A social media marketing agency can be a legit business if you: 

The ability to generate real business results through social media is the primary factor as to whether a social media marketing agency will be legit and generate income. Potential clients expect to see past social media marketing success when you pitch them on your services. Although you can attract clients by offering guaranteed services as a new agency, you typically will only make money if you deliver on your guarantees.

Often, you will need to show that your social media marketing efforts generate results beyond simple vanity metrics like followers and likes. Instead, your work should positively impact a brand's revenue. For example, a social media marketing agency owner on Reddit questions why they can't land any new clients despite having grown a previous client's account from 180 followers to over 80,000 followers. In response, other digital marketers stress the importance of providing a return on investment. 

The income potential of a social media marketing agency depends heavily on the niche that the agency targets. If you choose a niche with too slim of profit margins, your clients likely won’t be able to pay a sufficient amount for social media marketing services. One digital marketing professional on Reddit recommends targeting B2B niches with social media marketing services like software companies selling to SMBs because these clients can afford to pay the most. 

A social media marketing agency needs an effective client acquisition strategy to generate income. Although many people have the skills to be successful in a social media manager role, not everyone can generate their own book of business. One social media marketing agency owner on Reddit says that despite having managed social media accounts in the past in a corporate setting, they are struggling to land clients through their own agency. Another SMMA owner says that despite having taken both Tai Lopez’s and Iman Gadzhi’s social media marketing courses and using their client acquisition strategies, they could not land any clients of their own.

The digital marketing industry changes rapidly with new technologies and consumer trends. As such, social media marketing agencies often need to pivot strategies regularly to ensure their clients continue experiencing optimal results through social channels. For example, carousel image posts on Instagram were eventually replaced by short form videos on TikTok. 

Operating a legit social media marketing agency that is successful requires a considerable amount of time and hard work. Although many social media marketing agency influencers depict the business model as only requiring a few hours of their time per week, this isn’t accurate if you want to make a solid income. A digital marketing agency owner on Reddit that performs social media marketing for their clients expresses that they work extremely hard to generate over $1 million in revenue with their business. 

Local lead generation is an alternative online business model many prefer to social media marketing because it’s easier to land clients and you can earn passive income. Local lead generation entails setting up websites that attract customers for service businesses and selling the website space to real service business owners for $500 to $3,000/month. Unlike social media marketing where you need to convince a business owner that you can generate results for them if they pay you, a local lead generation website is a readymade marketing channel that can produce results for a business right away because you do the hard work ahead of pitching clients. Once you partner with a local service business, local lead generation websites require little maintenance so you can enjoy periods of passive income. 

In the following article, we discuss further whether a social media marketing agency is a legit business by looking at how much these businesses can make and some major inconveniences of the business model. 

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:

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 2024, 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. 

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 2024, 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. The Online Revenue System by Nick Ponte and Tom Gaddis shows you how to find potential clients using their SociSpy software.

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. 

Approximately 58% of marketing managers leverage freelancer support, according to Upwork. 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. Approximately 47% of marketers are already using social media automation tools, according to Demand Sage. 

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?