Is a Social Media Marketing Agency a Good Business? | 3 Inconveniences to Consider

January 23, 2023

According to Hubstaff, 97% of Fortune 500 companies rely on social media marketing and leverage at least one social platform in their marketing strategy. Furthermore, PRN Newswire highlights that even the majority 67% of small and medium-sized businesses take advantage of at least one social channel as well. It’s clear that, in 2023, the ability to reach customers and drive brand awareness through social media is a highly sought after skill set and a social media service agency is well positioned to serve this enormous need. 

Despite the potential, is a social media marketing agency a good business for you, or would you be better off going with another online business model like email marketing, local lead generation, or a paid advertising agency? In the following article, we take a closer look at the social media marketing agency model, including how much you can make, 3 inconveniences of the business model, how to learn the necessary skills, 6 steps to start your own agency, and some actionable tips to launch a profitable agency and land clients with ease!

What is a social media marketing agency?

A social media marketing agency is a digital marketing business that devises strategies, creates content, and runs campaigns for brands' social media platforms like Facebook, Instagram, and Twitter. Common services that social media marketing agencies offer include:

  • Social media management

  • Content creation
  • Paid social media campaigns

  • Lead generation

  • Running contests/giveaways

  • Social media strategizing

  • Social monitoring

How much does a social media marketing agency make? 

One of the main factors you’ll want to consider when deciding if a social media marketing agency is a good business for you is the earnings potential. Although there are some reasons social media marketing agencies fail, many generate decent profits because overhead costs are relatively low and the business model has good scalability. According to data from marketing reporting solution company Agency Analytics, social media marketing agencies make between $1,500 and $25,000/month per client. Research by HubSpot shows that the average digital marketing agency has a profit margin of between 11% to 20%

Clearly, results are going to depend from agency to agency, but we can use these numbers to estimate a typical scenario for a newer agency. For example, say you’re able to land eight clients averaging a realistic $4,000/month in revenue from each. In this scenario, your business would earn $32,000/month in revenue, or $384,000/year. Considering a best case profit margin of 20%, your business would make approximately $76,800 in profit for you to take home.  

3 Inconveniences of a social media agency

1. It's a hands on engagement

Unlike other online business models like affiliate marketing or CPA marketing that allow for immense flexibility in the working schedule, you’ll need to be able to contribute regular and consistent hours to your social media agency. On a weekly basis, you’ll have to perform tasks like run touch point meetings with clients, create content and schedule out upcoming posts, research and take advantage of current trends to drive post exposure, and adjust paid social campaign parameters to optimize results. Even though you’ll certainly outsource some of the work and can use automation tools for tasks like post scheduling, a social media marketing agency is still a very demanding online business endeavor that requires almost constant attention. 

2. You'll need to communicate with clients often

With a social media agency, you’re responsible for a large portion of a brand’s online presence, so you’ll need to be communicating with your clients ALOT. Besides regularly scheduled meetings to review your activities and their results, many clients will also want to approve content before it’s posted. Client communication is essential for a social media agency to ensure client satisfaction by highlighting how the money they are paying you is driving results for their business and also to avoid doing anything that would upset them like accidentally posting something off-brand.

3. Scaling is usually slow early on

Although social media agencies have high scalability potential, you’ll want to scale slowly in the early years of the business, especially if you have little experience with social media marketing. It takes time to develop expertise and establish processes. Biting off more than you can chew is an easy way to destroy your business before it ever gets started. By scaling slowly and focusing on delivering the best work possible to just a few clients, you can ensure you get great reviews from those clients to act as social proof for more clients in the future. You'll also want to make sure you find the right team members to help grow your business and not just hire anyone. Only once you have established a solid online reputation and have some key employees with proven results in your business should you scale your business to higher revenue goals.

Why a local lead generation agency may be better for some people

For those who don’t want to engage in regular client communication or who want more of a laid back business, local lead generation may be a more suitable business model. A local lead generation agency involves doing market research to find a high value business niche in a specific geographic location, building a website and using local SEO to rank the website on the first page of Google for that location, and then selling the valuable potential customer leads it generates to a local business who can perform the service for hundreds to thousands of dollars every month. 

Unlike a social media marketing agency, you don’t have to hold your clients’ hands and constantly prove your worth. The leads your websites generate are local people very interested in finding a local business to complete a service for them, such as lawn care or pest extermination. For example, say you run a pest control local lead generation website that targets a city where the standard cost for pest control is $500. If your client gets 10 additional customers a month from your leads, they can attribute that additional $5,000/month to working with your agency. Therefore, the value of a local lead generation business speaks for itself. Typically, once you rank a website and get a client to take the leads, they’ll stick with your agency for the long-term and there’s not much you have to do other than forward them the leads. 

How to get started with social media marketing?

If you want to start a social media marketing agency, you’ll need to know a thing or two about digital marketing with social media. Fortunately, there are some great social media marketing courses out there you can learn from so you can equip yourself with the necessary skills. With a social media marketing course, you can learn social media skills like running Facebook ads, developing a social media strategy, and navigating the marketing tools of various social media platforms. If you already have some basic digital marketing skills like copywriting or graphic design, you already have a good foundation to expand your skills from. 

6 Steps to start a social media agency

Step 1: Choosing a niche and target audience

Although a social media marketing company can be a great opportunity, in 2023, the market for these types of digital marketing agencies is already very saturated. Therefore, instead of starting your business and trying to offer your services to any general business, it’s better to choose a specific niche to serve. Specializing in social media marketing for a specific niche enables you to develop expertise for the niche and build a client portfolio of related companies so that you can stick out from the competition for other potential clients in the same industry looking for an agency with relevant experience. Establishing a specific niche also enables you to have a clearer picture of who your target audience is so you can take a more targeted approach to reaching them. 

Beyond improving the ability to attract and sign clients, choosing a niche is also important because it’s best if you serve clients with businesses you’re actually interested. As a social media marketer, you’ll be responsible for understanding the target audience of your clients and promoting content that stimulates their wants and desires so they buy from your client. If you choose a niche you’re interested in, you already have some insight into the target audience because you are the target audience, and it’s much easier to come up with and enjoy creating great content around the niche topic.

Step 2: Decide what services to offer and their prices

There are many marketing services you can offer your clients as a social media marketing agency. However, you don’t want to offer a service unless you can perform it for your client at a high standard. Therefore, unlike an established social media management company like Lyfe Marketing which offers a range of services, it’s best for new agencies to specialize in just one or a few select services. Here are some of the best services for new agencies to specialize in and offer clients. 

Social media management 

Social media management is a comprehensive service that usually entails focusing on one social media channel (or a few) and taking responsibility for all content creation, post scheduling, competitor research, community management, and any page monitoring or responding.

 

Content creation

Some businesses want to handle their own social media management and just need support with the content creation aspect. Agencies specializing in content marketing can provide copywriting, graphic design, and video production services for social media posts and advertising materials.

Social advertising

Running paid advertisements through a social media channel like Facebook with a Facebook ad is one of the most powerful methods for generating brand awareness and generating leads. Social media advertising services can include creating content for the ad, managing ad spend, setting targeting parameters, and adjusting the social media campaign as data is collected. 

Influencer marketing

Influencer marketing entails partnering with relevant influencers in your client’s niche and paying them to publish content that promotes your client’s offer. According to Influencer Marketing Hub, 60% of marketers say that influencer-generated content performs better and drives more engagement than a standard branded post. 

In terms of pricing your services, if you already have some experience in social media marketing, you should already have a rough idea of what your skills are valued at. If not, you can always do market research by looking at other agencies offering similar services or even look on freelance sites like Fiverr to see what others are charging for the service. 

Step 3: Create a website for your business

In 2023, no business is taken seriously without a website, especially one operating in the realm of digital marketing. After settling on a niche and services that you’re going to offer, create a website for your business to highlight who your company is for and how you can serve them. You can create a simple website yourself using a drag-and-drop site building tool like WordPress or hire a legitimate freelance web designer from a site like Fiverr or Upwork if you have the budget.

Step 4: Find and pitch clients

If you want to run your own social media agency, you’ll need to have the ability to sell yourself and your business. There are many effective ways to find clients for your social media marketing business, but if you can’t close the deal when you have business owners in front of you, it will be very difficult for your business to be successful. 

One of the best places to go for your first clients is to your current network. These include people you have already worked with at some capacity, and even friends and family with relevant businesses you could serve. If you’re uncomfortable with sales, you may also find it easier to talk naturally with people you already know about your business than a total stranger. Even if no one in your current network ends up needing your services, at least you can use the experiences to refine your pitch for when you go to other business owners and build your confidence in sales.

Step 5: Onboard clients

Once you land clients, taking the time to onboard each is an essential step for long-term success. Onboarding allows you to set expectations and provide your client with the proper resources they need to work with your business, such as setting them up on Slack so there is an effective communication channel between them and you. Onboarding should include:

  1. Setting up an in-person or virtual meeting at a time that works for both parties
  2. Going over the roles and responsibilities of each party
  3. Discussing the client's desired outcomes
  4. Reviewing potential challenges so they’re aware ahead of time
  5. Taking any feedback or questions from the client

Step 6: Hire a team

If you’re just starting an agency and have little startup capital, you may take on the role of a full-stack social media marketer and handle everything from the marketing strategy to creating the social media content and posting it on each of your clients social networks. However, if you want your agency to grow, eventually, you’ll need to hire a team to support you. 

Fortunately, you can find high-quality, affordable global talent through one of the remote freelance websites already mentioned, Upwork and Fiverr, or many others as well. If you’re not having any luck on those sites, you can also use other tactics like posting in online groups and communities, targeting talented job searchers with paid Google ads, or even going through a local community college to set up an apprenticeship program to filter teachable talent into your business.

Tips to improve your chances of success

Know your P&L

Even though you’re running a marketing business, it’s important to understand your financials if you want to run a successful company. Specifically, pay careful attention to your business profit and loss (P&L) statement. This compares the total revenue of your business against all the expenses needed to operate your business. The P&L statement helps you understand your business so you can make the right decisions to be profitable.

Show case studies

Case studies are one of the most powerful tools you can use to sell a potential client on your social media marketing service. Through case studies, you show businesses the kind of results you can generate for them through your previous successes. For example, you could show how after one year, you dramatically improved the social media presence of a previous client on a specific social media platform like Pinterest and how that contributed a 100% increase to your client’s revenue. By putting together a portfolio of these successful client experiences, you increase the confidence of potential clients who want to hire your business to handle their social media marketing campaign. 

Leverage automation tools

Using social media manager automation tools like Sprout Social can save your business tremendous amounts of time and money. These tools can help you schedule posts out ahead of time so you don’t have to meticulously post every day, assign work to team members, carry out social listening activities and automatically inform you when your brands are mentioned, quickly retrieve social media analytics, and more. In 2023, automation tools are standard for any social media marketing agency.

Conclusion

Social media marketing can be a great online business opportunity for those with creative personality types who enjoy interacting with others and influencing people's decisions. If you're still unsure about whether a social media agency is right for you, fortunately, there are countless other online business models you can consider before settling on the best opportunity for you. The most important thing if you want to be successful in online business is to set a goal, believe in it, and don't give up until you achieve it. So many people have already created the lifestyle of their dreams with online business. What are you waiting for? 

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Ippei Kanehara
Founder/CEO

$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2023, is to build your own lead generation business.

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