Digital Marketing Agency Profit Margin | Startups Guide

When selling digital marketing products or providing digital marketing services, it is imperative to focus on sustainability. Yes, we are talking about profit margins. The average digital marketing agency profit margin is 23% -27%.

 

A digital marketing agency’s profit margin is the difference between what it charges for its services and what it spends on expenses.

 

By all means, a digital marketing agency can have a higher profit margin if it can generate more leads and increase its conversion rates.

 

With this in mind, there are many ways that they can do this, such as:

 

• Creating and sharing content on social media 
• Engaging with the audience through live chat
• Building an email list

 

So if you are planning to start a digital marketing agency in India, here is what you need to know about the money you can make from it.

 

Overview of Digital Marketing Agency in India

 

• Investment: Rs. 2 Lacs - Rs. 10 Lacs (Minimum)
• Area Required: 500 sq ft - 700 sq ft 
• Human Resource: 8- 15 People
• Digital Marketing Agency Profit Margin: 20% - 30%
• Expected Earnings: 4 Lacs - 5 Lacs Monthly (Depends on the number of projects, the scale of business and the profit margin)

 

Types of Digital Marketing Services in India

 

• SEO (Search Engine Optimisation) - Rs. 8,000 - Rs. 25,000 per month
• SEM (Search Engine Marketing) - Rs. 10,000 - Rs. 30,000 per month
• Affiliate Marketing - Rs. 30,000 - Rs. 90,000 
• PPC (Pay-per-Click) - Rs. 10,000 - Rs. 40,000 per month
• SMM (Social Media Marketing) - Rs. 6,000 - Rs. 20,000 per month
• Blogging and Article Writing - Rs. 1,000 per Blog (500 - 800 words)
• Email Marketing - Rs. 1,500 - Rs. 4,000 per 20,000 Mails
• Brand Registration - Rs. 5,000 - Rs. 15,000 per Brand
• Digital Strategy - Rs. 7,000 - Rs. 40,000 per Strategy
• Mobile/Website Designing (UI/UX) - Rs. 40,000 - Rs. 75,000
• Marketing consultation - Rs. 10,000 - Rs. 80,000 per consultancy

 

Expected Gross Profit in Digital Marketing Agency

 

To determine the expected gross profit, you need to consider certain factors like the number of employees, the cost of labor and the cost of equipment.

 

Apart from that, many factors influence the expected gross profit of a digital marketing agency in India. 

 

The main factors are:

 

• Type of service
• Cost of services
• The number of hours invested by the company
• Industry
• Competition
• Market

 

For example, you provide a Blogging Service to a Client. 

 

• Cost of One Blog (500 Words) to Client - Rs. 1,000
• Cost of One Blog (500 Words) to Company - Rs. 700
• Profit - 30%

 

So, let's say you provide a minimum of 15 Blogs a month to that client at a profit of 30%.

 

As a result, you will make Rs.4,500 per month in profit from 1 Client. 

 

Thus, if you have 10 clients, you will make a profit of Rs. 45,000 per month.

 

If you already have bloggers on a salary basis, well and good. 

 

If not, you can easily outsource the service. They generally charge Rs.0.75 - Rs.1 per word.

 

Outsourcing the service initially is best for giving this idea a kickstart.

 

Note: This is the expected data for 1 service. You can provide multiple services and increase your profit. However, make sure that you are providing quality service to retain your clients and attract more customers.

 

Investment

 

The minimum investment required to start a digital marketing agency in India is a minimum of Rs. 10 Lacs.

 

You will have to invest in the following things:

 

• Digital Marketing Tools
• Systems (Laptop or Computer)
• Office Space
• Employees
• Legal Registrations (Such as Company Registration Online, GST Registration, Intellectual Property Protection etc.)

 

The expenses in the digital marketing business can vary from company to company. 

 

It is not just the cost of buying a digital marketing tool. 

 

The costs also include the cost of hiring employees and other production costs such as web hosting, design and development, etc.

 

Additionally, the most significant expense is the cost of acquiring new customers through advertising and social media marketing.

 

Here are some of the popular funding sources for Digital Marketing Businesses in India:

 

• Startups: Funding from VCs, angels, family members, friends and business partners are some of the popular sources for startups.
• SMEs: Funding from loans and bank loans is often used by small businesses to finance their growth.
• Corporates: Corporates often provide funding on account of their long-term partnerships with startups or SMEs or just because they want to invest in innovation.
• Crowdfunding: Crowdfunding is a popular method of funding where people contribute money towards an idea they believe in.

 

Digital marketing is one of the most competitive industries in India with many startups trying to gain traction with their ideas and services. 

 

Thus, the competition makes it difficult for new startups to get funding from banks or other traditional financial institutions due to the high-risk factors involved in this field.

 

Digital Marketing Tools you Must Invest In

 

The following are some of the most popular digital marketing tools that you must invest in:

 

• Social Media Tools 
• Content Management System (CMS) 
• Email Marketing Tools 
• Digital Marketing Software 
• Business Tools 
• Accounting Software 
• Inventory Management Systems 
• CRM Software
• Microsoft Office 365

 

Area

 

As starting a digital marketing business will require a professional space to work and conduct meetings, do not skip this part.

 

You will require a minimum of 500 sq ft - 700 sq ft space for an office. 

 

For this purpose, you can set up a home office initially, but make sure that the place has zero disturbance.

 

On the other hand, you can rent or buy a studio apartment for this purpose. Or, you can also look for office space in a commercial building.

 

It is always a good idea to be visible to as many people as you can.

 

So, when it comes to finding the best location for your business, you need to consider the following factors: - 

 

• Cost of living- The cost of living is important to consider when deciding where to open your business. You want to find a location that is not too expensive for you and your employees, as well as an area with low rent.
• Infrastructure- This refers to the physical aspects of the city or town, namely the availability of utilities and waste removal. This is important when you need your business to operate efficiently and reliably.
• Internet speed- Fast internet speeds are necessary for running a business today, so you want to find locations that provide that type of service. 
• Growth potential- You want to find an area with a high level of growth potential because it will help increase your sales both immediately and as the city itself grows.

 

Human Resource

 

Digital Marketing Businesses in India require people with diverse skill sets.

 

The 10 Job Roles you must hire for starting a successful digital marketing agency are:

 

1. Marketing Strategist
2. SEO and SEM Specialist
3. Content Writer/Marketer
4. Copywriter
5. PPC Manager
6. Graphic Designer
7. Front-end Developer
8. Social Media Specialist
9. Data Analyst
10. Email Marketer

 

However, there are some challenges that you need to be aware of before you start hiring your team. 

 

Some factors will help you identify the perfect candidate for your company: - 

 

• What skill sets do they have? 
• What industry experience do they have? 
• How much experience do they have? - What's their salary expectation? - How can they integrate with your team?
• Will they be able to fit into your team's culture?
• What is their potential for promotion and growth within the company?
• Do they have any weaknesses or strengths?

 

There are some important questions that you need to ask potential candidates to find the best person who will fit with your company.