Marketing Agency FAQ

marketing agency faq

It’s no secret that Loomly loves advertising, branding, and marketing agencies.

But what you may not know is that Loomly was born as a spin-off of an actual digital marketing agency.

So, if you’re looking to hire a marketing agency? Or wondering how much they charge?

Stay tuned, as the Loomly Team answers all your questions in this marketing agency FAQ.


What does a marketing agency do?

Marketing agencies, also called marketing firms or marketing companies, help their clients create, implement, and manage successful marketing strategies to achieve their business goals.


What are the five types of marketing agencies?

There are five types of marketing agencies.

Full-service digital marketing agency

If you work with a full-service digital marketing agency, you should have access to a range of services, including:

Specialized marketing agency

Boutique or specialized marketing agencies focus on one or more of the services listed above.

For example, an SEO agency can help you manage your search engine optimization campaigns, while a web design agency focuses on designing and developing websites.

Traditional marketing agency

Traditional marketing agencies focus on non-digital marketing services like:

  • Events
  • Public relations
  • Print marketing: brochures, product guides, newsletters, and customer magazines.
  • Broadcast marketing on television or radio.

Direct marketing agency

Direct marketing agencies help you plan and manage direct mail campaigns. They often provide you with mailing lists that match your target market, as well as designing and writing direct mail items. Direct marketing companies also handle mailing out items on your behalf and measuring consumer response to the campaign.

Telemarketing agency

Telemarketing agencies provide telephone-based marketing services by acting as call centers for businesses. Many of these firms are shifting from landline calls to SMS text pitches and mobile calls.


How much does it cost to start a marketing agency?

The cost to start a digital marketing agency depends on what type of clients you want to work with and how high your overhead costs are. For instance, if you’re going after Fortune 500 firms, you’ll need more of a budget than if you’re courting small businesses.

Here’s a rough guide as to‌ ‌what‌ ‌you’ll‌ ‌need‌ ‌to‌ ‌start a marketing agency:

  • A website. $30 a month to $3,000 a month.
  • Email marketing software. $20 per month.
  • Social media management software. $30 per month.
  • Content creation software. $60 per month.
  • Reporting software. $99 per month.
  • Conferencing and calendar software. $55 per month.
  • Business cards and print collateral. $60.
  • A workspace. Free to $300 to $3000 per month.
  • Internet and phone. (Optional cost if you already have them).
  • A business checking account and business licensing. $20 per month

Totals:

  • Minimum monthly total: $314
  • One-time costs: $60

Benchmark: You can run a digital marketing agency on as little as $300 a month.


How do marketing agencies find clients?

Start with these eight ways to get more clients for your marketing agency:

  1. Treat yourself like your own client.
  2. Get out from behind the desk.
  3. Take advantage of online directories.
  4. Prioritize your portfolio.
  5. Blog about marketing.
  6. Get interactive to find more potential customers.
  7. Build a following with your email newsletters.
  8. Get into the continuing education game.

How do marketing agencies make money?

Here are the most common types of pricing models used by marketing agencies.

Hourly rate pricing

Charging by the hour is the original method advertising agencies used with their clients. The agency charges a fixed hourly price and records the number of hours required to complete the project. The profit is built into the hourly rate, and the client is usually charged after the work has been completed.

Alternatively, the agency quotes a certain number hours, and the client pays them in advance with overages invoiced after the project is completed.

Commission-based pricing

Another traditional method of charging clients involves the agencies receiving a fixed percentage of the money the client spends on media as a fee. This is called the “Agency Discount,” which averages 15% of the media budget and is essentially a commission.

Retainer-based pricing

A retainer means the client pays the agency a fixed amount every month, quarter, or year to manage their marketing efforts. This fee is the equivalent of paying a consultant or a business coach on a monthly basis to help you with your business.

Fixed-pricing (Project-based pricing)

Fixed-pricing, or project-based pricing, refers to a pricing model where the agency charges the client a fixed price for a specific marketing campaign. By charging a fixed price, the agency estimates the amount of time, effort, and other costs necessary to accomplish the campaign. They factor in a profit margin and then set the price.

Value-based pricing models

The above pricing models are traditional cost-based pricing models, which involve calculating the project costs and adding margins to calculate the price you charge.

A value-based pricing model is different in that it calculates the value of the campaign based on benefits that a client receives in terms of its own profitability. The price is determined by the potential success of the project and the overall benefits to the client. These benefits can be numerically tangible and/or intangible in nature.

There are a couple of ways of creating a value-based pricing model. A results-based or performance-based model involves the client paying the agency only for predetermined results. For example, the agency may agree to receive a certain amount per sale that results from the performance-based campaign.

Another way of determining the value is to look at either the Life Time Value (LTV) or the client’s Current Marketing Cost of Acquisition (COA). Based on one of these criteria, the agency negotiates how much the client is willing to invest to acquire a certain number of customers, which is the fee for the campaign.

An intangible value could be something like “brand recognition” or “customer goodwill” that is difficult to quantify and measure but still considered valid.

Hybrid payment methods

The hybrid model utilizes a combination of the previously mentioned methods. Since many of the aforementioned payment methods are more advantageous to either the agency or the client, using a hybrid model can result in a more balanced‌ ‌ agreement.

One common way to do this is to combine a value-based pricing model with one of the other methods to reduce the agency‌’s ‌risk.


How much do marketing agencies charge?

To hire a marketing agency, business owners should expect to spend a minimum of $4000 a month on non-working dollars. Now, what does that mean?

  • Non-Working dollars: Investments that are not directly driving sales, such as paying for creative or marketing staff.
  • Working dollars: Advertising spends on Facebook or Google are considered working dollars because they directly drive sales.

Here are the quoted averages from 10 marketing agencies for various services:

  • SEO – $2000
  • Organic Social Media – $3500
  • Content Marketing – $5200
  • Paid Social Media – $4200
  • PPC/ Google Ads – $6000
  • Website Build – $4500 one-time fee
  • Marketing Strategy – $3400 one-time fee per marketing tactic

Loomly gathered and analyzed data about 3,000+ advertising agencies in 1,000+ cities around the globe and compiled our findings in this infographic:

marketing agency infographic advertising agency 2018 infographic


Why do you need a marketing agency?

Getting new customers is one of the most significant challenges that businesses face daily.

Marketing plays a critical role in attracting new customers to your company. Still, many small business owners struggle with deciding whether they should do the marketing themselves or get outside help.

Business owners should consider hiring a marketing agency because:

  • It will modernize your strategy.
  • It will free up time to run your business.
  • It will help you keep payroll costs down.
  • It is a sound investment that produces long-term results.

What are the largest marketing agencies in the world?

Agency Spotter has compiled a list of the 50 largest marketing agencies according to estimated yearly revenue. The list represents the most prominent agencies and not the agency networks or groups like WPP, Publicis Group, Dentsu Inc, Interpublic, and Omnicom Group.

The Manifest has also created a list of the Top 100 digital marketing agencies with company descriptions, former clients, and notable projects to find the best fit for your business.


How do you find a marketing agency?

Setup, the marketing matchmakers, has created a 42-page PDF guide (including a free interactive workbook) to help you find a marketing agency. It includes:

PART 1 – Planning for a marketing agency

  • Chapter 1 – Mapping your marketing objectives (Worksheet | Mapping Marketing Objectives)
  • Chapter 2 – Budgeting for a marketing agency (Worksheet | Marketing Budget Line-Items & Considerations)

PART 2 – The marketing agency selection process

  • Chapter 3 – Building your long/short list of marketing agencies (Worksheet | Specialist or Generalist: Which is Right for You?)
  • Chapter 4 – Selecting a marketing agency: The routes you can take (Worksheet | Request for Proposal (RFP) Checklist)

PART 3 – Onboarding a marketing agency

  • Chapter 5 – Establishing roles and functions (Worksheet | Roles and Functions)
  • Chapter 6 – Preventing issues with your marketing agency (Worksheet | Agency Onboarding Checklist)

Plus, you can also check out Loomly’s Top Marketing Agencies Directory featuring the best firms worldwide, across every continent.


Marketing Agency FAQ in a Nutshell

Marketing agencies come in all shapes and sizes and offer either generalist or specialist services.

Take the time to work out your marketing requirements and budget before selecting your agency.

Loomly is the Brand Success Platform that helps marketing agencies streamline client collaboration: start your 15-day free trial now.