So, You Want to Be Don Draper? A Practical Guide to Starting an Advertising Company
Thinking about starting an advertising agency? Hold on a moment, future Mad Men. It isn’t all about fancy offices and martini lunches (but we can dream!). An ad company is a serious business. It requires planning, hustle, and some cleverness. Let’s break it down.
Starting an Ad Agency: Your Launchpad
First off, don’t just put up a sign and wait. Unless you own a Bat-Signal, you must do some groundwork.
Business Plan: Your Course
Sailing without a map is tough. A business plan is your map to success. Describe what your agency does, how it will earn money, and how much it will cost. It’s like your agency’s origin story, profit forecast, and expense plan. Seriously, draft one. It’s easier than it seems.
Funding: Fuel Your Dreams
Money makes ads happen. Unless you are rich (lucky you!), you will need funding. Check these options:
- Loans: Banks might provide loans if your plan is solid and credit decent. Convince them you won’t waste it on ping pong tables.
- Investors: Have a great vision? Some might want to invest for a share. Be ready to pitch hard. Either way, choose wisely between loans or investors.
Portfolio: Showcase Your Talent
Clients want proof of your skills. A portfolio shows what you can accomplish. Even if new, gather prior work—freelance or personal projects count. Build a portfolio to attract clients. It’s like displaying your report card, but cooler.
Website: Your Digital Hub
In today’s world, you need an online presence. Your website is home for your agency. It should appear professional, display your portfolio, and explain why clients should choose you. Build a snazzy website!
Hiring: Create Your Team
Unless you possess superhero abilities, hire skilled people. Identify the skills you need to deliver fantastic advertising. Assemble your Avengers—for advertising.
Navigating Legal: Licenses and Paperwork
Legal matters aren’t glamorous but important. Don’t let it slow you down.
General Business Licenses
Good news! Usually, a special advertising license isn’t needed. You may require general licenses to operate legally in your state. It’s mostly straightforward—like your permission slip from the government.
Specific Advertising Licenses
No special license is usually required for a marketing consulting business. Less red tape means more creativity!
Money Matters: Profitability in Advertising
Let’s discuss the real deal: money. Is an ad agency a cash machine? Not really, but it can be profitable.
Profitability: Is It Worth It?
How profitable is advertising work? Profitability is measured by net profit margin. Industry data shows that margins range from 6% to 12%. Yes, you can earn money, but it requires actual work.
Revenue: Potential Earnings
What can an ad company earn? It varies. Established agencies make millions, while smaller startups earn less initially. But growth potential exists.
Salaries: From Entry-Level to Boss
Advertising can provide good pay. Salary ranges vary:
- Typical Range: Salaries range from $47,000 to $170,000 annually; top earners can reach $188,000. ZipRecruiter data shows average salaries from $47,000 to $170,000.
- Top Earners: The top 90th percentile earns up to $188,000 annually. Serious cash.
Factors affecting salaries include:
- Experience: More experience means higher pay.
- Job Role: Higher roles like Chief Marketing Officer earn more.
- Location: Salaries differ with living costs in various areas. Cities usually pay more.
- Industry: The industry of the job can also determine salary levels.
High-Paying Marketing Jobs
Want that corner office? Here are some lucrative marketing positions:
- Chief Marketing Officer: $200,250—top marketing role.
- Vice President of Marketing: $168,250—second in charge with a hefty paycheck.
- User Experience Director: $164,000—a key role with excellent pay.
- Vice President of Public Relations: $136,000—a PR expert.
- Marketing Director: $131,750—overseeing marketing strategies.
- Creative Director: $131,500—the creative force behind ads.
- Information Architect: $118,500—organizing information and earning money.
If you own the agency? In Sunnyvale, CA, expect around $134,010 annually. Not bad at all!
Bootstrapping: Starting with No Money
No cash but plenty of ideas? No worries. Start lean with this guide:
- Social Media Promotions: Use social media to promote services for free.
- Online Business Registration: Register on Google My Business and other sites for free exposure.
- Press Releases: Distribute press releases for publicity.
- Referral Programs: Satisfied clients can refer others for rewards.
- Reconnect with Old Clients: Reach out to past clients – opportunities might exist.
- Attend Free Events: Networking at free events can lead to connections.
- Offer Free Incentives: Provide a free consultation or valuable item to attract leads.
- Blogging: Start a blog to share expertise and pull in clients.
Get creative and connect with others. Maybe cut back on that avocado toast?
The Financial Side: Advertising Costs for Small Businesses
Now let’s shift gears. You’re not starting an agency; you’re a small business needing to advertise. What’s your budget?
The Annual Budget Overview
Small businesses usually spend $10,000 to $50,000 yearly on marketing. Experts suggest at least $1,000 per month or 7-8% of the total budget. Think about it—$10k to $50k annually or a grand monthly. Advertising isn’t free!
Budget Guidelines: General Advice
A common rule suggests spending 7-8% of annual revenue on marketing. At least $1,000 monthly is also recommended. Keep that insight in mind!
Your costs depend on:
- Business Size and Type: Smaller companies or startups often have lower budgets while established firms can spend more.
- afford more. No brainer.
- Industry: Some industries, which have high competition, may require larger advertising budgets. If you’re selling unicorn horns, expect to spend more on ads.
- Marketing Goals: The goal is brand awareness, lead generation, or sales ? The budget will vary. What to achieve? Brand domination? Adjust budget accordingly.
- Advertising Channels: Different channels, like social media, email marketing, or paid search, have costs. Facebook ads are different than billboards. Surprise!
- Location: Local ads cost less than national campaigns. Unless you’re advertising on the moon, then all bets are off.
Digital Marketing Costs: The Breakdown
Digital marketing costs $50 – $6,000 per month on average. Big range, right? Startup Budgets: Startups may allocate a higher percentage of revenue (15-20%) for marketing to build awareness. Established businesses reduce their marketing budget as they have a customer base. New kids must shout louder.
Advertising Cost Examples: Real-World Numbers
Want specifics? Here are some average monthly costs:
- Google Ads: Small businesses spend $100 to $10,000 per month on Google Ads. Google Ads: $100 – $10,000 per month. From “dipping your toes in” to “going all in.”
- Online Advertising: Online advertising costs $100 – $10,000 per month on average. Online Advertising: $100 – $10,000 per month. See a pattern?
- Facebook Advertising: Businesses pay $0.26 – $0.30 per click, $1.01 – $3.00 per 1000 impressions, $0.01 – $0.25 per reaction, and $0.01 – $5.00 per install. (various metrics). It’s all about clicks, impressions, reactions, and installs on the Zuck-verse.
- SEO: The average SEO cost is $750 to $2,000 per month. SEO: $750 – $2,000 per month. Playing the long game with search engines.
- Social Media Advertising: Allocate 8.7% of annual revenue to marketing efforts, with a bit dedicated to social media marketing. Don’t forget social media in the overall mix.
Getting Paid to be Clever: Revenue Streams in Advertising
Okay, back to making money. How do advertising folks get paid?
How to Turn Clicks into Cash
Here are common ways to monetize advertising skills:
- Affiliate Marketing: You promote products or services on your website, social media, or other platforms. Earn a commission for each sale or lead generated through your unique affiliate link. Become a digital salesperson.
- Selling Ad Space: You allow businesses to place ads on your website, social media pages, or other content platforms. Rent out digital billboard space.
- Social Media Influencer: Build a following on social media and partner with brands to promote products or services. Become Instagram famous and get paid to hawk products.
- Running Paid Ad Campaigns: Create and manage advertising campaigns for businesses on Google Ads, Facebook Ads, LinkedIn Ads, and others. Manage campaigns for clients.
- Ad Networks: Join networks like Google AdSense or Adsterra to display ads on your website and get paid based on clicks or impressions. Let the ad networks do the work and collect the checks.
- Native Advertising: Create content that seamlessly integrates advertising messages, making them look like regular editorial content. Sneaky advertising that blends in.
- Sponsored Posts/Reviews: Partner with brands to create sponsored content, like product reviews or social media posts. Get paid to write about products.
- Remarketing: Target users who have previously interacted with your website or brand with personalized ads. Follow those visitors around with ads.
- Video Ads: Create and run video ads on platforms like YouTube or Vimeo. Lights, camera, ads!
- Google Ad Manager: Use Google Ad Manager to manage and optimize ad campaigns on sites or apps. Tame those ad campaigns.
Level Up Your Ad Game: Building an Advertising Career
Want to climb the advertising ladder? Here’s a cheat sheet:
Pro Tips for Career Ascent
- Continuing Education: Pursue opportunities to continue education. Never stop learning.
- Strategic Portfolio: Use your portfolio strategically. Tailor it to jobs you want.
- Professional Mentor: Find a mentor. Learn from the best, grasshopper.
- Gaining Professional Experience: Gain experience. Experience is the best teacher.
- Developing a Professional Network: Develop a network. Networking is crucial!
- Expanding Skill Set: Expand your skills. Be a Swiss Army knife of advertising.
- Honing Communication Skills: Hone communication skills. Advertising relies on good communication.
The Big Bucks: Highest Paying Ad Jobs
Here are top-dog salaries:
- Chief Marketing Officer – $200,250.
- Vice President of Marketing – $168,250.
- User Experience (UX) Director – $164,000.
- Vice President of Public Relations – $136,000.
- Marketing Director – $131,750.
- Creative Director – $131,500.
- Information Architect – $118,500.
Start practicing those power poses now.
Google AdSense 101: Monetizing Your Website
Got a website? Want to make pennies from ads? Enter Google AdSense.
AdSense Basics
- Sign Up: Create an account with AdSense and connect your site. Signing up is the easy part.
- Control Ad Placement: Tell AdSense where ads appear on your site. Don’t let ads take over your website.
- Start Earning: Start earning. AdSense helps you earn from your ad space.
$100 a Day? Let’s Be Realistic (But Aim High)
Can you make $100 a day with AdSense? Maybe someday. It takes work.
- High-Quality Content: Create quality content: Ensure it’s informative and valuable. Content is king, remember?
- Optimize for AdSense: Place ads strategically within your content. Placement is key.
Patience; Rome wasn’t built in a day.
Solo Ad Business: A Niche Path
Want to get niche? Consider a solo ad business.
Steps to Solo Ad Success
- Pick a Niche and Get Web Hosting: Step 1: Find your specialty and set up your online shop.
- Get Email Marketing Software: Step 2: Email is the lifeblood of solo ads.
- Sell Solo Ads: Step 3: Find customers who want to buy solo ads.
- Fill Orders by Sending Email Broadcasts: Step 4: Deliver ads via email.
- Buy Solo Ads: Step 5: Understand the game by buying ads yourself.
- Sending Educational Content: Keep your audience engaged with valuable info.
- Avoid Ad Fatigue: Don’t bombard your list with too many ads.
- Use Growth Strategies To Increase Your Email Subscribers: More subscribers means more potential customers.
Solo ads: Not for everyone, but could be for you if you’re email-obsessed.
Digital Marketing Business Costs: What You’ll Actually Spend
Starting a digital marketing agency? Here’s a peek at potential costs. Costs can range from $730 to $29,100.
One-Time Costs
- Marketing budget: Yes, even marketers need marketing budgets ($500-$2,000).
Recurring Costs: The Monthly Grind
Recurring Expenses total $10,300- $23,700. Ouch. Costs hit your wallet month after month.
Reality Check: Important Considerations
The advertising world isn’t all sunshine and rainbows. It comes with aggressive deadlines.
The Giants of Advertising
The “Big Five” companies shape the industry.
— WPP plc, Omnicom Group, Publicis Groupe, Interpublic Group of Companies (IPG), and Dentsu Inc. These are the advertising giants. You may start as David. Just recognize these major players in the game.
Legal Eagles: Staying on the Right Side of the Law
Under the law, ads must be truthful. They cannot deceive or unfairly mislead. Claims must be based on evidence. Don’t lie. Don’t mislead. The Federal Trade Commission (FTC) is watching closely.
The Downsides: It’s Not All Rainbows and Unicorns
Advertising has its limitations. Don’t start blindly. Here are some downsides:
- High Expense: Advertising can be costly. This is especially true for small businesses. Cost is a major downside. It can feel like a money pit!
- Difficult to Assess Cost Benefit: Determining campaign cost effectiveness can be hard. It’s challenging to assess the impact. Is it working? That might remain unclear.
- Negative Feedback: Social media can attract negative comments. Prepare for potential criticism and manage your reputation carefully.
- Misleading Consumers: Ads can make exaggerated claims. This may result in poor purchasing choices. Misleading buyers harms your reputation. Don’t be *that* advertiser. Stay ethical.
License to Operate: Legalities Again
A reminder: Your marketing agency might need business licenses and permits. Check local regulations and don’t skip this vital step.
Business Setup: The Nitty-Gritty
Ready to begin? Use this checklist:
- Choose a name for your agency.
- Specify the type of agency you will open.
- Create a business plan.
- Select a location. (A virtual office works!).
- Register your business. Consider an LLC for liability protection.
- Select a pricing model. Will it be hourly? Project-based? Value-based?
- Open a business bank account & obtain a credit card. Keep finances separate.
- Acquire necessary permits and licenses. Don’t forget this!
Visit Upmetrics’ step-by-step guide for detailed information about starting your agency.
Digital Marketing Costs: A Closer Look
Another cost reminder: Starting a digital marketing firm can range from $730 to $29,100. Every agency should have a well-designed website to attract clients. Your website is your digital handshake.
Starting an advertising company can be exciting. With careful planning, hard work, and a bit of Mad Men attitude (minus the issues), you can create a successful business. Go ahead and make great ads!
