe
• Digital Marketing Career Blueprint by Seth Jared Hymes
• List Building Lifestyle by Igor Kheifets

What are the best courses to learn social media marketing?

The best courses to learn social media marketing include:

• Social Media Ads That Work by Jeremiah Krakowski
• Instagram Hacks University by Taijaun Reshard
• TikTok Insiders by Maxwell Finn

What are the best courses to learn SEO?

The best courses to learn SEO include:

• SEO That Works by Brian Dean
• Rankability Academy (formerly Gotch SEO Academy) by Nathan Gotch
• Practical Programmatic SEO by Ian Nuttal

What are the best courses to learn Google Ads?

The best courses to learn Google Ads include:

• God Tier Ads by Ed Leake
• Google Ads Search Certification on Google Skillshop
• PPC Fundamentals Course by Joel Bondorowsky on Semrush

Is it worth starting a digital marketing agency?

It’s worth starting a digital marketing agency for people who are:

• Comfortable on sales calls or learning them
• Willing to deal with client feedback, scope creep, and churn
• Okay with hands-on delivery or managing a team
• Capable of working in a fast-paced environment that requires adjustments to platform and technological disruptions

It’s not worth starting a digital marketing agency for people who:

• Hate client management and communication
• Want passive income or digital asset ownership
• Don’t enjoy learning technical platforms (ads, email, funnels)
• Get discouraged by rejection or slow results
• Prefer taking direction from someone else rather than giving direction to others

When asked about whether it’s worth starting a digital marketing agency, Reddit user Sea_Appointment8408 says they prefer freelancing because they’ve noticed small agencies get poor quality clients.

How does a digital marketing agency compare to other online business models?

Digital marketing agency vs affiliate marketing

Digital marketing agency vs affiliate marketing summary : Affiliate marketing is easier to start solo and has more passive upside long-term, but takes longer to monetize. A digital marketing agency earns faster and gives more control, but demands strong sales and delivery systems to avoid burnout.

Digital marketing agency vs Ecommerce

Digital marketing agency vs Ecommerce summary: Ecommerce offers fast scalability but comes with operational complexity and financial risk. A digital marketing agency gives more control and cashflow early on, but relies on clients and service delivery.

Digital marketing agency vs local lead generation

Digital marketing agency vs local lead generation summary: Running a digital marketing agency gives you control over pricing and offers faster cashflow, but often ties your income to client demands, feedback loops, and service delivery. Local lead generation flips the model: you build a digital property, rank it, and rent the leads to businesses. No fulfillment. No meetings. No client churn. Just recurring revenue from a digital asset you control.

Digital marketing agency FAQs

Can you start a digital marketing agency with no experience?

No, you can’t start a digital marketing agency with no experience. You either need experience running successful marketing campaigns that drive business revenue or managing teams that consistently achieve their goals. Without either one of these abilities, your business is destined to fail.

Do you need an LLC to start a digital marketing agency?

No, you don’t need an LLC to start a digital marketing agency. In the US, you can start a digital marketing agency as a sole proprietor without having any formal business structure. However, if you’re serious about your agency and want to protect your personal assets, paying for an LLC can be a smart idea. An LLC provides asset protection and taxation benefits for small business owners. Some people believe it also gives your business a more professional appearance as well.

Can one person run a digital marketing agency?

Yes, one person can run a digital marketing agency. One person running a digital marketing agency and fulfilling the work themselves is called a solo agency. A solo agency is pretty much just a freelancer that operates under the guise of a branded agency rather than their own name and can fulfill more complex projects. Payton Clark Smith is an example of someone who operates as a solo agency.

What is a better alternative to a digital marketing agency?

A better alternative to a digital marketing agency is a local lead generation agency, in my experience of making money with both over the last decade. A local lead generation agency is better than a digital marketing agency because it’s:

• Easier to close clients as a beginner without testimonials
• Easier to retain clients long-term
• Better for making passive income

Local lead generation agencies create websites and generate leads for valuable services before pitching clients. As such, the website is already a functioning marketing channel that you can allow a business trial for free before you close them. When a business closes leads you’ve sent them and generates revenue, it can be even more powerful than if you had testimonials to validate your services.

Digital marketing agencies perform services through their client’s marketing channels. If a client wants to fire a digital marketing agency, it’s relatively easy because they just remove access to their accounts. In contrast, a local lead generation agency owner performs digital marketing work on their own digital assets. As such, a client can’t fire you without losing the entire marketing channel, so client churn is typically lower with local lead generation.

Digital marketing agencies must actively work for another business to prove it’s worth continued payment for the digital marketing services. You can automate this to make passive income, but you need a skilled and capable team to handle most of the tasks for you, which cuts into profit margins substantially. With local lead generation, you do most of the heavy lifting upfront. Once you rank on Google and partner with a local business owner, these sites require minimal upkeep and you can just automate the leads to go directly to your client so you can earn passive income.

Check out my local lead generation training if you’re interested in learning more about this type of passive income digital marketing agency setup.