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How To Start a Social Media Marketing Agency: 4 Common Challenges To Consider

February 22, 2024

How to start a social media marketing agency:

  • Step 1 - Acquire in-depth knowledge on starting a social media marketing agency.
  • Step 2 - Focus on a profitable niche.
  • Step 3 - Make a list of your service offerings.
  • Step 4 - Set the pricing for your services.
  • Step 5 - Make a comprehensive business plan.
  • Step 6 - Build a multi-skilled team.
  • Step 7 - Find high-value clients.
  • Step 8 - Use the latest technologies.
  • Step 9 - Track your progress and optimize accordingly.

Consumers worldwide are maximizing social media platforms like Instagram, Facebook, and TikTok to purchase different products and services. In fact, DataReportal’s October 2023 insights show that 61.4% of the world’s population are social media users. That’s 4.95 billion potential customers. This is also the main reason marketers, aspiring business owners, and online entrepreneurs are diving headfirst into starting a social media marketing agency (SMMA).

Keaton Walker, founder and CEO of Agency Dominance, mentioned the profitability of a social media marketing agency in his YouTube video How I Land $100,000/mo SMMA Clients. His interview with Allen Wu and Dave Riggs of Apex Growth Method revealed that highly experienced SMMA owners can earn around $100,000 per client monthly. Even data from Statista shows that social media ad spending in 2024 will hit over $300 billion. This means that big and small businesses will rely on social media marketing in 2024 and beyond.

Potential clients will flock to social media platforms with lots of active users. According to Kepios and Meta’s investor earnings announcements, Facebook currently has 3.030 billion monthly active users. Having this amount of target audience can drastically change a brand’s potential sales. However, breaking into this saturated market takes experience. Beginners in this industry will need to exert more effort to keep up with the competition and changing industry demands. Venture into this business model with enough knowledge about starting your own social media marketing agency, its challenges and requirements, and the skills needed to succeed.

How To Start a Social Media Marketing Agency

Step 1 - Acquire In-Depth Knowledge on Starting a Social Media Marketing Agency.

The first step to starting a social media marketing business is acquiring in-depth knowledge of the business model, its market, and how the advertising process works. You need to understand the factors that affect consumer behavior and market demand. As stated in Belle Wong’s article on Forbes and data from Backlinko, an average person spends 145 minutes daily on social media. That’s why learning what keeps your target audience glued to their mobile devices or laptops is crucial. You can create dynamic social media management strategies that boost consumer engagement or attract prospective clients.

As a social media marketing agency, it’s crucial to seek high-value but affordable resources. Rock Content suggests subscribing to the TL;DR Marketing social media newsletter, Social Media Examiner, or other reputable organizations. Ryan Scott’s article on HubSpot recommends diving into social media marketing blogs, videos, podcasts, slideshows, and books. Some examples include Scott Monty (blog), Social Media Marketing Foundations (video), The Social Toolkit (podcast), The B2B Social Media Palette (slideshow), and The Art of Social Media: Power Tips for Power Users by Guy Kawasaki (book). These resources will help you gain the business model’s foundational knowledge and choose a high-performing, lucrative niche.

Step 2 - Focus on a Profitable Niche.

Focusing on a profitable niche lets you make a stable and scalable income through popular and high-converting social media campaigns. Choose niches with brands that are eager to augment their social media presence. According to Deian Isac’s article on Service Provider Pro, the most profitable niches as of August 2023 are remodeling, luxury watches, car customization, cosmetic surgery, and spiritual retreats. However, these SMMA business model niches aren’t fixed. Agency owners need to identify and research performant niches continuously.

In a September 2023 YouTube video by Jordan Platten, he reveals that kitchen and bathroom, e-commerce, and restaurants are the best SMMA niches. This data shows the volatility of this industry. That’s why it’s important to find a niche that is stable and performant. Consider your interests, the market demand, online conversions, and social and cultural trends. Finding the right niche means you can move on to creating your service offerings.

Step 3 - Make a List of Your Service Offerings.

You need to list the social media marketing services you will offer to your ideal clients. It’s easier to promote services that offer lots of benefits. As stated in Thrive Internet Marketing Agency’s blog, the right SMMA business services provide high search engine rankings, better online exposure and customer reach, enhanced customer trust, and increased profitability. This step entails balancing the services you’re good at, the popular ones, and the ones you can do alone and with a team. If you plan on starting a social media marketing agency alone, consider one to three social media services that aren’t too technical. If you plan to form a team, you can do more than three services.

This also depends on the skills of your team members and the social media platforms you want to venture into. Data from Kepios and DataReportal reveals that Facebook, YouTube, WhatsApp, and Instagram are the most used platforms globally. Let’s say you decide to focus on Facebook. Stacey McLachlan and Michelle Martin’s Hootsuite article states that PPC advertising, influencer marketing, and SEO are the best marketing services to deploy on Facebook. This shows the importance of tailoring your services based on your skills and chosen platforms.

Here are some examples of famous social media marketing services:

  • Content Marketing/Content Creation
  • Website Design/Development
  • Video Production/Marketing
  • Email Marketing
  • Link Building
  • Conversion Rate Optimization (CRO)
  • ADA Compliance Services

Step 4 - Set the Pricing for Your Services.

Setting the price for your social media marketing services considers your expertise, competitor’s pricing, potential client’s needs, and the demand for the specific service. You can do hourly, performance-based, using a tiered package, project-based, or standard pricing with service add-ons. According to the latest data from MixBloom and Upwork, the average hourly rate for social media management is $15 to $250 (for freelancers) and $600 to $15,000 monthly (for agencies). The social media platform you use is also a deciding factor. According to Clutch’s Social Media Marketing Pricing Guide 2024 article, channel-based advertising costs around $25-$49 per hour. SociNova’s pricing is a good example of a tiered package.

One of the most common pricing is the tiered packages. Some social media managers or agencies offer a package set like this:

  • Basic Package (social media marketing + basic edits)
  • Gold Package (social media marketing + edits + content optimization)
  • Platinum Package (social media marketing + edits + content optimization + keyword research)

Tailor your pricing schedule to the social media campaigns you intend to offer. The more technical a service is, the higher its cost will be. For example, basic content writing is easier than Search Engine Optimization (SEO) and PPC advertising. So, your SEO and PPC advertising services should be priced higher.

Step 5 - Make a Comprehensive Business Plan.

You must create a comprehensive business plan to organize your financial, marketing, and operational procedures. SWELLEnterprise states that a business plan helps with branding, target market identification and engagement, and service optimization. It’s an SMMA blueprint that will serve as your success roadmap and guide for upgrading your business or tackling common issues. According to Mark Henricks’ article on Entrepreneur, there’s a 30% chance of higher sales growth with a strategic business plan. It lets you craft a dynamic social media strategy and improve your social proof.

Data from Excellent Business Plans and Small Business Trends reveal that 50% of international or local social media marketing agencies fail within five years. This highlights the importance of developing one. Wyclife Opondo’s LinkedIn article states that a comprehensive business plan helps in goal setting, resource allocation, performance evaluation, and strategy development. It also guides you in picking team members or employees with specific skills.

Step 6 - Build a Multi-Skilled Team.

Build a team of skilled individuals for your social media marketing agency. Accumulating people with a mix of soft and technical skills is highly valuable to the growth and success of your SMMA business. Soft skills are skills that cannot be measured, such as creativity, communication, and strategic thinking. Katrina Kirsch’s 20 Technical Skills Every Marketer Needs article lists down technical or hard skills like SEO, Instagram marketing, campaign management, influencer marketing, ad targeting, A/B testing, email marketing, copywriting, and many more.

If you decide to start a social media marketing agency alone, make sure you have the critical skills for engaging with brands, delivering high-quality services, and driving online conversions and brand awareness. You need a mix of these skills to create better, more engaging social media campaigns. This way, you can venture into various social media channels. It also allows you to expand your service offerings as your SMMA grows and acquires more clients.

Step 7 - Find High-Value Clients.

Finding high-value clients requires talking to your friends and family, connecting with brands, and networking with business owners. This lets you spread the word that you have started a social media marketing agency. As published in Kyra Goodman’s article on Sked Social, you can offer complimentary social media audits or invite potential new clients to a short social media training. These creative ways of prospecting will help you entice your target market.

Anil Salvi’s How to Get Clients for Social Media Marketing Agency (SMMA) article on Saleshandy mentions cold email outreach, social media, and business partnerships as the best methods for getting clients. All these approaches can help you attract prospective clients. What matters is your marketing strategy. You must be creative but wise in developing the perfect complimentary service offer and elevator pitch. You can use technologies and platforms like Eventbrite (event management) and Fiverr (finding clients) to streamline your client acquisition process.

Step 8 - Use the Latest Technologies.

You must maximize the latest technologies to simplify and automate some aspects of your social media marketing agency. Christina Newberry’s article on Hootsuite divides these tools into scheduling, analytics, monitoring, reporting, automation, engagement, customer service, chatbots, and platform-specific. Paid advertisements like Facebook Ads and Google Ads are also well-known platforms for broadening the reach of your online campaigns. In fact, PPC is 50% more effective in converting customers than organic site traffic, as per the latest data from Unbounce. That’s why you need to learn to use different social media marketing tools, platforms, and software.

Here are other examples of popular social media marketing agency tools and technologies:

  • SocialPilot (scheduling)
  • Buzz Sumo (analytics)
  • Keyhole (monitoring and reporting)
  • Buffer (automation)
  • Khoros (engagement)
  • Zendesk (customer service)

Step 9 - Track Your Progress and Optimize Accordingly.

The last step to starting a social media marketing agency is tracking your progress and performance to optimize accordingly. Social media analytics is one of the most important factors you must implement to monitor your social media campaigns’ and agency’s performance. Google Analytics, Sprout Social, and HubSpot are reputable social media analysis tools you can use. As stated in Hootsuite’s 17 Social Media Metrics You Need to Track in 2024 [BENCHMARKS] article, you need to consider these Key Performance Indicators (KPIs):

  • Engagement rate
  • Reach
  • Impressions
  • Audience growth rate
  • Click-through rate
  • Conversion rate
  • Cost per click
  • Average response time
  • Customer satisfaction score

As a social media marketer and agency owner, monitoring these metrics will help you adjust your marketing strategies. It also enables you to create campaigns that perform and convert. Having real-time, comprehensive insights into your social media marketing agency’s performance will make tackling common challenges easier.

4 Common Challenges To Consider in Starting a Social Media Marketing Agency

  • Fast-Changing Industry Trends and Demands - The social media marketing industry is volatile. It can change instantly depending on what the consumers want to see. Social media trends like word-of-mouth marketing, long-form content, and gaining Facebook likes are becoming more modern. Now, consumers focus more on video marketing, influencer marketing, and engagement over likes. The fast-paced trends of this industry push marketers to spend more money on skill improvement workshops and paid tech subscriptions. It takes more effort to keep up with the latest market demands.
  • Attracting Potential Clients by Offering Something Unique - Market saturation made the social media marketing industry more difficult to break into. Making a name for yourself requires offering something unique. It’s also challenging to compete with established agencies with a solid client base and online presence.
  • Low Engagement - The high competition in social media marketing leads to low engagement, especially when you are a beginner. Agencies and social media marketers with more experience can attract better traffic and engagement to their social media posts and campaigns. 
  • Consistently Generating High-Quality Content - Ankit Singla’s article on Master Blogging and data from EarthWeb reveals that 7.5 million written blogs are published daily. This means that social media marketing agency owners must generate high-quality content daily to outperform 7.5 million other bloggers and marketers.

How To Overcome the Challenges of Starting a Social Media Marketing Agency?

To overcome the challenges of starting a social media marketing agency, consider gaining knowledge from reputable resources, using Artificial Intelligence (AI), learning in-depth analytics, and strictly monitoring industry trends. It’s crucial to prepare yourself for any potential drawbacks that might happen. According to Score.org, 77% of brands internationally use social media to reach their target consumers. This highlights the importance of learning the core concepts, foundational knowledge, best practices, and the latest strategies for social media marketing.

David Schlais and Derek DeMike, creators of the 2GuysBuildaBiz YouTube channel, reveal how other aspiring SMMA owners can succeed in the industry. In their video How To Start A Social Media Marketing Agency As A Beginner in 2024, they mentioned that gaining practical experience, continuously building a client pipeline cost-effectively, and creating a professional image are critical in starting a social media marketing agency. You can build your business portfolio by offering free trials to local businesses. This involves creating free social media captions, video campaigns or reels, and graphics. You can also run social media giveaways to generate leads through friendly contests like “Tag a Friend”, “Refer a Friend”, or “Follow To Win”.

What are the Requirements for Starting a Social Media Marketing Agency?

Knowledge of social media marketing, a business plan, permits and licenses, and tax considerations are the requirements for starting a social media marketing agency. Quora user Tom Hespos mentioned that a good name, a website or a social media account, and a pipeline strategy are essential in building your social media marketing agency. These requirements are a must to create a legal, high-performing SMMA business. You also need to have the essential social media advertising skills to produce high-quality outputs.

What are the Essential Skills Needed To Start a Social Media Marketing Agency?

Writing, research, customer service, SEO knowledge, creativity and design, data analytics, and budgeting are the essential skills needed to start a social media marketing agency, according to the Digital Marketing Institute. These basic skills will help you create social media campaigns that are engaging and up-to-date. Honing your skills in using different social media tools is also a transformative factor in SMMA. Tools like Tailwind, Sendible, and Brandwatch allow you to speed up your marketing tasks.

Can You Start a Social Media Marketing Agency With No Experience?

Yes, you can start a social media marketing agency with no experience, given you have the basic skills, knowledge, and strategies of the business model. As explained by Abhiyan Limbu in his LinkedIn article, the key to building a successful SMMA business is implementing a step-by-step process of what you need to do. It’s also advisable to join social media marketing groups and exclusive communities to gather valuable information on the latest trends, consumer behavior, and market demands.

Is an SMMA Training Useful for Starting Your Social Media Marketing Agency?

Yes, an SMMA training is useful for starting your social media marketing agency because you get to learn unique techniques and insights from different coaches and trainers. Each of these SMMA workshops has different focus points. Some focus on popular social channels, while some go in-depth into engaging your potential customers. Other aspiring SMMA owners join social media marketing agency courses from known professionals like Daniel Thomas. There are also famous programs, such as Hootsuite Academy, PPC University, Social Media Marketing Masterclass, Social Media Specialization, and many more.

How Much Does It Cost To Start a Social Media Marketing Agency?

It costs around $12,272 to start a social media marketing agency, according to Pat Walls, founder of Starter Story. It starts at $100 and can go up to $29,100. This cost estimate includes business formation, software, employee, website, and advertising costs. You can choose the most cost-effective way of starting an agency by doing everything yourself and using free online tools.

Is a Social Media Marketing Agency Profitable?

Yes, a social media marketing agency is profitable, given that you make a 90% profit margin. Data from Agency Analytics show that social media marketing agencies earn around $1,500 to $25,000 monthly per client. You can increase this amount by acquiring more long-term clients. According to Mike Mancini’s YouTube video Digital Marketing Agency Revenue and Profit Margins | How Much Can You Make?, he makes around $11,000 in monthly revenue for 10 clients. His expenses amount to $794, which includes wages for outsourced employees, internet, landing page software, and call and time tracking software. Mike makes $10,206 monthly or $110,472 in yearly profit for a 93% profit margin.

Social Media Marketing Agency FAQs

What is a Social Media Marketing Agency?

A social media marketing agency is a company that runs digital marketing campaigns focusing on different social media channels. Its services span from ideation and content creation to campaign marketing and optimization. Most social media marketing agencies offer Search Engine Optimization (SEO), video and influencer marketing, copywriting, keyword research, and many other common services.

Is Starting an SMMA Hard?

Yes, starting an SMMA is hard because of market oversaturation, high client expectations, fierce competition, changing social media algorithms, and excessive skill requirements. Aspiring SMMA owners will also need ample knowledge and skills to outpace 42,396 digital marketing professionals in the U.S. alone. That’s why SMMA courses and resources are essential to gathering rich insights into the business model.

Is Starting an SMMA Worth It?

Yes, starting an SMMA is worth it because this business model lets you earn $500 to $5,000 monthly. This industry reached a revenue of $226 billion in 2022, according to the latest data from Statista. It will continue to grow throughout the 21st century, estimated to hit a $385 billion market value by 2027.

Start a Profitable Business in 2024: Choose Local Lead Generation

A social media marketing agency is in high demand nowadays, but local lead generation will remain a profitable, scalable, and more in-demand business model throughout the 21st century. Starting an SMMA business requires extensive industry knowledge, technical skills, and unique value propositions. Sure, you can succeed. But scaling your social media marketing agency will take significant time and effort because of the high barrier to entry.

According to DataReportal, consumers use 6-7 social media platforms globally each month. And because they spend around 2 hours and 25 minutes browsing posts and feeds, marketers take this opportunity to launch compelling campaigns. This highlights the cutthroat competition that social media marketing agencies are facing. You also need to address the high maintenance for multiple advertising campaigns and low profits for massive work hours. Plus, you can easily lose clients at any time. It gives you less control over the potential income you can make.

On the brighter side, local lead generation isn’t as crowded as SMMA because you deal with local niches. It’s also easy to start. First, you must build a microsite for the local service niches that are lucrative and have high demand. Then, you generate engaging, relevant content that ranks high on search engines like Google. Once you’re ranked, free leads will message you from time to time. You can then forward these leads to local businesses in need of prospective customers. You not only earn around $10K for each lead gen site, but you also get to own digital assets in the form of websites.

If you’re an aspiring online business owner who wants to earn more than $50,000 of passive income monthly, then a lead gen biz is definitely for you!

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