Born and raised in New Zealand I always knew that I would do something big with my life. It started in 2011 when I co-founded a digital marketing agency called AllFamous Digital in Manila, Philippines. At the time I had no idea what I was getting myself into, and made numerous costly mistakes along the way.
Five years on, a few notches on my belt and grey hairs in my beard, I have distilled the most painful and valuable lessons into these 11 rules for running a digital marketing agency.
1. Digital marketing is difficult, love it or die.
If you want to start a digital agency, you need to be passionate about digital marketing. The digital space has so many moving parts, and most change or die regularly. There are a million channels to think about and constant technology obstacles to overcome or, for the optimist, embrace.
Social media management is becoming a commodity, and clients are starting to expect more advanced services like multi-channel marketing automation and programmatic ad retargeting, not to mention the always-on ROI question. SEO as we knew it five years ago is dead and clients are looking for help building a world-class digital experience for their customers.
The bottom line is, you better love it, or you won’t keep up.
2. Don’t be too opportunistic, build packages
When I first started, I pitched for everything and to anyone. It is natural to test the market and understand who is buying and what they want. Eventually, you'll need to stop and build a robust offering that can be tailored to clients, but are all services you’ve tried and tested.
Building packages was a major breakthrough in our sales process. Instead of creating custom pitches to clients based on their requirement, we designed a 'best seller' menu with three price options that would suit a range of clients.
Having your pricing together also indicates to the client that you have done this before and that you've built a reliable service around your packages.
3. Scale your digital agency with process and templates
We have all heard about #agencylife. Digital agencies, even if you have a start-up vibe, are incredibly hard work as it is a high touch industry. Companies use digital agencies to manage their online look and feel, act as a real time communications arm, and be able to handle difficult customer inquiries and complaints.. not as easy as say throwing a new billboard up every few months.
A good agency will need to have an intimate relationship with the client's marketing, brand, customer service and even HR departments as social and online channels have ties to each. Per client multiple skillets are required meaning you have to have a base team balanced perfectly across multiple clients with highly variable workloads.
For this reason it is very hard to scale. As you win new clients you have to hire people. As you lose clients you need to fire people. If you hire too early you can screw your profitability, and if you hire too late your clients experience delays and rushed work.
4. Get out of 'campaign thinking' and build recurring revenues
Many marketers still live in the world of campaigns. Digital agencies that chase campaign pitches may win the odd award, but they will have issues maintaining their revenues and profitability over time. Eventually, brands will realise that consistency is king and they will need a digital agency to run the social media and website functions all year round, with creative agencies that pitch for campaigns to overlay and enhance.
The answer is to build recurring revenues in a retainer style relationship where you bill monthly for a fixed set of services (for example, X published blogs per week, Y Facebook posts per day etc).
5. Outsource the skills you don’t have
The digital marketing game is a mixed bag requiring a diverse skillset to be successful. The problem is that you have to find a way to start with all the skills in place, without running your agency into the ground with high overheads. Most clients will want to deal with one digital agency for everything.
Let’s break it down. A typical full-service digital agency has these skills:
- Content manager
- Content writer
- Community manager
- Multimedia artist (video and design)
- Email manager
- SEO manager
- Paid advertising manager
- Reporting specialist
If I were to go back and do it all again, I definitely wouldn’t have hired so many staff before I had contracts in place. Do as much as you can yourself, then hire through ODesk for any skills you lack. As you win new clients continue to scale on ODesk until you have enough demand to justify hiring a full-time employee. You can technically make profit on day one if you can get your head around outsourcing skills.
6. Process and templates win awards
If you are a good leader, running a team of ten in your agency is manageable. But running a team of 30 people across ten or more clients becomes very challenging if you can’t scale your knowledge and enable your team.
The only way to achieve a consistent and reliable service even when you grow is to create repeatable and templated processes. It may sound anti-creative but even creative agencies have a huge amount of process and governance to ensure the client experience isn’t compromised.
After much failure, our agency started heavily investing energy into building a knowledgebase using Google sites, which is free. It is very simple but provides a place for people to create and access useful information and templates.
7. Become an expert on everything
I promise you, nobody is an expert, and anybody claiming to be an expert usually comes with a bloated salary expectation. Everybody is only as good as how current they are with the latest practices, which are changing all the time. If you find an affordable hire claiming to be an expert, he or she probably isn’t.
When I first started my agency I hired senior staff that had more experience than I did in digital marketing. For the longest time I assumed they knew better than I did and I found it difficult to quality manage their work or lead them in creating world-class experiences for my clients. My clients weren’t happy in the quality of service, and my staff weren’t happy because they weren’t learning from anybody.
After failing repeatedly and losing most of my staff, I decided to roll my sleeves up and do the work myself. It turned out I absolutely loved doing it and I was pretty good at it. I wish I had started this way, but it was a really good (and expensive) learning opportunity. If you are going to start a digital agency, I highly recommend you start doing everything yourself, so you can teach and lead.
8. Know your burn rate
Having a clear understanding of how much your agency costs to operate on a monthly basis is critical to understanding how many clients you need to be billing regularly to stay afloat. Digital marketing is a very competitive space and brands still only throw scraps in terms of budget. A minimal digital team of three to four people costs a lot in any country, while an average digital budget is USD $2,000 - $5,000 per month for medium-sized businesses. You do the math. it doesn’t leave much wiggle room for creativity when your small team needs to manage five or more clients for the agency to break even.
9. Keep up to date with the latest tech
Fortunately for us marketers, the financial crisis drove a lot of people into becoming tech-entrepreneurs who created awesome new cloud software for almost every purpose. The digital marketing industry has done quite well out of this as we now have affordable technology platforms that once only large corporations could afford. I suggest you watch Ted and ensure you get interested in the all latest social networks and cloud software that pops up.
10. Share your knowledge unwittingly
Both brands and digital agencies are evolving constantly with disruptive technology change. Somebody with ten years' experience knows just as much about new platforms as a 21-year-old that actually uses them. Initially, I was cagey about the things we were learning with clients, but I soon realised this is the wrong attitude.
Show all you cards and you will get more business. Even if you teach other agencies how to do something you’ve already mastered, you will be a step ahead of them. It takes time to incorporate a new solution into an agency, and there is bound to be significant failure before it can be mastered. By that time you will have mastered something new.
Giving brands free advice and solutions leads to them trusting you to help them. It is generally too difficult for brand teams to be agile enough or resourced properly to keep up with the latest technology changes, so they have to hire somebody ... hopefully you.
11. Get somebody to do the boring stuff
If you are a great digital marketer, it is unlikely you are also an efficient business manager. At least this was the case for me. I vehemently dislike money and often my head is in the clouds thinking about new social networks or crowd-sourcing platforms, and not in the books controlling our spending. The problem is that finance and administration is at the core of any business and should drive decision-making. If this isn’t you, ensure you have a business partner that is excellent in this space. It will save you a lot of money and headaches in the long run.
- Robin Leonard is the co-founder of AllFamous Digital, a digital marketing agency based in Manila, servicing clients from New Zealand, Australia, Singapore and Philippines.